Peak Oil

[NobleSavage]

Ok, how long do you think it will take the various experts to agree on what an "economy of stable size" is? By the time you get that figured out we the world is going to be very different. Solar is a few years off from being price competitive with coal in all 50 states. Japan has more electric car chargers than gas stations.

No politician is going to put the breaks on growth. It just isn't going to happen unless there is a global dictator and I don't like that option.

It doesn't take experts to stabilize an economy...it is the 'experts' - the politicians and their neoclassical economic advisers who try to stimulate growth. It wasn't always so.

At what point do you consider an economy an economy? I just finished The Ascent of Money and it seems like all the new problems rhyme with all the old problems, they are just bigger.

 

[ralfy]

Peak Oil. Quaint term. Misses the entire point though. Our limits are not governed by the amount o foil we can extract from wherever. OUr limits are governed by the amount of pollutants injected into the air by burning fossil fuels that living things can tolerate. Its like the actor playing the undersecretary of enery on Newsroom said "if we'd done that 20 years ago we'd have a chance. Now its to late."

For those who are environmentally handicapped what he said translates into "We're toast!", or, "Kiss your sweet ass goodbye".

We're in for a ride up the temperature ladder; life is the unfortunate victim of our need for stuff and comfort.

Hey, we'll push things forward a ways, but, this E ticket is a must ride and it's going to end badly, much more badly than if we'd just tried to fight it out for what fossil fuel was left 40 years ago. There will be no souls going to heaven. Every thing living on earth will be consumed by the burning we started. Mars is a place where thing just failed. Venus is a place where things never got going. Earth will be a biological cinder field.

....and that's my compassionate conservative view.

Limits are government by scientific facts (such as oil being a limited resource, gravity, etc.).

Peak oil has nothing to do with pollutants. Even with much less of the latter, oil production will still peak for reasons given in my earlier paragraph.

Finally, a peak in production will still take place whether or not one's views are conservative.

- - - Updated - - -

We can have economic growth with less energy and less physical mater.

Yes, and we've been doing that for several years by increasing credit levels. The problem is that doing so leads to financial crashes and eventually requires increasing energy and material resources as more goods and services are needed to back up the value of money supply.

 

[DBT]

Limits are government by scientific facts (such as oil being a limited resource, gravity, etc.).

Peak oil has nothing to do with pollutants. Even with much less of the latter, oil production will still peak for reasons given in my earlier paragraph.

Finally, a peak in production will still take place whether or not one's views are conservative.

- - - Updated - - -

We can have economic growth with less energy and less physical mater.

Yes, and we've been doing that for several years by increasing credit levels. The problem is that doing so leads to financial crashes and eventually requires increasing energy and material resources as more goods and services are needed to back up the value of money supply.

Looks like an oxymoron. The term ''economic growth'' describes a measurable increase in economic activity, GDP, which means a measurable increase in production and/or consumption. Without a measurable increase in some form, using the term 'growth' is a misnomer.

'' Economists will complain that growth in GNP is a mixture of quantitative and qualitative increase and therefore not strictly subject to physical laws. They have a point. Precisely because quantitative and qualitative change are very different it is best to keep them separate and call them by the different names already provided in the dictionary. To grow means "to increase naturally in size by the addition of material through assimilation or accretion." To develop means "to expand or realize the potentialities of; to bring gradually to a fuller, greater, or better state." When something grows it gets bigger. When something develops it gets different. The earth ecosystem develops (evolves), but does not grow. Its subsystem, the economy, must eventually stop growing, but can continue to develop. The term "sustainable development" therefore makes sense for the economy, but only if it is understood as "development without growth"—i.e., qualitative improvement of a physical economic base that is maintained in a steady state by a throughput of matter-energy that is within the regenerative and assimilative capacities of the ecosystem. Currently the term "sustainable development" is used as a synonym for the oxymoronic "sustainable growth." It must be saved from this perdition. ''

 

[Draconis]

I'm one of those who think that overpopulation (either locally, or globally) is the biggest problem and stokes up peak oil and global warming. Perhaps it is peak food we should be concerned about. And in the West with our aging population, we are not in a great position to defend ourselves when the starving hordes come to find something to eat, or something to do that will pay for something to eat. Perhaps they are already coming.

 

[Axulus]

I'm one of those who think that overpopulation (either locally, or globally) is the biggest problem and stokes up peak oil and global warming. Perhaps it is peak food we should be concerned about. And in the West with our aging population, we are not in a great position to defend ourselves when the starving hordes come to find something to eat, or something to do that will pay for something to eat. Perhaps they are already coming.

Here's how Africa can feed itself in 15 years:

http://www.theverge.com/2015/2/18/8...ming-world-hunger-africa-poverty#b02g18t20w15

 

[bilby]

I'm one of those who think that overpopulation (either locally, or globally) is the biggest problem and stokes up peak oil and global warming. Perhaps it is peak food we should be concerned about. And in the West with our aging population, we are not in a great position to defend ourselves when the starving hordes come to find something to eat, or something to do that will pay for something to eat. Perhaps they are already coming.

Here's how Africa can feed itself in 15 years:

http://www.theverge.com/2015/2/18/8...ming-world-hunger-africa-poverty#b02g18t20w15

That's nice; but probably unnecessary. Africa is a huge place, but it doesn't necessarily need to grow enough food to feed itself, any more than I do - I buy food, and use my labours to earn the money to do so from non-farming activities, which is a better result for both my family, and the farmers.

In Ethiopia, famous for the big 'Live Aid' famine of the 1980s, population has doubled since Bob Geldof implored us all to do something urgently; and a couple of years ago, they had a similar drought to the one that struck the region in the late 1980s - but they didn't starve, in large part because they don't grow millet, wheat or rice for domestic consumption so much these days, but instead grow flowers. Flowers can't be eaten, but they do grow well in the Ethiopian climate, and they can be sold to rich Europeans who want nice cut flowers on their dining tables. In return they pay hard cash to the Ethiopian flower growers, who use that cash to buy millet, wheat, rice, or any other food they need from anyone who has it to sell - the EU, US, Russia, Australia - lots of places are selling food grown in places that food grows well, and Ethiopian farmers can't compete as food producers. But they can compete as growers of flowers.

 

[ralfy]

Looks like an oxymoron. The term ''economic growth'' describes a measurable increase in economic activity, GDP, which means a measurable increase in production and/or consumption. Without a measurable increase in some form, using the term 'growth' is a misnomer.

'' Economists will complain that growth in GNP is a mixture of quantitative and qualitative increase and therefore not strictly subject to physical laws. They have a point. Precisely because quantitative and qualitative change are very different it is best to keep them separate and call them by the different names already provided in the dictionary. To grow means "to increase naturally in size by the addition of material through assimilation or accretion." To develop means "to expand or realize the potentialities of; to bring gradually to a fuller, greater, or better state." When something grows it gets bigger. When something develops it gets different. The earth ecosystem develops (evolves), but does not grow. Its subsystem, the economy, must eventually stop growing, but can continue to develop. The term "sustainable development" therefore makes sense for the economy, but only if it is understood as "development without growth"—i.e., qualitative improvement of a physical economic base that is maintained in a steady state by a throughput of matter-energy that is within the regenerative and assimilative capacities of the ecosystem. Currently the term "sustainable development" is used as a synonym for the oxymoronic "sustainable growth." It must be saved from this perdition. ''

Economic growth refers to increasing money supply, and that's the primary goal of capitalism, as it involves profits and returns on investment. The catch is that the value of increasing money supply is retained only with increasing availability and use of energy and material resources, which is why some of the money is used to invest in business expansion as well as in consumer spending.

The problem is that the rest of the money is used on unregulated financial speculation, which means credit levels rise fast, leading to one financial crash after another. Also, a resource crunch eventually takes place, causing a slowdown and eventual decline of production and consumption of goods and services. Finally, environmental damage and global warming take their toll on resource availability and contribute to loss of life and property damage, thus amplifying financial crises and the threat of a resource crunch.

 

[ralfy]

I'm one of those who think that overpopulation (either locally, or globally) is the biggest problem and stokes up peak oil and global warming. Perhaps it is peak food we should be concerned about. And in the West with our aging population, we are not in a great position to defend ourselves when the starving hordes come to find something to eat, or something to do that will pay for something to eat. Perhaps they are already coming.

Another problem is overconsumption. The U.S., for example, has less than 5 pct of the world's population but has to consume up to 25 pct of world oil production in order to maintain middle class conveniences. Similar patterns can be seen in rich countries, such that if the rest of the world followed them, the global population will require several more earths.

The same middle class (which makes up only a fraction of the world's population) is responsible for more than half of personal consumption worldwide. In order to maintain middle class conveniences, they have to sell goods and services to a growing consumer market. That means the global middle class has to keep growing so that the current middle class can get what they want:

http://www.bbc.com/news/business-22956470

This is part of capitalist systems, which require continuous growth, and thus more material resources and energy to produce and sell more goods and services to a growing consumer market, which in turn is made available through a growing global middle class and a growing population.

 

[Axulus]

I'm one of those who think that overpopulation (either locally, or globally) is the biggest problem and stokes up peak oil and global warming. Perhaps it is peak food we should be concerned about. And in the West with our aging population, we are not in a great position to defend ourselves when the starving hordes come to find something to eat, or something to do that will pay for something to eat. Perhaps they are already coming.

Another problem is overconsumption. The U.S., for example, has less than 5 pct of the world's population but has to consume up to 25 pct of world oil production in order to maintain middle class conveniences. Similar patterns can be seen in rich countries, such that if the rest of the world followed them, the global population will require several more earths.

The same middle class (which makes up only a fraction of the world's population) is responsible for more than half of personal consumption worldwide. In order to maintain middle class conveniences, they have to sell goods and services to a growing consumer market. That means the global middle class has to keep growing so that the current middle class can get what they want:

http://www.bbc.com/news/business-22956470

This is part of capitalist systems, which require continuous growth, and thus more material resources and energy to produce and sell more goods and services to a growing consumer market, which in turn is made available through a growing global middle class and a growing population.

How does this graph fit with what you've written above?

 

[ralfy]

How does this graph fit with what you've written above?

One of the results of increasing debt is demand destruction. Meanwhile, oil consumption for the rest of the world (and consumption overall) keeps rising:

http://ourfiniteworld.com/2013/04/11/peak-oil-demand-is-already-a-huge-problem/

 

[Axulus]

How does this graph fit with what you've written above?

One of the results of increasing debt is demand destruction. Meanwhile, oil consumption for the rest of the world (and consumption overall) keeps rising:

http://ourfiniteworld.com/2013/04/11/peak-oil-demand-is-already-a-huge-problem/

What do you mean "demand destruction"?

More graphs, which seem to contradict your assertion that economic growth necessarily requires more energy and resource consumption:

Material intensity continues to fall dramatically. In the U.S., the amount of resources extracted per dollar of GDP has decreased by nearly 75% over the past 90 years.

Energy intensity, the portion of the total energy supply required to produce a material, has also dropped markedly. For example, the manufacture of 1.5 gigatons of steel would have gobbled up one-fifth of the world’s total primary energy supply (TPES) in 1900. In 2010 it used only about one-fifteenth.

A classic example of dematerialization is the computer. In just 30 years, the amount of material required to produce one PC declined 68%, and each machine housed 250,000 times more RAM. In 2011 PC makers used, in aggregate, only 54 times more material to create 38 million times more processing power than in 1981—a truly stunning instance of dematerialization.

https://hbr.org/2015/03/vision-statement-stuff-when-less-is-more#b02g17t20w15

 

[ralfy]

One of the results of increasing debt is demand destruction. Meanwhile, oil consumption for the rest of the world (and consumption overall) keeps rising:

http://ourfiniteworld.com/2013/04/11/peak-oil-demand-is-already-a-huge-problem/

What do you mean "demand destruction"?

More graphs, which seem to contradict your assertion that economic growth necessarily requires more energy and resource consumption:

Material intensity continues to fall dramatically. In the U.S., the amount of resources extracted per dollar of GDP has decreased by nearly 75% over the past 90 years.

Energy intensity, the portion of the total energy supply required to produce a material, has also dropped markedly. For example, the manufacture of 1.5 gigatons of steel would have gobbled up one-fifth of the world’s total primary energy supply (TPES) in 1900. In 2010 it used only about one-fifteenth.

A classic example of dematerialization is the computer. In just 30 years, the amount of material required to produce one PC declined 68%, and each machine housed 250,000 times more RAM. In 2011 PC makers used, in aggregate, only 54 times more material to create 38 million times more processing power than in 1981—a truly stunning instance of dematerialization.

https://hbr.org/2015/03/vision-statement-stuff-when-less-is-more#b02g17t20w15

Please read the article you shared very carefully, as it actually counters your argument and supports mine. Here's a clue: lower levels of energy and material resources needed to manufacture a unit, but more units needed.

The latter is important because that explains why energy consumption has been growing worldwide (see the article I shared). See also global production or extraction and consumption for iron ore, copper, phosphates, water, aluminum, wheat, rice, corn, and more. Also, check out global money supply, global GDP per capita, etc.

 

[ralfy]

Also, from the same author mentioned in the article:

"Vaclav Smil: 'The great hope for a quick and sweeping transition to renewable energy is wishful thinking'"

http://blogs.scientificamerican.com...tion-to-renewable-energy-is-wishful-thinking/

 

[ralfy]

I forgot to explain demand destruction. See oil consumption for the U.S., EU, and Japan as seen in the first chart of the article. For more details, read the rest of the article.

 

[DBT]

Economic growth refers to increasing money supply, and that's the primary goal of capitalism, as it involves profits and returns on investment. The catch is that the value of increasing money supply is retained only with increasing availability and use of energy and material resources, which is why some of the money is used to invest in business expansion as well as in consumer spending.

Not just money supply. If the mining activity, for example takes a downturn because demand for the product, iron ore, etc, is reduced, the economy takes a downturn in relation to that sector...if that sector happens to be a significant percentage of a Nations GDP, it effects economic activity at large. Higher unemployment, smaller disposable incomes effecting the retails sector, housing market and so on. It's the whole package that is effected.

 

[ralfy]

Not just money supply. If the mining activity, for example takes a downturn because demand for the product, iron ore, etc, is reduced, the economy takes a downturn in relation to that sector...if that sector happens to be a significant percentage of a Nations GDP, it effects economic activity at large. Higher unemployment, smaller disposable incomes effecting the retails sector, housing market and so on. It's the whole package that is effected.

Indeed, which is why we have peak oil coupled with financial crises.

 

[Togo]

"Vaclav Smil: 'The great hope for a quick and sweeping transition to renewable energy is wishful thinking'"

http://blogs.scientificamerican.com...tion-to-renewable-energy-is-wishful-thinking/

He seems to believe that fracking reduces CO2 emissions. Can anyone explain?

 

[Axulus]

"Vaclav Smil: 'The great hope for a quick and sweeping transition to renewable energy is wishful thinking'"

http://blogs.scientificamerican.com...tion-to-renewable-energy-is-wishful-thinking/

He seems to believe that fracking reduces CO2 emissions. Can anyone explain?

When it is to extract natural gas it does when it is used to replace coal as the source of energy for power plants, as coal releases more CO2 per kJ of energy generated.

 

[semiopen]

What you said is that oil would drop to $35. That did not happen. Not even close.

The price will continue to move up and down and probe the minor highs and lows. If it probes 44 again and breaks that, your thesis is in peril.

The market has been hovering around mid to high 40 and low 50s for a couple of months now. That suggests to me that a price floor has been reached. It is not going to go below mid-40s unless something truly crazy happens in the oil markets.

There is no law that says oil must stay above 40, 35, or whatever. There is a law that it cannot go below zero.

Not law per se but very unlikely in my estimation.

Your bet is saying something like you can flip a coin and it will come up heads three times in a row, I simply took the other side.

Except that we are not playing with fair coins and (unlike with coin flips) the incremental price movements are not IID.

I also have told you exactly what has to happen for your bet to have a chance. Oil has to consolidate above $50 or so this month and hopefully make a move above $60 relatively soon. You would have approximately an even chance of winning if it reaches about $67.

Of course that has to happen. For a quantity to reach a certain level it must first reach some intermediate level. That's pretty trivial.
The question is, will it drop to $35 first. I still say no.

I thought my side of your silly bet was that oil would go to 35 before it went to 100. As your hero Dubya once said,

To be frank, I think the jury is still out on that one

Obviously if there was any glimmer of human intelligence in your bet, the price of oil has to stay above 35.

Between July and January oil has had seven straight down months. With any kind of luck, oil will not have a down month in February. At the moment, it is less than an average day's volatility from having a down month.

The current collapse saw oil go from about 106 to 43. The three week rally saw a high of 54. Assuming the 54 is some kind of minor/intermediate high we can expect to see a drop to 43 - (54-43) = 32.

Of course keep in mind that this is all similar to the ghost of Christmas future, as Scrooge says

And you're going to show me the shadows of things that have not yet happened but will happen?

We don't know exactly what will happen.

 

[semiopen]

April Oil futures have just taken out 43 on an intra-day basis. That's called a lower low, no guarantee that Derec will lose his ridiculous bet, just a bitch slapping for his misplaced optimism.

The market seems to be treating Derec's invisible stop sign with the respect it deserves.

As I mentioned way back on 2/11 -

Consider the price action since we made our little bet. Oil went down four dollars or so to 44, then it went back up 8 dollars to around 53 (+4 on the original price), down 5 dollars back to 48 or so, back up 4 and now is back down 4. In other words it has gone up about 4 and gone down about 4 since we started. Isn't that exactly what I said? The chances of it going to x+y are about the same as it going to x-y - in this case y = 4.

The price will continue to move up and down and probe the minor highs and lows. If it probes 44 again and breaks that, your thesis is in peril. There is no law that says oil must stay above 40, 35, or whatever. There is a law that it cannot go below zero.

Oddly Derec seemed to argue that it was possible that oil could go below zero in his reply to that post, at the same time maintaining that it could not go below 35. This shows why he is such a formidable debate opponent.

Derec 2/12 - The market has been hovering around mid to high 40 and low 50s for a couple of months now. That suggests to me that a price floor has been reached. It is not going to go below mid-40s unless something truly crazy happens in the oil markets.

Maybe UCLA making the NCAA BB tournament qualifies as something truly crazy.

Derec 2/12 on oil going below zero - Not law per se but very unlikely in my estimation.

Meanwhile, some forecasts have oil averaging $35 for this year... they're talking about an average, not a little hickey.