Jumat, 15 September 2017

PEAK OIL THAT THE WORLD OIL PRODUCTION MOSTLY GOING HIGHER N HIGHER.. UNTIL THE PEAK N THAN... GOING BACK DOWN.. UNTIL THE NEW CONDITION.. N MOST STABLE.. AS THE NORM CONDITION.. ???>> SO WHAT HAPPENED.. IN THE PERIOD 1989-2013-2014.. N AFRTERWARD.. ??? IS IT GOING TO MORE STABLIZE.. OR THERE IS A NEW.. MOVE ON..OR CHANGE THE THE ENERGY DIVERSIFICATION OR THERE IS DEVELOPMENT OF THE NEW TECHNOLOGY.. IN SOME INDUSTRIES BASIC N THE ECONOMIC AREAS..??>> ....The United States increased production by 5.1 million barrels per day from 2010 to 2015. The increase in production from countries around the Persian Gulf over the same period was slightly less at 5.0 million barrels per day. The increase in total world production was 8.4 million barrels per day so the rest of the world declined by some 1.7 million barrels per day. This was despite Canadian production rising 1.0 million barrels per day from oil sands developments plus some other increases from Russia, Brazil, Colombia etc. Most oil producing countries are in well-established long term decline or plateau at best. How these trends will interact can approached from a bottom-up basis. To that end, the following graphs show likely production profiles by region for the next five years...>> ....Iranian production peaked in 1974 at 6.1 million barrels per day as the Shah tried to overtake Saudi production. It is assumed that Iranian production is geologically limited. Iraqi production continues rising despite the civil war in that country. Currently at over 4.0 million barrels per day, Iraq’s geological endowment should see production continuing to rise towards 9.0 million barrels per day....>>

Looking Back 10 Years After Peak Oil

This is a guest post by Verwimp Bruno.
All views expressed here are those of Verwimp Bruno and do not necessarily represent those of Ron Patterson.


Peak Oil is the moment in time when, on a global scale, the maximum rate of oil production is reached. The moment after which oil production, by nature, must decline forever. Since Earth is a closed system, next to this production (supply) event, there must be an equal demand event: Peak Oil Consumption. Since there are no substantial above ground deposits, Peak Oil Production and Peak Oil Consumption must coincide. The world consists of a lot of different countries, some of which are already far beyond peak oil production That leads to the assumption the world as a whole reaches peak oil production. On the demand side, it is worth looking, because different countries have different economies, different degrees of development, and so on, if, while some countries still experience significant growth in oil consumption, some countries are already well beyond Peak Oil Consumption by now.


The production history of crude oil is well documented. For all relevant OPEC and NON-OPEC countries the data are gathered by Peakoilbarrel.com here, OPEC Charts, and here, Non-OPEC Charts, respectively. It is clear some countries have reached peak oil production long time ago. For readers of this blog, familiar with these data, this is no surprise. Still world oil production is growing, because some countries make up for the countries that are losing production. Many readers of Peakoilbarrel.com wonder when the exact moment will be when global oil production will have reached that ultimate peak. But how relevant is that moment? Will it bring doom, gloom, the end of motoring, plastics and tooth paste. It might be more interesting to know whether your country is before, beyond or at Peak Oil Consumption right now. And what about coal and natural gas?


Finite resources tend to be exploited as fast as possible, resulting in an ever increasing “production” (“mining” is the more correct term), until a limit is reached, after which production declines. The result is the bell-shaped curve M. K. Hubbert showed the world in A.D. 1956:

Bell Curve

We all know this curve did not materialize exactly this way. The peak was set at 13billion barrels per year, while the world produces some 32 billion barrels per year now. Nevertheless that production must decline sooner or later. Oil is still a finite resource.
In A.D. 1972 researchers from M.I.T. wrote Limits to Growth, Report to the Club of Rome. They analyzed the word as a whole and took different parameters into consideration: Finite resources, finite absorbing capacity of the world’s ecosystems (climate!) and human population. The standard run of their model looked like this:

Figure 35

In this graph resources are depictured as an inverse cumulative function, starting at 100% in the upper left corner and ending at near zero in the bottom right corner. When that graph wouldn’t have been cumulative, it would have been a bell-shaped curve. The ‘industrial output per capita’ curve reflects the use of resources and is indeed bell-shaped. The graph with the ‘S’-dots, indicates services per capita. That graph goes higher than industrial output, and starts to decline later. The contemporary deindustrialization of the USA and Europe, and their growing service economies are in line with the standard run of the World Model.
In june 2015 the leaders of the G7 gathered in Schloss Elmau, Germany, for their annual Summit. Afterwards the Leadersʼ Declaration was released. A chapter is dedicated to climate change. The leaders say: “Mindful of this goal (to hold the increase in global average temperature below 2 °C. ) … we emphasize that deep cuts in global greenhouse gas emissions are required with a decarbonisation of the global economy over the course of this century. Accordingly… we support … the upper end of the latest IPCC recommendation of 40 to 70% reductions by 2050 compared to 2010 … .
When the evolution of the energy consumption of the world, of which nowadays approximately 85% consists of greenhouse gas generating fossil fuels, is extrapolated to the end of the century, when a fixed point of nearly 0% fossil fuels at A.D. 2100 and a fixed point of “40 to 70% reduction by A.D. 2050”, say 50% reduction, is set, when the current growth in use of fossil fuels is gradually turned in an as moderate as possible decrease, meeting the two fixed points, when the evolution of nuclear, solar, wind, hydro and biomass is counted in in an optimistic way, the future looks like this diagram:

World Energy Consumption

The G7, from a climate change point of view, Hubbert from a finite resources point of view and the Club of Rome from a combined point of view, they all predict roughly the same bell-shaped curve. So the bell- shaped curve is going to be it. Notice there is no significant distinction between oil, coal and gas.


Different countries in the world have different economies, different degrees of development, different GDP/capita ratio and so on. But if the world as a whole is projected to walk along this bell-shaped trajectory, it is reasonable to hypothesize every country on itself will follow that trajectory sooner or later. Recent data until A.D. 2014, collected by BP, seem to already give evidence of this hypothesis.

World Consumption

World energy consumption equals 500 exajoules per year. The curve shows growth. So availability is not yet a problem.

FSU Consumption

The former Soviet Union consumes a little less than 40 exajoules. That is 8% of the global consumption and about 25% lower than their peak in 1991. It is clear the Former Soviet Union might never again reach the >50 exajoules they used to consume.

European Consumption

Europe minus the Former Soviet Union consumes 60 exajoules per year. That equals 12 % of the world energy consumption. The decline since 2006 is 18%. That is significant and severe.

North America Consumption

North America consumes 110 exajoules per year. That equals 22% of the world energy consumption. The dedline since 2008 is about 5%. That might not be statistically significant. Nevertheless: there has been no more growth since 2000. On the global timescale 15 years is a significant period of time.
All the above summed up, equals 42% of the world energy consumption. Add Japan, Australia and South Africa, with stagnant or declining energy consumption too, and the conclusion is: “Half of the world’s energy production is consumed in countries with declining or stagnant energy consumption. These are all the mature first world economies.
The decline in energy consumption might be caused by local availability issues or affordability issues. Most probable explanation might be: heavy industries have left these countries, the poor and the elderly –groups with less than average energy consumption- are growing groups in these societies.


World Consumption

The above graph, in Mtoe, is constructed using Hubbert Linearization.  This technique is unreliable unless the available data suggest the bell-shaped curve has already gone thru its first infliction point, and it gains reliability when the peak is reached or passed.  This means there are enough data for the world, for Eurasia and for North America.  There are not enough data for Asia-Pacific, nor for south and Central America, Africa and the Middle East.  To reduce the mathematical problem to a system of two equations and two unknown variables, South and Central America, Middle East and Africa were grouped and called “Scamea” in the graph.
The sudden drop in 2015 is artificial.   It results from the fact that the latest data points in the linearization of the global data are slightly above the trend line.
The results of this exercise are:
–       Europe and the former Soviet Union (Eurasia), has peaked.
–       North America has peaked.
–       Asia Pacific is peaking as we speak.
–       The group consisting of South and Central America, the Middle East and Africa had a large potential for growing energy consumption.


Historical data show the growth in coal, oil and gas consumption vary widely in time and space.  But the decline of coal, oil and gas consumption coincides more or less, especially in times of crisis: Former Soviet Union post 1990 and Europe post 2006.  This supports affordability, rather than availability is the root cause of declining consumption.  This thesis is often proposed by Gail Tverberg. 

World Coal

More than half of the world’s oil production is traded on the international markets.   Still Net Export Mathematics, or the Export Land Model, shows severe concern about future oil availability to importing nations.  For gas only a third of the world’s production is traded on the international markets.  For coal it is only a fourth. Applying ELM on coal or gas will paint a grim future for importing countries as well as for countries dependent on the revenue of their exports.


Peak Oil translates into Peak Oil Consumption. Peak Oil Consumption comes with Peak Energy Consumption. Half of the world has passed the point of maximum energy consumption. This point is marked by large scale economic crisis. Asia Pacific is approaching that point now. For energy importing countries with still growing energy consumption Peak Energy Consumption may rather be triggered by coal or gas, since these global markets are tighter than the oil market. Renewables do not play any role.


All data: BP 2015. BP Statistical Review of World Energy June 2015
Limits to growth, Meadows et. Al., Universe Books, 1972.
G7 Leaders’ Declaration, G7 Germany, 2015.
Hubbert, M. K., Nuclear energy and the fossil fuels, Drilling and petroleum practice, American Petroleum Institute, 1956.
Graphs: by www.mazamascience.com
Other graphs: by author.

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379 Responses to Looking Back 10 Years After Peak Oil

  1. Arceus says:
    Your final sentence is interesting: “Renewables do not play any role.”
    I am assuming you mean renewables do not play any role in peak oil/gas/coal production or consumption. However, I’m guessing you believe that Peak Solar and Peak Wind energy will also occur not long after peak oil/gas/coal.
    • Verwimp says:
      What I mean is: The amount of renewables, nowadays, even in the countries with a lot of renewables (like Spain: a lot of wind!), is still only a tiny fraction of the entire energy mix of these countries. Therefore renewables have no significant impact on the affordability of energy for the local people, nor for the local industries.
      The thesis on renewables was not elaborated in this post, but if there might have been a significant impact of renewables on a global scale, I would have seen it in my analysis of the data. And that was not the case.

      • Doug Leighton says:
        I suspect in some situations hydro-power (renewable) might be an exception. For example in Norway, hydro provides 98% of that nation’s power. And 90% of British Columbia’s electrical generation is hydroelectric which helps industry to be competitive (aluminum smelters). This also allows lower household electrical rates than in some jurisdictions.
        • Verwimp says:
          Hi Doug, I would like to agree with you. But the energy consumption of Norway , which is a huge exception on a global scale, is no longer growing. They, dispite the fact they are still huge oil and gas exporters, seem to have reached a limit too.
          I have no data on BC. They may have an advantage of their hydro.
          • Phil Harris says:
            Hi Verwimp
            A great set of data and framing within LTG models and the projected response to climate change: many thanks. It helps my understanding. But relating to your last sentence, you have supplied a diagram that projects future World Energy, which does include substitution of fossil with renewable energy, which alters considerably the proposed future total energy available over this century (this diagram frames a proposed response to climate change as I understand it).

            Perhaps with the LTG standard scenario in mind, do you have any thoughts also on per capita energy consumption varying regionally? Clearly endogenous population growth rates, discounting inter-regional migration, vary greatly, with some populations at or below replacement levels. Indian sub continent for example shows an extraordinary mosaic of population growth rates from very high to low.
            • Old Farmer Mac says:
              “Clearly endogenous population growth rates, discounting inter-regional migration, vary greatly, with some populations at or below replacement levels. Indian sub continent for example shows an extraordinary mosaic of population growth rates from very high to low.”
              Population growth- or the lack thereof- might turn out to be more important than growth of renewables.
              It is very hard to predict what might happen when it comes to birth rates, but consider the case of Brazil. The birth rate there fell so far and so fast it caught everybody by surprise.
              So far as I can tell this sea change came about mostly because television and maybe the internet allowed younger women there the OPPORTUNITY to see other younger women living their lives without kids or with only one or two kids.From there they took it on themselves to quit having more than one or two kids.
              This could not have happened without the Catholic church losing its grip on sexual mores, and it could not have happened without affordable and readily available birth control.
              Outfits such as ISIS and Dumpling Boy’s NK commies might be able to keep their citizens in the dark, but so far as the rest of the world goes- television and internet are IN.
              Even the most remote Indian village will likely soon have at least one or two small battery operated solar charged tv sets and radios and the villagers will be gathering around whenever the proud owner wants to show it off.
              The demographic transit might accelerate beyond all routine expectations.
              • Fred Magyar says:
                It is very hard to predict what might happen when it comes to birth rates, but consider the case of Brazil. The birth rate there fell so far and so fast it caught everybody by surprise.
                Yep! There are numerous studies on the effects of Brazilian soap operas on the reduction of birth rate in Brazil.
                This paper has explored the effects of television, and in particular of programs such as soap operas, on women’s fertility. Our analysis draws on the experience of Brazil, a country where soap opera watching is ubiquitous and cuts across social classes. We exploit differences in the timing of entry into different markets of Rede Globo, which until the early 1990s had an effective monopoly on novelas production in Brazil, to estimate the impact of Globo availability on fertility choices. We find that, after controlling for time varying controls and for time-invariant area characteristics, the presence of the Globo signal leads to significantly lower fertility. This effect is stronger for women of low socioeconomic status, as measured by education or durable goods ownership. The effect is also stronger for women who are in the middle and late phases of their childbearing life, suggesting that television contributed more to stopping behavior than to delayed first births, consistently with demographic patterns documented for Brazil. Finally, suggestive evidence in the last part of the paper indicates that the results may be interpreted not only in terms of exposure to television, but also of exposure to the particular reality portrayed by Brazilian novelas. Our findings have important policy implications for today’s developing countries. In societies where literacy is relatively low and newspaper circulation limited, television plays a crucial role in circulating ideas. Our work suggests that programs targeted to the culture of the local population have the potential of reaching an overwhelming amount of people at very low costs, and could thus be used by policymakers to convey important social and economic messages
                (e.g. about HIV/AIDS prevention, children’s education, the rights of minorities,
              • Glenn Stehle says:
                “Why Singapore women don’t have more babies” https://www.youtube.com/watch?v=XsyF-IhsLM8
                “Singapore government offers cash incentives to boost the fertility rate” https://www.youtube.com/watch?v=wSLfo5ZxU9c
            • Verwimp says:
              Hi Phil, Thanks!
              Actually I do not believe renewables will stop the decline in energy consumption, once a region plunges into large scale economic crisis. It is clear renewables are a good thing, but in the larger sceme of things, they do not make such a big difference.
              I, unfortunately, do not have acces to a detailed set of demographic data. Sure your question is a good one, but I can’t answer.

              • Takuto says:
                In Germany, Wind and Solar play a major role already now. Electricity production stems over 50% from wind in several states (“lands”) and most home owners in south Germany have solar roofs which deliver 3 – 5 times the electricity that is consumed in that house. However, energy consumption will still fall because all energy consumers need less and less energy, e-cars, LEDs etc. Otherwise there would be no reason energy consumption should fall.
            • wiseindian says:
              India is not a nation in a traditional sense, it’s a collection of countries IMO hence the wide variety of birth rates. Most cultures within India already have birth rates below replacement levels. It’s the dominant North Indian states which are dragging the numbers up.
              It’s a recipe for disaster, I see internal friction in coming years (before resource problems start to happen). Already the seats for legislature are frozen because any change will generate protests mainly from states (cultures) who have significantly reduced their birth rates.
              I guess sometime in future, India will revert to it’s natural state of multiple nations. I just hope some kind of framework is worked out to collectively deal with Islamic invasions from the North.
        • Paulo says:
          95%+ of BC electricity generation is hydro. There is now some wind farms, and occasionally energy is purchased from US suppliers, but with minor conservation 100% is easily obtainable. Once site C is producing there will be excess to our needs.
          There is a cogen site in Campbell River and a gas powered facility on the lower mainland but I believe it is mothballed.
          It is truly an advantage and source of Provincial pride. The Liberals under Gordon Campbell tried to break it up in initial steps towards privatization, raided its coffers to support general revenues, plus contracted over-priced run of the river projects, but that has since been stopped by an angry public.
          • TechGuy says:
            Neither Norway or Quebec are major populated regions. They also have a very unique conditions that permit large amounts of hydro power. No way this can be replicated worldwide, especially in regions that have few water resources available. Using Norway or Quebec to make a point on renewables is ridiculous!
            • HR says:
              Oh do come along tech guy. You’re using common sense. The topic is renewables for goodness sake. Just go with the flow. It’s magical.
        • Old Farmer Mac says:
          HI Doug,
          I posted a link about research into solar storms toward the end of the last main article yesterday. I would appreciate it if you would read the link, which you may have seen already, and perhaps answer a couple of questions I posted with it.
          You are THE MAN in this forum when it comes to astronomy. Thanks in advance!
          • Doug Leighton says:
            I’m certainly not an astronomy expert Mac. My master’s thesis involved plasma physics, specifically magnetohydrodynamics as related to aurora (Alfvén waves) and out of habit I’ve always followed developments in this field. I do follow astronomy research news in a general way (except pulsar physics: I’m an obsessive-compulsive nut case). Any knowledge of Solar Storms and their impact on earth I might have would fit the ‘Wikipedia Expert category’, you know the kind – read a paper, write a paper.
            There is an article entitled: ARE SOLAR STORMS DANGEROUS TO US? which is a good summary.
            As for stars in general I would recommend: STARS HAVE EARTH-LIKE WEATHER.
            http://www.space.com/3994-stars-earth-weather.html but this is kind of esoteric stuff.
            • Old Farmer Mac says:
              Thanks Doug.
              Your link is older, mine is about brand new research and verification of very powerful solar storms now documented within the last thousand years.
              I posted a long comment about the possible consequences with this link yesterday on the older article.
              Hopefully some other folks, especially engineering types familiar with the grid, will comment on that link. My amateur conclusion is that such a storm could easily put us in a mad max scenario, maybe permanently.
              • Techsan says:
                OFM, I view these Carrington Event type solar storms as potentially serious for the power grid, but not something that will wipe out all electronics.
                One should distinguish between the electrical effects of a solar storm (relatively slow) and the EMP (electromagnetic pulse) produced by a nuclear explosion (fast). Nuclear EMP can destroy electronics; the solar storm disturbance won’t, in my opinion.
                The solar storm can induce a large DC current in power lines, causing a utility-scale transformer to move out of its operating region, overheat, and fail. Replacing one of those transformers can take years. Northern areas are more likely to be affected than the southern US.
                Components can be added to the power grid to dissipate the DC current. Because the solar particles move slower than light speed, we can see it coming with solar observation satellites and have an hour to turn things off, losing power for a while but preventing damage.
                We should of course spend the money to add the components to protect the grid.
                A sharp cutoff of oil imports seems to me more likely to cause a Mad Max scenario (though not like the movie, where they were short of nearly everything, but apparently had plenty of gasoline and car parts).
                • Old Farmer Mac says:
                  Thanks again Techsan,
                  My modest knowledge of probability theory allows me to understand that the odds of an extremely powerful storm, one many times larger than the Carrington event, are pretty low, probably less than one in five hundred in any given year.
                  I don’t worry about our getting hit by an asteroid, or invaded by little green men, but I really wonder about the odds of an EXTREMELY powerful solar storm happening, a storm many times more powerful than any we know about.
                  So far as I can tell, the grid is NOT properly protected and the odds are extremely high it will not get the upgrades it needs for this purpose.
                  If it weren’t for the fact of the historical record, we would not know for instance about an extraordinarily powerful earthquake that occurred in the south central part of the USA a couple of hundred years ago. This area is not even MENTIONED when earthquake risks are discussed. Not one person out of a thousand knows about it.
                  • MarbleZeppelin says:
                    Old Farmer, the Carrington event that knocked out telegraph stations and allowed others to run without batteries was exceptional. It was actually two storms arriving at once. The first took hours to arrive the second took minutes (near half the speed of light). The two arrived here simultaneously.
                    So the odds are extremely low that a massive solar storm impingement will arrive. It means multiple storms striking at once, if they are aimed here in the first place. Probably a far greater chance of there being no electricity to interrupt than it getting knocked out completely by nature.
      • MarbleZeppelin says:
        Renewables produce about 7 percent of the world energy use now and are growing. Both efficiency and renewables have a constant downward pressure on energy prices. Due to demand constraints it is difficult to use extra production of energy resources so therefor price can drop dramatically, as we have just seen with oil and natural gas.
        I think the combination of growing renewable energy and energy efficiency is having a very strong downward effect on both price and the peak resource effect. Years ago I predicted this would set up an oscillation effect and it seems to be coming true. What this does is make the traditional fossil fuel business extremely sensitive to price while the resource depletion scenario is causing production costs to rise. Not a good time to be in the oil and gas business where they have to keep pulling rabbits out of the hat to keep up production and then find that success steals away the money. All the while, renewables and efficiency are eating away at demand. If demand falls a little then prices fall a lot.
        • wimbi says:
          And pretty soon there will be some sort of carbon tax or equivalent. It just has to come, given the situation on climate – the essential certainty of some colossal catastrophe in the near future.
          Then what with the ff industry??
          Meanwhile, back in the development labs, the cost effectiveness of wind/solar/efficiency relentlessly pursues its way downward, as is inevitable with any new tech.
          Surely people in ff’s can see all that- and what to do about it- move over to the rising sun.
          • MarbleZeppelin says:
            For a period we are going to have a real mix of energy producers and changes where new industries develop and old ones disappear. The buggy whip syndrome.
            I know my grandparents lived through it. Grew up in stone cabins in semi-wilderness with oxen, got to see the transistion to cars, airplanes, rockets, radio, TV, refrigerators, jets ….
            I guess we and those following will see major disruptions in technology, industry, agriculture and nature. The disruptions will follow faster and faster.

            • Jef says:
              To imply that the period of development that your grandparents saw is at all instructive as to what will happen in the future is ridiculous. That was a period where several sources of cheap almost free energy of a quality and usefulness that can never be duplicated.
              “Alternative/renewable” energy will never support growth or prosperity for humanity on that scale or anywhere near it.
              The “alternative/renewable” energy future you all toss around as if it were inevitable will never happen in a world where whole economies are tanking.
              You might say that an “alternative/renewable” energy boom can employ everyone and save whole economies. This would mean that at least for 20 years or more we would have to ramp up energy use just when energy is declining and becoming more expensive. Not going to happen.
              • MarbleZeppelin says:
                Jeffy said “To imply that the period of development that your grandparents saw is at all instructive as to what will happen in the future is ridiculous. That was a period where several sources of cheap almost free energy of a quality and usefulness that can never be duplicated.”
                First of all Jeffy, your assertions are ridiculous very poorly thought out.
                I was illustrating how fast change was and how it is accelerating, not using it for forecasting.
                The energy back then and now was low quality, inefficient and used inefficiently. It was nowhere near free at a time when making a dollar or two a day was good money.

                You said”The “alternative/renewable” energy future you all toss around as if it were inevitable will never happen in a world where whole economies are tanking. ”
                Oh come on now, renewable energy is available at several magnitudes the rate of fossil fuel and far cheaper and more efficient than fossil fuels. The amount is virtually unlimited compared to fossil fuels.

            • thrig says:
              Accelerating? The Boeing 787 appears rather more 707 than 2707. Bit slower, even. What ever happened to that progress? SSTs and space colonies were an obvious next step to anyone with some log graph paper and a ruler.
              • MarbleZeppelin says:
                SST’s? Obvious next step? Not to anyone interested in conserving fuel or making a buck flying aircraft. The Concorde had 1/5 the efficiency of the A380.
                787? A nice midsize aircraft capable of crossing the Pacific and about 20 percent more efficient than it’s predecessors. Apparently no market for the big ones at the time.
                Passenger aircraft are hitting the 100 mpg/passenger. The new turbofans being installed recently will move that toward 120 pmpg.
                NASA is researching blended body passenger aircraft, which will give a large boost in fuel efficiency and structural strength.
                Gulfstream has new wing shapes that reduce shock wave formation on the wings.

                I flew sailplanes. Hours in the air with no fuel use, but most people don’t want to spend time circling in lift or riding ridge and cloud street lift. Nice and quiet though with a great view. They only hit about 140 mph.
              • MarbleZeppelin says:
                Thrig, maybe you will appreciate the technology that goes into jet aircraft if you watch this. Much of the changes are not very visible.
              • MarbleZeppelin says:
                Things to come in the near future.
                Lockheed’s concept blended body heavy lifter to replace the C5

                • wimbi says:
                  Interesting. I have always liked to look at airplanes. As a teenager, I watched the WWII fighters practicing over my house, from P39’s on thru Mustangs. I could identify them by sound and other odd clues. Lots of them crashed while showing off to their girlfriends.
                  Now down to important business. Can you or anybody tell me a sensible use for a new long range stealth bomber?
                  The only possible opponents to such an anachronism would be russia or china, both of which could easily defeat them with far cheaper means very well known to those skilled in the art.
                  • MarbleZeppelin says:
                    Stealth bombers can be used in both small and large wars. The passive “radars” might detect something but could not be used to aim defensive weapons at the bombers or fighters. The active VHF will be more accurate but again, the problem is hitting a stealth craft, not just detecting it. VHF can be jammed.
                    A few cover fighters could take out any standard jets that might find a bomber in the dark.
                    In any case, the detection will be much later than with non-stealthy aircraft, giving little time to respond. If they are detected at all.
                    The major use for stealth aircraft is to make the enemy be really nervous about attacking or sending up it’s non-stealth aircraft.
                    Look up the P-61 Black Widow. Not good to have one of those or a Mosquito on your tail in the dark.

                    There is one being rebuilt to fly in Reading PA.
                    The Widow’s Web
                    http://www.maam.org/p61/p61_recovery.htm http://www.maam.org/p61/p61_rest.htm
                  • wimbi says:
                    Well, no place here for deep discussion. What I was thinking about well known antidotes was swarms of little drones. All quite intelligent and with hyper active radar.
                    And all recoverable.
                    Gawd! what a lot of work on that wreck!
                    I remember the P61. Thought at the time, just use a Mossy, or a Ju88. Saves lots of time and money.
                  • MarbleZeppelin says:
                    How about robotic air hounds? They use real time gas chromatography to sniff out the exhaust fumes and chase right up it’s tail.
                  • hightrekker23 says:
                    I kept thinking how impressed a fifties audience would have been if they’d known what we could do by now—only to realize, “Actually, no. They wouldn’t be impressed at all, would they? They thought we’d be doing this kind of thing by now. Not just figuring out more sophisticated ways to simulate it.”
                    That last word—simulate—is key. The technologies that have advanced since the seventies are mainly either medical technologies or information technologies—largely, technologies of simulation. They are technologies of what Jean Baudrillard and Umberto Eco called the “hyper-real,” the ability to make imitations that are more realistic than originals. The postmodern sensibility, the feeling that we had somehow broken into an unprecedented new historical period in which we understood that there is nothing new; that grand historical narratives of progress and liberation were meaningless; that everything now was simulation, ironic repetition, fragmentation, and pastiche—all this makes sense in a technological environment in which the only breakthroughs were those that made it easier to create, transfer, and rearrange virtual projections of things that either already existed, or, we came to realize, never would. Surely, if we were vacationing in geodesic domes on Mars or toting about pocket-size nuclear fusion plants or telekinetic mind-reading devices no one would ever have been talking like this. The postmodern moment was a desperate way to take what could otherwise only be felt as a bitter disappointment and to dress it up as something epochal, exciting, and new.
                  • MarbleZeppelin says:
                    Whoever wrote that piece doesn’t have a clue about modern advances and technology. Why even your hair shampoo has very advanced technology. Every area has advanced. Aircraft, cars, trains, paper, electronics, almost all materials have made huge advances. Heating, insulation, just about everything has advanced technologically.
                    Our understanding of the world and how it works is light years past the 1950’s.
                    Definitely written by someone who is too lazy to even look past the surface, in fact not even look at the surface.
              • hightrekker23 says:
                I agree– with the exception of biology, we have not made the progress of the past.
                Physics, aside from some elegant is just sorting out the Standard Model of the 1970’s.
                Te silly com people do make fun games and toys– but seem to need the Russians as a back up for the big projects like space.
                Google has made a oracle machine- sort of, but pales in what Haber did.
      • John B says:
        World power generating capacity in 2014 included 27% from renewables.
        To suggest that this number is a “tiny fraction” is uninformed at best. Or more likely some doomer fantasy delusional thinking.
        Also, solar power production has consistently doubled every 2 years for the past 20 years. This type of exponential growth rate, simply cannot be ignored.
  2. Ves says:
    Hi Caelan,
    Here is some clarification from the end of last thread.
    Here’s how things go wrong. A business gets a $10,000 start up loan. Out of that loan they pay say $6500 in individual wages, salaries and dividends and the rest of if they use to purchase equipment, supplies, marketing, energy costs, insurance etc, etc. Now, all of the $10,000 originally borrowed must eventually be figured into the prices of the products or services that the business must charge in order to make a profit and remain in business. So as this process goes on through time there is a rate of flow of prices that must be at the very least $10,001.
    This shows that price of inflation and so an ever increasing loss of your purchasing power is built into the system. Hence current free market theory is systematically flawed. This uncorrected and ever widening “Gap” in the rate of flow of income compared to price is the most and unrecognized fact that brings the system into imbalance.
    For over a year that imbalance between input price and flow of income for oil industry was over 60%.

    • Clueless says:
      Again, I am clueless. I borrow $10,000 [think of renting money] and 10 years later I have to pay it back plus $1 [essentially a zero interest rate environment,which is what we now have]. You then say – “Hence current free market theory is systematically flawed.” WTF???
      In the past 10 years, your posited “ever widening “Gap” in the rate of flow of income compared to price” has been shrinking like crazy because of declining interest rates. [I am of the opinion that low interest rates CAUSE deflation. (Because, in theory, with zero interest rates there is no cost of capital. You just keep rolling over the zero interest loan and never pay it back.)]
      Actually, I do not think that I understand one single word of what you wrote. But, since this web site seems to be the premier web site with respect to money, and economics [almost everybody on this site claims to know how to run the economy, manage the money supply, set economic policy better than the Federal Reserve, or anyone else in the world] I am sure that you are wealthy beyond my wildest dreams.
      Maybe you can describe a better “theory” to replace the systematically flawed free market theory. Might be worth a Nobel Prize in economics.

      • shallow sand says:
        Clueless. I know very little about many things but I do think zero interest rates have been a negative for most of the time.
        Maybe ok during the “emergency” of 2008-2009. But starting in 2010 there should have been small increases made every so often, maybe 1/4% every six months. By now we would be at 2.5% or so.
        We have a rapidly aging population who is earning no income. To a simple thinker like me, that isn’t a good thing.
        I worked at a bank some during summer breaks in college. I recall all of the retired people who came in, they all had their savings in CD’s that were paying decent interest rates.
        I know you have done fine by being a savy investor, but I do not think you are the rule, but the exception.
        My grandparents all lived through the depression, none ever owned stocks. I have a finance degree, which granted doesn’t mean much, but should at least theoretically give me a leg up, but I am not so confident trading stocks.
        The idea was to save and pay into social security for 40-50 years and then be able to retire. Financial repression has cut into retirement income big time, which has surely hurt the US economy in many ways.
      • Ves says:
        This is all just cost accounting. Clueless, have you heard the stories from grandparents what they remember about deep recessions or depressions? They will always say “there was just no money”. You can even go to Greece today and hear the same thing. I have explained how the lack of purchasing power is built into the system in two paragraphs. What is your explanation for “there is just no money”? If possible in 2 paragraphs.

        Anyway this post was just tied from last thread from the Enno’s post on and it had to do with KSA oil production and profitability of the marginal producers.
        • Caelan MacIntyre says:
          Hi Ves,
          Thanks for the elaboration. I would like to read it again, as well as Watcher’s in the previous thread, and try to digest and think about it some more.

        • Caelan MacIntyre says:
          Usury… is today the practice of making unethical or immoral monetary loans that unfairly enrich the lender.
          The term may be used in a moral sense—condemning taking advantage of others’ misfortunes—or in a legal sense where interest rates may be regulated by law. Historically, some cultures… have regarded charging any interest for loans as sinful.” ~ Wikipedia, Usury entry
          “Nowadays the fractional reserve banking system counts fiat currency instead of gold as reserves against its lending. The demand deposit money created by the private banking sector is a large multiple of the amount of fiat money issued by the government… Under our present system, money is currency plus demand deposits. Currency is created out of paper by the government, and no interest is charged for it; demand deposits are created by banks out of nothing (up to a large limit set by small reserve requirements) and interest is charged for it. For example, when you take out a mortgage to buy a house, you are not borrowing someone else’s money deposited at the bank. The bank is in fact loaning you money that did not exist before it created a new deposit in your name. When you repay the debt, it in effect destroys the money the bank initially loaned into existence. But over the next 30 years, you will pay back several times what the bank initially loaned you. Although demand deposits are constantly being created and destroyed, at any given time over 90% of our money supply is in the form of demand deposits.” ~ CASSE
          “Our mainstream money system is based on competition, selfishness, greed, individual gain, instead of cooperative values, altruism, good will…
          The mainstream money system destroys communities. It affects everything in our lives…

          Outside the USA, there is a worldwide movement to replace the dysfunctional money system that exists– all the individual national currencies.
          One of the biggest hurdles is people’s ignorance of how the mainstream money system works… Mainstream money is issued by banks, and those banks have an agenda… they’re giving a public service in providing a medium of exchange which we all use– we have to use– but at the same time they have a for-profit agenda. And there’s a contradiction there. In fact, if you think about it, the banks issuing money is anti-democratic
          If everybody knew the full facts about how money is issued, how it’s put into circulation, who is issuing it, how they have power and control over the economy, and over individuals’ lives, I think there’d be a lot of very unhappy people around.” ~ Francis Ayley
    • Enno Peters says:
      I think what you miss is the added value that the business provides for its customers, compared with its inputs. A shop selling apples that charges 50% above the price for which it bought the apples, makes perfectly sense for its customers.
      The capitalistic system is the best invention mankind has ever come up with. Just look at the improvement in human well being (life expectancy, child mortality, etc) over the last 400 years. It just needs a very good oversight, which many governments are struggling with to provide.
      • wimbi says:
        The capitalist system sure has been good to me. On the other side of it, it has been hell on the future where my grandkids will be living.
        When I got to the stage where I started my own business, I was so naive that I was shocked to see the lawyer put down as the purpose of the company “to maximize income (narrowly defined as money) to the stockholders!
        I had thought the purpose of a company, and of a life, was to make the world a better place. That was the income I had hoped for.
        Nope, that company went on to make money for me and lots of others, by making stuff like things that whizzed around the only planet we have looking for things/people to kill. Very effectively, too.
        This condemns me to spend my last minutes trying to atone for my sins. That’s why I keep pushing for a switch of priority from making killers to making things that make the world a better place.
        Needs a good oversight! That’s for sure. Got ideas?
        • Glenn Stehle says:
          It looks like the anti-capitalist crowd, Naomi Klein being a prime example, has pretty much abandoned peak oil arguments in favor of global warming arguments.
          Craig Collins, however, argues that to abandon peak oil arguments is a mistake:
          But even if they’re [peak oil theorists] wrong about total collapse, peak hydrocarbons are bound to trigger escalating recessions and accompanying drops in carbon emissions. What will this mean for the climate movement and its galvanizing impact on the Left?
          Klein herself acknowledges that, so far, the biggest reductions in GHG emissions have come from economic recessions, not political action. But she avoids the deeper question this raises: if capitalism lacks the abundant, cheap energy needed to sustain growth, how will the climate movement respond when stagnation, recession, and depression become the new normal and carbon emissions begin falling as a result?
          Klein sees capitalism as a relentless growth machine wreaking havoc with the planet. But capitalism’s prime directive is profit, not growth. If growth turns to contraction and collapse, capitalism won’t evaporate. Capitalist elites will extract profits from hoarding, corruption, crisis, and conflict. In a growth-less economy, the profit motive can have a devastating catabolic impact on society. The word “catabolism” comes from the Greek and is used in biology to refer to the condition whereby a living thing feeds on itself. Catabolic capitalism is a self-cannibalizing economic system. Unless we free ourselves from its grip, catabolic capitalism becomes our future.
        • Glenn Stehle says:
          A prominent Marxist thinker, Victor Wallis, penned this response to the “green capitalists,” or what I frequently call the Green Utopians, and is germane to your statement, “That’s why I keep pushing for a switch of priority from making killers to making things that make the world a better place.”
          Are there any limits to “making things that make the world a better place”? And if there are limits to the production and consumpiton of “things,” what does this mean for the future of capitalism? To the future of the polity, culture and society of the United States? To human flourishing?:
          Here’s Wallis:
          At a conceptual level, it is clear that “green capitalism” seeks to bind together two antagonistic notions. To be green means to prioritize the health of the ecosphere, with all that this entails in terms of curbing greenhouse gases and preserving biodiversity. To promote capitalism, by contrast, is to foster growth and accumulation, treating both the workforce and the natural environment as mere inputs….
          The technological fixation has been a constant of capitalist development. Initially focused on maximizing labor productivity, it is continuously replenished by ever more miraculous applications, especially in the spheres of communication and of genetic engineering. The unending proliferation of innovations—a hallmark of late capitalism—lends credence, in public perception, to the idea that there is no challenge that technology cannot overcome….
          The upshot of all these considerations is that the question of how to supply the world’s currently growing energy demand without continuing recourse to carbon dioxide-producing fossil fuels—coal, oil, and natural gas—has not yet been solved. In view of the problems associated with all the alternative energy sources, a radical and comprehensive reconsideration of the demand side of this equation would seem to be called for. This is the essence of the socialist response: while encouraging the use of various safe-energy alternatives, it can accept the fact that these alternatives are ultimately limited in their total power-generating capacity, and therefore that the world’s aggregate energy consumption will actually have to be reduced.
          I think Wallis has cherry picked and distorted Marx’s thought, because Marx was without a doubt every bit as much of a Positivist and a product of the Enlightenment as what Adam Smith was.
          Nevertheless, I do like what Wallis has to say, even though I disagree that his thinking enjoys Marx’s imprimatur.
          • Ralph says:
            It has been obvious to me for a decade that renewable energy and other collapse prevention strategies would not prevent collapse, but could delay it for some time. Limits to exponential growth (population or economic) cannot be bypassed by substitution. Since human population continues to grow, and irreversible damage to the environment and biodiversity is accelerating, the best long term strategy to minimise human suffering and environmental damage is to trigger deep collapse as soon as possible, so that population and economic activity are reset back towards sustainable levels as quickly as possible.
            To this end, the best strategy is to identify the most supply constrained and economically irreplaceable resource, and maximise its consumption whilst actively suppressing substitution strategies. It is clear to many here that oil is that resource, so we should all in the interests of humanity suppress all efficiency policies, substitution with alternative resources or technologies, and actively encourage non-essential consumption.
            Therefore in the best interests of humanity Ron should immediate close and remove this website, and actively troll the few remaining PO aware sites out there, and send campaign contributions to the most corrupt wanabe political leaders he can find. At the same time of course he should continue personal and local preparations to survive a low energy and resource constrained future, because we will need as many intelligent and far-sighted community leaders as we can get if we are to survive the transition at all.
            Needless to say this post is partly, but not entirely, /sarc
          • Glenn Stehle says:
            There is no doubt that Posivism and Progressivism are linchpins of the “national faith” of the United States.
            As Thomas E. Buckley explains, they were part of the “political theology” of Thomas Jefferson, which laid the foundation for “a set of shared beliefs fundamental to the development of a national faith.”
            The decay of traditional and unjust political institutions and the remarkable success of the scientific conquest of nature unloosed the hope that all impediments to human happiness would be progressively removed.
            If we fast-forward to the present, we see the Positivist faith is still very much alive in the United States. As Matthew Schneider-Mayerson writes in Peak Oil, “most Americans have an implicit faith in the development of new technologies to provide energy for future generations.”
            In his surveys of more than a thousand peakists which he conducted in 2011, however, Schneider-Mayerson found that most peakists did not share this fundamental tenet of America’s national faith. He quotes one promient peakist: “It’s too late for cheery myths about how technology, wind hybrids, biofuels, hydro-electric dams, solar energy, or hydrogen will save us and let our society continue as it is.”
            “Using Barbara Ehrenreich’s and Karen Cerulo’s analyses of American optimism,” Schneider-Mayerson goes on to explain, “I highlight the ways that peakism deviated from the American ‘dominant social paradigm’ of implicit faith in technological and the inexhaustibility of crucial resources.”
            So since 2011, have peakists converted to the “dominant social paradigm”? Or are you merely attempting to convert them?
            And furthermore, just to set the record straight, at no time did Wallis or I ever assert “we should all in the interests of humanity suppress all efficiency policies, substitution with alternative resources or technologies, and actively encourage non-essential consumption.”
            That is pure straw-manning.
            • Ralph says:
              No that is not your assertion – it is mine!
              I sometimes wonder if The Oil Drum was killed off because it’s owners saw further attempts at promotion were counter productive. I think the peak oil ‘movement’ can never exist because the more clearly you see our predicament, the less you want to talk about it. A bit like the deep/dark greens.
              • Is peak oil a “movement”? What the hell does that mean. I mean when you refer to something as a “movement”, just what the hell are you saying. How can a geological event be a movement? It is just something that is happening, it is not a movement of any kind.
                • Bob Nickson says:
                  Well, if the geological event is seismic…
                • Ralph says:
                  Schneider-Mayerson talks about it being one. I don’t think it could ever become one.
                • Old Farmer Mac says:
                  We have an ongoing civil rights movement in this country, and there is a movement afoot to prevent people from owning firearms, and there is an environmental movement pursuing a large number of goals such as control of over fishing and limiting air pollution .
                  We have LOTS of movements.
                  But I can’t say there is any thing afoot that can be called a peak oil movement.
                  The small handful of people who follow the issue in blogs such as this one might reasonably be called a subset or clique of people involved in the larger environmental movement.
                  • SW says:
                    I don’t believe that there is a movement to prevent people from owning firearms. I think that is a ridiculous absolutist over-reaction to any sort of sensible regulation to firearm ownership. The camel’s nose under the tent scare stories generated by the paranoid NRA crowd. THere was a time those folks advocated responsible gun ownership. Now it is basically a gun for every lunatic and forget about who gets killed in the crossfire. Anyone who dares to challenge that is automatically assumed to be trying to take away your penis extension.
                • Boomer II says:
                  Is peak oil a “movement”? What the hell does that mean.
                  I don’t see it.
                  I’m here to know how quickly the Bakken might peak to better understand the economics for fracking.
                  I read all the comments/predictions about a future without oil, but I don’t think those are directly tied to peak oil. What happens as a result of peak oil is not the same as discussing the geology and economics of oil exploration.
                  Since the Carter days I have been aware that oil is not unlimited. And I have been amazed that more planning wasn’t started then to prepare for the decline. But I don’t acknowledging a limited resource is the same as a “movement.”
                  • Jon says:
                    Spot on. Like you I am just trying to be prepared for the interesting times ahead
              • Old Farmer Mac says:
                I was and remain in contact personally with some of the people who created and kept TOD up and running. Nobody “killed” TOD, it just died mostly because the people running it had been doing it for a long time and got to the point that they wanted to get on with OTHER THINGS.
                It could have evolved, or stayed much the same and continued to thrive, with the emphasis moving to other topics.
                Running a site that big with that much content is a hell of a lot of work for no pay.
          • Glenn Stehle says:
            One more thing.
            Progressivism, as many of the descendants of slaves and native Americans can testity to, in addition to its positive side has had a dark side to it too. And, as Arundhati Roy explains, the dark side of Progressivism has not gone away:
            However, if we look to the future, and if the Tsars of Development believe in their own publicity, if they believe that There Is No Alternative to their chosen model for Progress, then they will inevitably have to kill, and kill in large numbers, in order to get their way.
            If you look at a map of India’s forests, its mineral wealth, and the homelands of the Adivasi people, you’ll see that they’re stacked up over each other. So in reality, those who we call poor are the truly wealthy. As the globalized corporate economy strengthens its grip on our lives and our imaginations, its beneficiaries have united and seceded into outer space. From there they look down at the forests and river valleys where the poor live and see superfluous people sitting on precious resources. They are puzzled. They wonder: What’s our water doing in their rivers, what’s our bauxite doing in their mountains? What’s our iron-ore doing in their forests? The Nazis had a phrase for superfluous people — überzähligen Essern, superfluous eaters….
            Today, words like ‘Progress’ and ‘Development’ have become interchangeable with economic ‘Reforms’, Deregulation and Privatization. ‘Freedom’ has come to mean ‘choice’. It has less to do with the human spirit than it does with different brands of deodorant. ‘Market’ no longer means a place where you go to buy provisions. The ‘Market’ is a de-territorialized space where faceless corporations do business, including buying and selling ‘futures’. ‘Justice’ has come to mean ‘human rights’ (and of those, as they say, ‘a few will do’).
            This theft of language, this technique of usurping words and deploying them like weapons, of using them to mask intent and to mean exactly the opposite of what they have traditionally meant, has been one of the most brilliant strategic victories of the new dispensation. It has allowed them to marginalize their detractors, deprive them of a language in which to voice their critique and dismiss them as being ‘anti-progress’, ‘anti-development’, ‘anti-reform’ and of course ‘anti-national’—negativists of the worst sort. Talk about saving a river or protecting a forest and they say, ‘Don’t you believe in Progress?’ To people whose land is being submerged by dam reservoirs and whose homes are being bulldozed they say, ‘Do you have an alternative development model?’ To those who believe that a government is duty bound to provide people with basic education, healthcare and social security, they say, ‘You’re against the Market.’ And who except a cretin could be against a Market?
            As writers we spend our lives trying to minimize the distance between thought and expression, trying to give form to our intimate, most inchoate thoughts. This new Development language does the opposite. It is designed to deceive, to mask intent.
            This language heist may prove to be the keystone of our undoing.
            Two decades of this kind of ‘Progress’ in India has created a vast middle class punch drunk on sudden wealth and the sudden respect that comes with it—and a much, much vaster, desperate underclass. Tens of millions of people have been dispossessed and displaced from their land by floods, droughts and desertification caused by indiscriminate environmental engineering—the massive infrastructural projects, dams, mines and Special Economic Zones. All of them promoted in the name of the poor, but really meant to service the rising demands of the new aristocracy. http://www.literaturfestival.com/intern/reden/arundhati_roy_engl
          • wimbi says:
            Thanks for those replies.
            My own idea of a better place is very far removed from the usual “more of everything” idea.
            If I have enough lumber, I would far rather have more forest than yet more lumber. And to me, enough is not a whole hell of a lot and is usually fairly easy to get.
            I have done enough travel to know that most people don’t in fact have enough, but I also, being an engineer habituated to think up solutions, think it would not be a huge problem to get them enough without ruining the future.
            India, for example, has enormous reserves of solar they aren’t even thinking of exploiting, and in ways that are straight out easy and cheap to do. Example, village solar ovens.
            I tried to sell that idea without much luck. They surprised me with the remark that such an oven could also burn bodies, and save a lot of effort gathering wood.
            It would behoove the wealthy to assure that each Indian, and all others who don’t have enough, to get enough. Fast. Before they are forced to move into the wealthy’s front room.
            My vision of a better world is closer to David Korten’s “Change the story, change the Future”.
            And so on.
            Of course, population is a huge problem. I think education by way of such things as soap opera has been proven to work, fairly fast. My Indian friends told me “Dallas” helped the population problem far more than all government efforts.
            I have funded that sort of thing. Don’t know, but think I got a satisfactory return on investment.
          • It doesn’t matter because Marx was wrong. Marx is relegated by real life to academia and three red flag waving communist party members.
      • Ves says:
        Okey. let’s just stop for a second and have a look at where we started with this conversation. My above post started when Caelan asked me to clarify the post where I responded to Watcher question: “Why there is always a question in the media that SA/OPEC somehow has an obligation to cut?”
        So my post was about lack of purchasing power of consumers and NOT about different “ism”. Problem with this forum is that commentators are not mindfully reading so we start with oil and end up with totally irrelevant conversation. As you can clearly see Clueless admits in his post that he does not understand one word about what I am talking about but feels urge to comment. May I ask what people are commenting about if they don’t understand comment in the first place? This is hilarious.
        So why there is always a question in the media that SA/OPEC somehow has an obligation to cut? And who needs whom?
        It is good question and resident forum oil “experts” can’t figure that out. Well in order to extract the marginal oil like shale or tar in the long term in the current “extend & pretend” free market system you need appearance of financial benefit to extract these marginal plays. But what do you do when there is not even remote financial benefit? Marginal plays have 2 problems: geology (declining rates) and lack of purchasing power of oil consumers. I have explained how lack of purchasing power is built into the system. So what needs to happen is that someone else needs to produce less in order price to rise for marginal plays. Well apparently no other world producers are interested in what Harold Hamm and Bloomberg oil analyst would like them to do. So in the meantime, until dust settles in ME, we are reading all this nonsense about drill efficiency, technology improvements of marginal oil plays. But number of active rigs and oil production in NA are going down. That is just cold fact.
        • Old Farmer Mac says:
          Financial decisions, strictly speaking, are not NECESSARILY made on the basis of generating a profit. The distinction is somewhat subtle,and merely a technicality in mathematical terms, but sometimes the right decision is to run one business or industry or another AT A LOSS in order to prevent even larger losses elsewhere.
          Generally speaking, I don’t have much use for Watcher’s arguments about prices etc not really mattering, because they absolutely do, in the longer term at least and usually in the short term as well.
          But let us suppose we can keep oil supplies up to the amount currently needed to maintain bau by subsidizing the producers. In reality, they will be running at a loss but society will be making up that loss for them. The every day or nominal price of oil could be way above or way below the true price of it, meaning with the subsidy included.
          Now let us suppose we could subsidize the tight oil industry to the tune of two hundred billion bucks annually, this figure being one I pulled out of thin air.
          IF the extra oil thus provided keeps the wheels of business as usual turning without too much squeaking, and without SEIZING UP, the subsidy would be a BARGAIN in comparison to the alternative- economic depression due to a major shortage of oil. Of course at some future time, the subsidy would eventually grow so large society would simply be unable to pay it.
          So -When Watcher says you gotta have it, you WILL HAVE IT, price be damned, he DOES have a point. UP TO a point, anyway.
          Now as far as every body laying the responsibility for a cut at Saudi feet, that’s like a bunch of older kids expecting their parent’s to bail them out of financial troubles for no other reason than the parents bailed them out IN THE PAST.
          It is not in their overall best interests, as they see things, for the Saudis to cut production, or else they would have done so.
          FIRST point. The Saudis are engaged in a defacto economic / military war with some very worrisome enemies, and the current cheap price of oil is working very much in their favor. They have enormous reserves, their enemies do not.
          SECOND point. The Saudis may not yet be satisfied that the rest of the OPEC countries are CONVINCED the Saudis will not bail out their cheating asses again, as has happened in the past.
          The Saudis are perhaps waiting for some SERIOUS guarantees from the rest of OPEC, and maybe some outside producers as well, that quotas will be honored.
          Third, the House of Saud is currently embroiled in a succession crisis , and may be running on autopilot, for now. Once a new leadership is in place, and has had time to consolidate control, the new leadership may abandon some current policies and put some new ones in place. Such policy changes might include cutting production.
          Fourth, there may be some unofficial cooperation taking place between the USA and SA. Cheap oil is very much in the overall economic and political interests of the USA for now. It is helping our allies and our own people to a far greater extent than it is hurting us, excepting of course the people in the domestic oil patch.
          Politics is a hard ball game, and politicians do not hesitate to throw one percent of voters off the bus and under the wheels to curry favor with the other ninety nine percent, regardless of party affiliation.
          I am NOT saying anybody from Foggy Bottom is twisting Saudi arms to keep the price of oil DOWN, but unless I am a DUNCE , I am on rock hard ground saying our diplomats are NOT pressuring the Saudis to cut production.
          Incidentally I seldom have much good to say about any politician, but imo the OBUMBLER will go down in history as an average or better than average president overall. Maybe even a really good one, SO LONG as he does not overreach and hand control of the federal government to the R’s for a a decade or two or three as a result.
          Yesterday or day before I pissed Ron ( Sorry, Ron! ) off by saying Obama doesn’t give a a damn about the oil patch. I do believe he cares at the personal level, but that his hands are tied at the presidential level by party and national economic considerations.
          A republican would do precisely what Obama has done when it comes to oil prices, except a republican might allow oil exports and approve the Keystone. Neither action would have any serious impact on the price of oil, in terms of the really big picture.
          • Yesterday or day before I pissed Ron ( Sorry, Ron! ) off by saying Obama doesn’t give a a damn about the oil patch.
            No, that was not what you said. You referred, several times, to Obama as “Obumbler”. That was what pissed me off. Now you might have said Obama had bumbled several things, and named them. That would have been your opinion and I would have respected that. But you did not. You called him Obumbler because he did not order the oil companies to cut production to support oil prices.
            Really Mac, you could have done better than that.
            • Old Farmer Mac says:
              Ok, he bumbled the roll out of OCare worse than any other major initiative I ever heard about. He pissed off the Canadians who are our closest friends in the whole world by denying approval of the Keystone pandering to his hard core green supporters , even though anybody literate in energy matters knows that the tar sands oil will get to market anyway, and maybe via the hands of our worst potential enemies.
              He failed to see to it that his justice department prosecuted any banksters. This one issue alone, combined with his going along with the construction of an American police state apparatus spying on ALL of us has been a truly MAJOR failing in my estimation.
              I generally refer to Donald Trump as the CHUMP and HRC as the Harpy ( not here ) or worse and I can’t remember ever saying anything in this forum positive about any of the current republican candidates or recent republican presidents.
              I might have had a few nice things to say about Jimmy Carter maybe, and I recently said I will vote for Bernie Sanders if he gets the nomination. I also said that if the election comes down to HRC and the Chump I will stay home and get drunk and cry for my country.
              I have said that Obama is going to go down a big winner in historical terms for the Democrats, but that OCARE was and may remain a Pyrrhic victory for the democrats since it resulted in the R’s wiping the floor of congress with them and may yet be one of the key issues in the next election. It probably WILL be a key issue although it may not get that much publicity.
              If the R’s win, they have a shot at appointing a lot of Justices to the Supreme Court over the next eight years.
              Coming from me, OBumbler is actually pretty close to an AFFECTIONATE nickname. Obama has accomplished a good bit when it comes to reforming drug laws, and he has done more to preserve the environment for sure than any republican would have done.
              On the other hand he has done next to nothing to improve the schools of this country- although he had the political capital to do something, after the same fashion Nixon ( Tricky Dick) had the capital and credentials that enabled him to open relations with the Chinese.
              If he could run for a third term, I would vote for him in preference to the CHUMP for damned sure, and in preference to most of the current R candidates, maybe all of them.
              I will not refer to Obama as the Oxxxxx again in this forum since it offends you.
              Something tells me that if I live another twenty years I will be looking back on his administration as the part of the GOOD OLD DAYS.
        • shallow sand says:
          Ves. Sorry about my response to clueless re zero interest rates, it was just that, and no comment on your post.
          • Clueless says:
            SS – give me a break!
            Your response to me contained your thought of “Financial repression .” WTF is that???
            I just said that, in my opinion, zero interest rates produce deflation! That is what you [based upon your posts] are suffering from. That is, all of these companies could borrow to drill at essentially a zero interest rate, so they never would have to pay it back [if they can keep rolling the loan]. So, they do not have to make any money to stay in business. Which is what is screwing YOU!
            Based upon current economics, their loans should be north of 20%. Which is still less than a lot of credit card interest.
            So, what is it that you are “sorry” for???
            I guess that a Masters Degree in Accounting and a minor in Economics has been wasted on me.

            • shallow sand says:
              clueless. I do not disagree with you re 0 interest rates. I didn’t (and still don’t) understand what you and Ves were discussing, honestly, other than you believing low interest rates are deflationary (which I agree with).
              I was apologizing because I thought maybe it seemed like I was commenting on more than that.
              I’m not so bright sometimes, especially when trying to skim thru stuff here. I have reread the posts above, still don’t follow. Sorry I’m dense.
              • Ves says:
                You are not dense.
                Here is again my point:
                Under the current financial system only A as purchasing power is available while the total cost of production is never less than A (salary) + B (other costs). So the total rate of flow of price (A+B) will always tend to exceed the rate of flow of total individual purchasing power (A). So you have constant deficit of individual purchasing power due to inherent price inflation. So the self liquidating market is currently impossible. System is unstable even during the so called “boom”

                • Clueless says:
                  Ves – “Salary”???????
                  Warren Buffett does not take a salary, yet has billions of $ to spend. Other billionaires that you might have heard about that took/or are taking virtually no “salary” include Zuckerberg, Jobs, The Walton family, the Kennedy family, the Rockefeller family, the founders of Google, and hundreds of others.
                  Now, to the people you have never heard of: The owners of virtually every small business in America who take dividends, sell stock, borrow money using their businesses as collateral, etc. and essentially spend far more than they reap in “salary.”
                  I never inherited one dime. I worked almost 50 years before retiring. And I have made and spent more from investments than I earned in salary. I will not say how much I earned, but I probably averaged earning enough salary by the 4th month that social security taxes were no longer being withheld.
                  I personally have met hundreds of people who inherited more than they will ever earn in salary.

                  Short conclusion: Your formula is defective.
                  Without even knowing, I will go out on a limb and make a clueless “guess” that Shallow Sand has received most of his income throughout his life from something other than by receiving a “Salary.”
                  • shallow sand says:
                    clueless. No comment, other than to say there are “reasonable compensation rules” which I believe IRS will enforce in an audit.
                    Not that there is much of any compensation of any kind in the last year re: stripper oil wells.
                  • Ves says:
                    Do you really think that oil just magically appears out of the ground for Shallow Sand?? Really??? It never appeared to you that there are some actual human beings that are doing the drilling/maintaining/operating/trucking that oil and require the “salary”?? Really??? That “salary” (A) + other cost of supplies and machinery and equipment (B) forms the total rate of flow of price for that one barrel of oil. Do you get that? That flow of price (A+B) is always greater than the purchasing power (A).
                    A+B > A

                    I am sorry to say but you really don’t get this very simple cost accounting concept. Few months ago we debated and you displayed lack of understanding that stock market is zero-sum game and you are boasting that you are savvy investor. I would say you are very lucky investor. It is no problem if we don’t know some things. I don’t know lot things like for example why anybody is still drilling. Problem is if do not accept that maybe we don’t know some things. Not accepting is what always causes you suffering.
            • shallow sand says:
              I’m sorry (was apologizing for) that I had no clue what you and Ves were discussing, other than ZIRP, which I agree has screwed us possibly more than anything else.
      • Caelan MacIntyre says:
        “The capitalistic system is the best invention mankind has ever come up with.” ~ Enno Peters
        Which is irrelevant if humans can’t manage their ‘invention’. And this appears to be the case.
        “Just look at the improvement in human well being (life expectancy, child mortality, etc) over the last 400 years.” ~ Enno Peters
        Which is also irrelevant if it doesn’t take into account longer time scales, such as the cumulative negative effects (social, spiritual, environmental, etc.) of this so-called capitalism.
        “It just needs a very good oversight, which many governments are struggling with to provide.”~ Enno Peters
        And less naive statements from those who seem to think that it just needs a very good oversight from the current crops of so-called government.
        Illusion, from the album, ‘Unknown Way’
        • Caelan MacIntyre (comment sponsored by Tesla Motors) says:
          Human energy, human ingenuity, the hard-work ethic, and much of the results in the current context:
          (For increasingly-‘expensive’ oil, just add progressively more boots and a heavier energy-transfer system.) (But, hey, the energy transfer system works just fine. And repeat after me; ‘technology will solve our problems’. Now say that over and over again until we/they believe it.)
          (The organisms that created all that oil could also represent the human figure, seeing as we are talking about energy and resource squander.)

          • MarbleZeppelin says:
            Above message sponsored by the Order of Luddites.
            Technology does solve millions of problems. We are just scratching the surface of sustainable natural technology and you want us to stop.
            I suppose you just got right up and ran when you were a baby. Never laid there pooping in your pants, or crawling around wiping up the dirty floor. Nope not you, right up to running from day one.

            • Caelan MacIntyre says:
              Baby steps? Then it appears as though we might want to wriggle out of our diapers and take our thumbs out of our mouths very soon. How much time do you think we’ve got? Even babies eventually grow up, but maybe there’s an implicit assumption that we as a species have not been saddled with some sort of fatal mutation– in which case, the diapers stay on.
              …While our figure just keeps spinning the wheel of technology until it can’t anymore, and maybe disappears forever by its own making.
              Stepping Stones (1991)
              We won.
              Stepping on them now.

              The stones in our crossing
              Of a shallow, fast-moving river
              Of evolution

              With many a careless step,
              Some fragile stones are crushed
              Beneath stumbling footwork

              Fossils to study at a later date,
              Lessons of failure

              Their descendents might have had
              Our abusive privileges

              The river grows wider,
              The stones become fewer and far between
              As our worried feet get wetter…

              Will we create our own stepping stones?
              Or fall in, to join the thunder-lizards
              Of our making?

              Or become the stones, themselves,
              Stepped upon by our
              Own mistakes
              Stay tuned…
              • MarbleZeppelin says:
                How much time do I think we have? Personally, I think we don’t have much time. As a species, I think we are radiating already, and with our ever increasing knowledge of genetics we will radiate over the next few centuries. There will be multiple types of “humans”.
                • Caelan MacIntyre says:
                  BummerToo bad that I won’t be around to receive my very own personal drone-delivered Monsanto human, complete with a custom-ordered double-wide Kardashian™ trailer.
                  • MarbleZeppelin says:
                    Humans will be adapted to the environment. Makes more sense than adapting the environment to us. Won’t need a trailer or a Kardashian, whatever that is.
                  • Caelan MacIntyre says:
                    Humans have to be adapted to the environment or the environment will be intolerable for humans.
                    Currently, humans seem quite maladaptive, which makes notions of genetic engineering, at least in certain contexts, laughable and naive.
  3. TechGuy says:
    [prime minister, Narendra] Modi has repeatedly said India would not accept constraints on its development as part of any climate deal. Unlike China’s submission to the UN in June, India’s does not spell out when its emissions might peak.
    “China Will peak emissions by 2030 and reduce carbon intensity 60-65% by 2030 against 2005 level”
    Confucius says: “Promises made in distant future never honored.”

    The East is just using Climate change as a means to de-industrialize the west so they are the only game in town. The more de-industrialize the west becomes the more resources become available in the east! The con-game of the century!
    Meanwhile over in Indonesia: http://www.cnn.com/2015/09/17/asia/indonesian-haze-southeast-asia-pollution/&rct=j&q=&esrc=s&sa=U&ved=0CBQQFjAAahUKEwitvIO7rOHIAhUJHR4KHWoKC94&sig2=anwcEje_dH5oTsdoX78wdw&usg=AFQjCNEYD6svmCf2R6ou5G97CaPS7_hujw
    Farmers are torching peat bogs in order to make room for plantations, including plantations for bio-fuels. Oh the sadistic Irony: “We must destroy the planet so we can grow more bio-fuels to save it”
    • Arceus says:
      >>”The East is just using Climate change as a means to de-industrialize the west so they are the only game in town. ”
      That is likely an unfair characterization of the dynamic going on. On the one side of the ledger we have the American egotistical, legacy-obsessed, attention-span-challenged rubes (Obama, Kerry) who fancy themselves global leaders and political sophisticates who must set an example. On the other side of the equation, we have the asian bureaucrats who are focused like a laser-beam on their export-oriented economies. Does it really come as any surprise that when it comes to the inevitable carrot or stick prodding that, in the end, the asians agree to make promises that sound nice but for which they know they are entirely unaccountable? And if the industrial economy of the west chooses to get hung by its own rope, who is it that should stop them?
  4. Coolreit says:
    Oil demand is growing stronger now than in years if not decades: Your peak consumption conclusion/analysis is complete nonsense. As long as the amount of energy in such a condensed form as oil and cheaper than human energy, it will be consumed in greater amounts:
    Latest demand numbers (Aug-Sept data – Energy Aspects)
    Indian oil demand rose strongly to 3.82 mb/d in September, with y/y growth at a record 0.5 mb/d, led by diesel, gasoline and naphtha. October is likely to see similar demand strength, given the usual seasonal buying ahead of Indian festivities and another low base last year. Diesel led the y/y growth once again in September, rising by a record 0.25 mb/d. A light monsoon season has led to a pick-up in diesel use in agriculture. Part of the y/y growth was also driven by a very weak base last year, as floods curtailed industrial and agricultural activity. The Indian government’s goal of building 30 km/day of roads will also be positive for diesel. Gasoline demand increased by 0.11 mb/d to 0.53 mb/d, with the year-to-date growth at 15%. IOC and HPCL continue to import gasoline, including a recent tender for around 0.5 mb for November delivery.
    Total European demand in August was higher y/y by 0.38 mb/d to 14.05 mb/d, supported by sustained momentum from Italian (up y/y by 0.12 mb/d at 1.30 mb/d), and Spanish (higher y/y by 53 thousand b/d at 1.20 mb/d) demand. ULSD and gasoline demand continued to drive growth in these two countries, up collectively by 15.3% and 13.4%. Meanwhile, heating oil restocking helped French demand rise y/y by 38 thousand b/d to 1.70 mb/d. This, together with very strong growth from Turkey (+0.26 mb/d y/y) where vehicle sales continue to soar (+35%), was able to offset weakness in German demand, lower y/y by 57 thousand b/d at 2.48 mb/d, the fourth decline in six months. German demand is likely to have remained weak in September and October, partly stemming from low Rhine river levels, which meant inland stocks were run down, distorting underlying demand figures somewhat. Indeed, consumer heating oil stocks have risen, which is usual ahead of the winter, but commercial stocks have been falling, with preliminary September data showing German commercial inventories at their lowest since May. Demand elsewhere however stayed strong, with preliminary French demand higher y/y by 4.1% in September, on continued restocking of heating oil.
    Middle Eastern oil demand for the top seven countries increased seasonally in August to 6.51 mb/d, higher y/y by 0.26 mb/d, led by Iraq, where demand increased by 0.15 mb/d to a record high of 0.75 mb/d. A low 2014 base driven by the IS invasion and strong seasonal demand for fuel oil (up y/y by 31%) from the power generation sector supported. Saudi Arabian demand increased y/y by 0.13 mb/d to 2.86 mb/d, with gasoline higher by 27 thousand b/d, and jet higher by 11 thousand b/d, both supported by increased travel following the end of Ramadan. Growth in fuel oil (+56 thousand b/d) and crude burn (+79 thousand b/d at 0.85 mb/d) remained elevated as temperatures soared (CDD’s were higher y/y by 6.5%) and electricity loads hit a record high. Diesel demand, however, declined y/y for the third consecutive month—possibly due to soaring temperatures dampening construction activity and fuel oil continuing to displace diesel in the power generation sector. But, with Saudi Arabia allocating $1 trillion for construction projects, with a particular focus on rail and road programmes including the Riyadh Metro, Dammam Rail, Saudi-Bahrain Causeway, overall demand growth should remain strong. In fact, GCC countries have seen no slowdown in construction, with UAE, Qatar, Kuwait approving a slew of projects, particularly in the road and housing sectors.
    Brazilian August demand was lower y/y by 0.1 mb/d at 2.44 mb/d, with gasoline down by 84 thousand b/d and diesel by 68 thousand b/d. Ethanol demand, however, was higher by 48% y/y at 0.32 mb/d, buoyed by cheap prices. Combined gasoline and ethanol demand rose by 2% y/y to 1.0 mb/d. But ethanol output was lower y/y by 20% in the second half of September as heavy rains in the south hampered sugar mill operations, which may support gasoline demand going forward. Still the outlook for gasoline and diesel demand remains gloomy given the government’s latest forecast of a 2.4% GDP fall this year.
    Preliminary August FSU demand was pegged at 4.9 mb/d, up y/y by 78 thousand b/d. Russian demand continues to come in stronger than expected as rouble depreciation has supported industrial activity, despite a severe recession. July demand totalled 3.8 mb/d, a near one-year high, and slightly up y/y. Demand is being led by naphtha, gasoil and other products.
    South Korea:
    South Korean August oil demand increased y/y by 0.1 mb/d to 2.38 mb/d, the strongest growth since March. Diesel demand led, up y/y by 59 thousand b/d to 0.44 mb/d, partly due to a weak base. Naphtha demand rose y/y by 45 thousand to 1.19 mb/d as cracker utilisation picked up in early August. However, utilisation has eased since, as ethylene margins for cracking naphtha weakened amid the Tianjin blast and slowing demand in China, and the return of Japanese crackers from maintenance. Gasoline demand was up y/y by 6 thousand b/d. Fuel oil demand also rose y/y by 6 thousand b/d, despite high nuclear availability, as temperatures were hotter y/y (26% more CDDs). However, butane demand dropped y/y by 22 thousand b/d, as low fuel prices have rendered switching to butane-fueled autogas vehicles unattractive, a trend we see persisting. Moreover, there are signs the Korean economy is slowing as exports posted their sharpest fall in six years in August. Exports account for roughly half of Korea’s GDP, and shipments to China, which absorbs a quarter of the total, dropped by 8.8% y/y in August. Hence, oil demand, particularly naphtha, growth is likely to weaken over the rest of the year.
    Chinese apparent consumption totalled 10.28 mb/d in August, with y/y growth at 0.56 mb/d (5.7%). But actual demand growth is likely to be weaker due to product stockbuilds.
    Gasoline apparent demand was flat m/m at 2.75 mb/d, higher y/y by 0.44 mb/d in August, supported by strong SUV sales, even though overall car sales have contracted. Naphtha demand eased slightly to 0.85 mb/d in August, but weaker cracker margins and a seasonal easing in gasoline demand are likely to weigh on naphtha demand for the rest of the year. LPG demand and imports, meanwhile, remained high on rising PDH capacity.
    Apparent demand for diesel rose y/y by 0.12 mb/d to 3.53 mb/d as the lifting of the annual fishing ban in August helped. But industrial activity remains muted, leading to record diesel exports of nearly 0.18 mb/d, although run cuts and TARs may help ease exports in early Q4 15.
    Japanese August oil demand rose seasonally m/m to 3.53 mb/d, taking it higher y/y by 71 thousand b/d, driven by naphtha (+47 thousand b/d), jet fuel (+30 thousand b/d), crude burn (+25 thousand b/d) and gasoline (+21 thousand b/d) offsetting weakness in LPG (-40 thousand b/d) and fuel oil (-20 thousand b/d). Much like in Korea, naphtha demand continues to grow, higher y/y for the seventh straight month, partly as the 2015 naphtha cracker turnaround schedule (<0.5 Mtpy between April-August) was lower than in 2014 (~0.7 Mtpy). Moreover, the competitiveness of naphtha has also seen its usage in petchem plants rise, displacing LPG. But with the return of naphtha crackers from maintenance, petchem margins have started to fall, which together with an unexpected drop in industrial output, will weigh on naphtha demand going forward. Elsewhere, despite the restart of Japan’s Kyushu Electric nuclear plant on 11 August, fuel oil demand in August did not drop as sharply as expected, down by just 7% y/y compared to a drop of 12% in the first seven months of 2015, largely due to hydro generation falling y/y by 23%, the first fall in eight months. In fact, crude burn rose by 22% y/y, though this was on a small base. Slightly warmer weather (CDDs 3% higher y/y) in August also helped. But with the Japan Meteorological Agency forecasting a warmer than normal winter, fuel oil demand is unlikely to find support, especially with the gradual return of nuclear generation.
    Australian oil demand was slightly lower y/y at 0.94 mb/d in August. Transportation remains the backbone of oil demand, amidst falling industrial activity. SUV sales continued to increase (up y/y by 13.6%), even as passenger car sales fell by 3.3% y/y. Total vehicle sales were up y/y by 2.6% y/y. This, together with rising dieselisation in Australia (where some 10% of passenger cars now run on diesel, up from 5.5% in 2010), supported diesel demand. Diesel demand increased by 8 thousand b/d y/y to 0.4 mb/d, offsetting the weakness in diesel usage in the mining and coal sectors, on reduced demand from China and lower prices. Gasoline demand, meanwhile, was flat y/y at 0.32 mb/d. Jet fuel demand was pegged at 0.14 mb/d, broadly flat y/y. LPG demand fell by 12 thousand b/d y/y, largely due to weak commercial demand, as industrial activity remained muted.
    Canadian (August) oil demand was steady m/m at 2.37 mb/d, with y/y declines easing to 36 thousand b/d. Gasoline and diesel demand remained weak, amidst an ongoing recession.
    US (July – due to EIA official monthly numbers data lag)
    US July oil demand was revised lower by 0.28 mb/d, less than our expectation of 0.4 mb/d, leaving demand up y/y by 0.7 mb/d at nearly 20 mb/d, the highest since April 2008. Gasoline demand was revised down, but only by 0.1 mb/d to 9.4 mb/d, the strongest since September 2007, taking y/y growth to 0.2 mb/d (2%). August may still come in higher before demand tapers off in the autumn. Demand was strongest in PADDs 1 and 5 where product supplied rose y/y by 0.13 mb/d and 74 thousand b/d, broadly in line with trends in vehicle miles travelled (VMT) data—VMTs in the west higher by 4.7% and PADD 1 by 3.8% (South Atlantic by 5%) in July, and overall VMTs up by 4.2% y/y. But gasoline demand in PADD 3 fell y/y by 0.11 mb/d, which was at odds with VMT data that showed a 5.1% y/y increase on the Gulf Coast.
    • Greenbub says:
      Thanks for the post, Coolreit.
    • Enno Peters says:
    • Fred Magyar says:
      Oil demand is growing stronger now than in years if not decades: Your peak consumption conclusion/analysis is complete nonsense. As long as the amount of energy in such a condensed form as oil and cheaper than human energy, it will be consumed in greater amounts:
      Well, sure, 99% of the world is still stuck in BAU so increased demand is to be expected in the short term.
      But, I disagree that Verwimp’s conclusion is complete nonsense, what I think you are missing is disruption and paradigm change. You are convinced that what has been until now will continue forever. I find that very highly unlikely!
      “If I had asked people what they wanted, they would have said faster horses.”
      ― Henry Ford
      How many people today are asking for ‘Uberized’ driverless EVs that you can hail with your smartphone?
      Disclaimer: I’m not saying that my hypothetical example above is a given, but what I am saying is that disruption and paradigm change are.
      • Jef says:
        Fred – First off try as I might I can not see what driverless cars are solving for. Second most if not all of your “disruptive tech” you tout has the net effect of putting way more people out of work than it does creating jobs.
        A paradigm change is happening right now for sure, poverty and inequality are running rampant and destroying lives.
        We have only one way to get money into peoples hands so that they don’t die and that is to make, sell, buy, and throw out STUFF. There is no future until we figure how to change that dynamic.
        • Fred Magyar says:
          Fred – First off try as I might I can not see what driverless cars are solving for. Second most if not all of your “disruptive tech” you tout has the net effect of putting way more people out of work than it does creating jobs.
          Jef for what it is worth, I’ll be the first to agree that disruptive technology will indeed put a lot of people out of traditional jobs. As an example the blacksmiths who used to make horseshoes lost their jobs when automobiles disrupted the horse and buggy era. I’m not saying that was good for those blacksmiths at the time. They and society had to adapt. Google Tony Seba’s presentation. He has photographs showing how it only took 13 years for a NYC street full of horses and buggies to transition to a street that was full of horseless carriages.
          In any case the reality is that driverless EV technology is here now and will be disrupting the old paradigm in the very near future whether any of us really wants that or not.
          BTW, don’t mistake the messenger for the message I’m just reporting how I see it. It doesn’t matter what any of us thinks as to whether any of this disruption is going to have fall out or not. It is happening and things are changing really fast.
          We have only one way to get money into peoples hands so that they don’t die and that is to make, sell, buy, and throw out STUFF. There is no future until we figure how to change that dynamic.
          That is a description of the linear economic model and it isn’t working now. However there will be a future and I think or economies will be circular and will look more like this.
        • twocats says:
          this is from MIT tech review, they don’t give hard numbers but I’ve seen some estimates in the past on how much fuel is spent searching for parking spaces that are fairly high. Driverless uber cars with a corresponding parking system. Obviously doesn’t solve “all problems” but certainly could increase efficiency and reduce consumption on activities people are already doing.
          But the biggest effects could come with full automation. Cars that park themselves—a trick GM has demonstrated with its EN-V concept vehicle—could save fuel by eliminating the need for drivers to circle the block waiting for a parking space to open up. The ambition is for a car to drop its owner off and go directly to the nearest available parking spot—even if that spot happens to be miles away, too far for the owner to walk. When it’s time to leave, the owner notifies the car with a smart phone, and it picks him or her up.
          • Fred Magyar says:
            I’m pretty sure we are already seeing the beginning of the end of private automobile ownership. Interesting survey from Frog design.
            Once a rite of passage for any teenager, owning a car is increasingly being overshadowed by the desire for a smartphone, a new survey shows.
            In the survey of 1,200 people in four major countries by global tech design and strategy firm frog, 30% of the respondents said that they would give up their car before their smartphone.
            “Given that smartphones have been commonly available for only 10 years, we expect the proportion of people who value them more than their car to grow swiftly and significantly,” frog said in a statement about the survey.
            The online survey of the residents of the United States, China, Denmark and Germany found that 37% of car owners would like to give up their car outright or felt they could get by without it.
            Personally, I highly doubt that I will ever buy another car in my life. In the future if I need a car I will rent, use something like Zip Car or a service like Uber. I really don’t want or need the hassels that come with car ownership.
            Side note: From this survey it seems that people are still not very comfortable with the concept of driverless cars, I think I can understand where they are coming from but I also think that in another decade that won’t be an issue anymore. Humans are really good at walking… driving, not so much.
            • Old Farmer Mac says:
              There is no doubt competition in the rental car business, but damned little or none in the bottom end of it, renting old cheap cars.
              And the locations at which rentals are available, in general terms, are few and far between in small towns and out in the edges of large urban areas.
              I can and do actually keep an older truck tagged, insured, and maintained, cheaper than I could rent a suitable truck, and get somebody to take me to the rental store and go back with me to bring me home again, once a month or so. A LOT cheaper.
              But hopefully, entrepreneurs will find ways to make rentals really cheap, compared to owning an older vehicle.
              It is safe to say however that existing businesses already renting cars are going to do everything within their power to prevent one horse rental stores from opening.
              But there is hope. A person can actually operate a such a store nowadays for almost nothing, having the necessary location for an office being the very cheapest one available, and mostly keep his cars elsewhere, and do almost all his business by phone.
              I have seen a local company delivering a rental car locally by towing it to the customer on a dolly behind a pickup truck. That way they can deliver it at their own and the customers convenience, and pick it up again at their own, a few hours earlier or later.
              Personally I doubt totally autonomous cars will be seen on the roads in serious numbers for at LEAST a decade but I have been wrong before about the speed at which new technology can go mainstream.
              In this case I base my doubts more on legal troubles and the cost of brand new tech than on the technical viability of it. From the looks of it, such cars will be TECHNICALLY proven under real world conditions to be as safe as human drivers within the next few years.
              Uber and other such services will be illegal for a decade yet in some places, actually lots of places. Maybe longer. Maybe almost forever.
              Now as it happens, I live PERSONALLY in PERMANENT contact with lots of poor people- people I know WELL personally. I often suspect I am the ONLY regular in this forum in this situation.
              Poor people, and borderline poor people, the ones who work hard, are virtually ALWAYS on the look out for any opportunity to make a few bucks, and providing an affordable ride to the doctor or grocery store or school event using an old existing car is one excellent way of making an extra ten or twenty. This is generally strictly against the law, and contrary to the letter of the mandated insurance policy, but it is nevertheless a very common practice.
              An empty belly or a kid that needs new clothes trumps technicalities such as permits, income tax compliance, and risk of being held responsible in the event of an accident, etc.
              Another work around I see potentially becoming VERY popular is the unofficial joint ownership of a car to be shared with intimate long term friends or family.
              Owning one piece of equipment and allowing another farmer to use it, in exchange for the use of a DIFFERENT piece he owns, is a very common practice, among farmers who know each other well, and among small contractors.
              I own a grader box, seldom used, and one of my neighbors owns a tractor powered post hole digger, and we swap. Neither of us uses these particular implements very often, but renting either of them more than about three or four times costs as much as buying them when you take into account the expense of going to the rental company to pick them up and take them back. I swap equipment this way on a fairly regular basis. You have to know your other half well for it to work.
              I know off at least three paired of older couples who live next door to each other who share a single phone line. They never admit this, but you know when you call somebody and the “visiting ” neighbor answers the phone too many times, and you ask the neighbor for THEIR phone number for some reason, and they freely give you the one for the house next door.
              With dsl and phone combined costing eighty bucks, this saves people who are hard up forty bucks apiece. That’s enough gas to get to work for a week or two or enough to pay the water and sewer bill etc.
              UNFORTUNATELY, my own nearest neighbors are too far away for me to work this little scam on the phone company myself.
              But I did it back when I was long haired and temporarily poor at times and living in an apartment. Back in those days, I felt like it was my moral DUTY to STICK IT TO THE MAN. The statue of limitations applies. LOL
              This actually MADE the phone company money, because an extension line thru a wall and the paid account being used twice as much was a LOT better deal for the phone company than NO paid service in EITHER apartment.
              I have noticed that the paid trash pick up service provided in rural areas such as my own results in some houses having a hell of a lot of garbage. I used to keep mine in barrels and haul a load to the county dump station myself once in a while, but since I have gotten older, I pay the twenty bucks a month. The limit is three ordinary thirty three gallon cans in any given week. The truck drivers are NEVER going to say anything about me having two or three cans ONCE in a while. The really old woman ( who incidentally has very little money) who lives just down the road puts her garbage in a heavy duty plastic bag and makes me a cup of coffee once in a while and THINKS I am hauling it to the dump for her, as a favor, which I used to do. So once in a while , I have an extra can full. LOL. I am still putting out less than half as much trash as a lot of people on the route with more money to spend on junk, for the same monthly rate.
              People do what they have to in order to get by, and worry about the rules later.
              • R Walter says:
                All of this ’56 Desotos and ’57 Chevys in Cuba will one day be bought for peanuts to be used as rentals here in the US of A, it’ll be a booming business. After an EMP renders every new car useless, those old cars with points and distributors will be tooling around the town with happy motorists enjoying the drive and the ride.
                Eventually, they’ll make it to Barret-Jackson auctions.
                • Old Cuban cars won’t be sold for peanuts. Your line of thinking assumes Cubans are wearing bones through their nose and will sell for a few trinkets. The reality is that old car sales and exports will be closely regulated to control market prices.
                  The Cuban dictatorship has an overwhelming control system. When something isn’t controlled (say underage prostitute prices), it’s done on purpose, to achieve whatever dark purpose they have in mind. Cheap prostitution is used to encourage sexual tourism. The prostitutes make little money, the government oligarchs rake profits by controlling hotel, rental car, and other prices as well as keeping them under their ownership and tax system.
            • Fred Magyar says:
              Clean Disruption of Energy and Transportation – Book Trailer – Tony Seba https://goo.gl/gjJ7ar
              Published on Nov 2, 2014
              The industrial age of energy and transportation will be over by 2030. Maybe before. Exponentially improving technologies such as solar, electric vehicles, and autonomous (self-driving) cars will disrupt and sweep away the energy and transportation industries as we know it. The same Silicon Valley ecosystem that created bit-based technologies that have disrupted atom-based industries is now creating bit- and electron-based technologies that will disrupt atom-based energy industries.

              This is what disruption looks like in the very early phases:
              1 Million EVs Sold Worldwide
              By Tali Trigg | October 29, 2015 | 1

              At some point this month, one million electric vehicles (including plug-in hybrid and full battery electric vehicles) have now been sold worldwide. This took place in only six years, which is four years faster than it took non-plug-in hybrids (e.g. Toyota Prius) to reach one million in sales.
              This is the highest amount of EVs to ever ply the roads, even taking into account the fact that EVs were popular twice before (1910s and 1990s). So what makes this time different?
              For one, batteries. The battery technology (primarily lithium-ion) has developed increasingly with higher energy density (which partly determines range) and lower costs.
              • R Walter says:
                Forklifts with a battery for the energy to power them are a perfect choice for work in warehouses.
                1.2 billion vehicles on the planet, one million EV’s are less than 1/1000th of the total.
                It will take a lot of ff to close that gap.
                I do agree, not everybody needs to own a jet to fly to a destination, everybody shares that mode of transportation, the safest travel ever.
                Uber and Lyft will probably be in the ev business and the flight travel business too. Look out Lufthansa!
                • MarbleZeppelin says:
                  So the Uber or Lyft EV takes you to the local airport or farm airfield where the aircraft takes you to an airport near your destination, then another Uber or Lyft EV take you to the resort hotel.
                  Makes sense to me.

    • Verwimp wrote about demand:
      Since Earth is a closed system, next to this production (supply) event, there must be an equal demand event: Peak Oil Consumption. Since there are no substantial above ground deposits, Peak Oil Production and Peak Oil Consumption must coincide.
      That is a true statement if a true statement ever existed. Yet Coolreit calls it complete nonsense. And he lists places where demand is increasing to back up his story. As if consumption could outpace production! I call that complete nonsense.
      As long as some countries consume more than they produce other countries must produce more than they consume. Demand muse equal production. Actually we should stop using the word demand to imply consumption. Currently the word is used primarily to imply expected future consumption. But future consumption, or demand, will equal future production and not one barrel more, whatever that may be.
      • Old Farmer Mac says:
        Ron is dead on, he should BAN the EFFING word “demand” from use in this forum, except when it is used properly. There is an endless amount of confusion brought about in the mind of the typical person due to the word being misused for “consumption”.
        Demand properly defined is a mathematical abstraction, a theoretical function that simply says the consumer will use more at any given INSTANT in time of a given product if the price is less and more if the price is higher.
        Cheap oil does not increase the DEMAND for oil. It increases the CONSUMPTION of oil. Expensive oil does not decrease the DEMAND for oil. It decreases the CONSUMPTION of oil.
        EVERY last technically literate person in this forum would have a hissy fit if another one misused an accepted technical definition from the hard sciences in such fashion.
      • WeekendPeak says:
        The earth is not a closed system. Asteroids, and, more importantly sunlight, which is was what made oil, gas and coal, (stock versions of solar), wind, hydro and solar (flow versions of solar) are continuous inputs. The heat and electromagnetic energy we radiate out are outputs.
        If anything, the fact that the earth is not a closed system is probably one of the most reoccurring themes on this blog.


        • Verwimp says:
          Correct. But we, earthlings, are not importing or exporting fossil fuels with other entities in space. So for practical purposes and in that strict sense the statement “closed system” is right. It’s ‘close enough.’
          • Dennis Coyne says:
            Hi Verwimp,
            A lot of energy comes to the planet in the form of sunlight. Since we are talking about energy and not only fossil fuels, the system is not closed.
            As fossil fuels deplete the price will increase and other sources of energy will ramp up (wind, solar, nuclear, hydro, and geothermal). Energy efficiency will also help.
            • Verwimp says:
              I agree, Dennis! Every energy statistic would look totally different when solar would be counted in correctly (as in: every ray of sunlight that powers our agriculture, for example.) But you and I know the amount of sunlight is a constant (more or less), so for practical purposes it is not taken into account when evolutions of energy use are taken into consideration. That is because when you are talking about evolutions, you are talking about first derivatives. Constant parts of the equation no longer matter in the discussion.
              • Old Farmer Mac says:
                The amount of sunlight we can use and ARE using in a new fashion, namely generation of electricity, IS CHANGING.
                I do agree for now that the relatively small amount of electrical energy we gain from this new industry is trivial in terms of the big energy picture. But this acorn shows considerable promise of growing into a mighty oak, given time.
                And while passive heating has been around since way back when, it is apt to be ramped up substantially within the foreseeable future as builders take energy efficiency and costs into account.
                Your argument may be technically correct but it fails on practical grounds.
                Something tells me that as time passes, people will actually be MIGRATING in substantial numbers in order to take advantage of optimal solar energy levels.
                I seldom ever hear of any body moving to Vermont to retire, but millions used to move to Florida.
                That migration is slowing, but the one to my part of the country, the southern mountains, is just getting well underway.
                One primary reason people are moving here is that they like the overall weather better, on a year round basis. You can enjoy yourself outside here in the winter by putting on a coat and cap, but you can’t get any nakeder than naked, and that’s not enough to enjoy summer in Florida.
                Another is that “damnyankees” such as my former BIG APPLE inlaws love to make fun of our backwoods hillbilly Bible thumping pistol packing culture- but they WANT to come LIVE here because crime rates as well as taxes are actually pretty low and Bible thumpers actually stop if they see you on a country road with car problems.
                My last set of damnyankee inlaws retired to a little place very near Jesse Helms’ home town. It took them a while but they no longer get nervous when they see somebody walking thru a field toting a shotgun or rifle and they actually know where beef and chicken come from now. They used to believe it came out of beef and chicken factories. LOL, this is not much of an exaggeration.
              • Dennis Coyne says:
                Hi Verwimp,
                Yes the energy in is relatively constant, though due to changes in the Earth’s atmosphere over time, more of the energy input is being retained by the planet.
                As far as the energy being harnessed for human use (to perform work), the amount of solar energy being harnessed for growing plants (both natural and agricultural) and for wind and solar electricity and solar heating of homes and water, this has changed over time (the agriculture plus natural growth change is poorly measured, but is relatively small compared to fossil fuel use).
                If wind, solar, geothermal, and other renewables grow as fast as oil and natural gas output from 1905 to 1970, we will be fine. As fossil fuels peak in 2020 (all types in Mtoe) and fossil fuel prices rise in response. the rate of increase of non-fossil energy output will rise.
                Chart below shows the natural log of oil and natural gas output from 1905 to 1970 and the trailing 10 year growth rate from 1915 to 1970 (read off right axis). The average growth rate from 1905 to 1930 was 14.3%. The growth rate remained above 6.6% through 1970.
                • MarbleZeppelin says:
                  There are about 122 million full time employees, but the number of part time employees remains relatively high.

                  With 37% of the people either under 18 or over 65 that makes 201 million people in the potential labor force. With 122 million full time employees that makes an employment gap of 79 million. It looks like there are about 6 million stay at home parents so that still leaves a gap of 73 million adults not working full time and even including part time workers that leaves 50 million adults below retirement age that are classed as non-workers.
                  Maybe many of them own the 28 million small businesses operating in the US?
    • MarbleZeppelin says:
      Production is still outpacing demand. Increases in demand due to the price drop are expected, temporary and relatively small. Price dropped by half, demand only went up a few percent, not doubled.
      From the EIA
      “Global liquids production continues to outpace consumption, leading to strong inventory builds throughout the forecast period. Global oil inventory builds in the second quarter of 2015 averaged 2.3 million b/d, compared with 1.8 million b/d in the first quarter of the year. The pace of inventory builds is expected to slow in the second half of the year, to roughly 1.5 million b/d. In 2016, inventory builds are expected to slow to an average of 0.8 million b/d. ”
    • Verwimp says:
      Hi Coolreit, Thanks for your opinion. The data you mention are short term fluctuations. It would be a surprise if, given the low contemporary prices, there would be no growing consumption. But my analisys is long term. Contemporary prices may result in a short term revival of consumption, but still: I do not believe the former Soviet Union or Europe will ever again reach their respective peaks of 1991 and 2006. Nor will the USA leave its 15 year old consumption plateau in an upward way substantially. It will rather be the countries in the Middle East, Asia Pacific, Africa or South and Central America that will run away with the contemporary oil surplus. Time will tell.
      • Housebent says:
        In my opinion, you wrote a very, very good post; concise, reasoned, well-structured, and educational. Really, one of the best posts I have come across for a while on this subject.
    • Synapsid says:
      Why is Turkey listed under Europe?
      • WeekendPeak says:
        Part of Turkey is in Europe, part in Asia / middle east.

        • Synapsid says:
          Yes. Very little of Turkey is in Europe though, and less than a fifth of the population, mostly in Istanbul.
          Coolreit was talking about oil demand; perhaps I should rephrase my question:
          In terms of oil demand, why is Turkey listed under Europe?
  5. Old Farmer Mac says:
    There is plenty of food for thought in this post, and it is going to take me a while to thoroughly digest it.
    Energy consumption has declined more in total and especially per capita in the advanced economies than I realized, and has been growing less in the lesser developed countries than I thought.
    So far there has been no discussion of the role of efficiency in the comments. Here are some of my own, off the top of my head.
    One, some things that take enormous amounts of energy to build simply LAST and LAST, and we have ENOUGH of these things, for the most part, that we are not building more of them, or only a few, compared to previous decades.
    Highways come to mind first of all. It costs a lot to maintain a highway, but the cost of maintenance is peanuts compared to the cost of original construction.
    Houses likewise last a hell of a long time. We hear plenty about shoddy construction , but the fact is that little cookie cutter tract houses built back in the FIFTIES are mostly still in EXCELLENT condition if they have been well maintained.
    Automobiles last longer than ever. I can remember when a car was considered worn slam out at a hundred thousand miles, needing an engine and transmission overhaul, new exhaust starter motor radiator suspension parts, upholstery paint etc. I see PLENTY of cars today that still look almost new and run like new with two hundred fifty thousand miles on them, without ever having had any major repairs. AND furthermore, they go TWICE and sometimes three times as far on a gallon of gasoline. The car I drive these days gets three times the mileage the four by four pickup gets- and it gets better mileage than the one I had before that- which I drove ALL the time.
    I have only a half a dozen old style incandescent light bulbs in still in use -three hundred watt bulbs I bought up before they were discontinued- but they are in a barn used for storage only and are turned on only an hour or two a month. ALL the bulbs in the house now are led’s..We have installed new windows and doors and styrofoam insulation covered with vinyl and a very high efficiency oil furnace-and IF I were to use it for as our primary heat source, I would need only half as much oil as we used before upgrading the house. When it finally croaks, it will be replaced with a high efficiency heat pump.
    Our tv set doesn’t even get warm to the touch. The refrigerator uses half as much electricity as the one it replaced. Same size, same features.
    What all this boils down to is that while economists do have their heads out of sight up their butts in a lot of respects, they do know a few things, and one of the things they know about is the decoupling of economic growth from energy consumption.
    We JUST DON”T NEED AS MUCH , per capita, to live well, as we used to.
    Now I do not know and cannot even make an educated guess as to how long this trend of more productivity per unit of energy can be extended, but it is pretty obvious that we are a long way from finding out. A Chevy Volt will go twice as far, on average, or farther, on the same amount of energy as a similar conventional car, under real world conditions, because it will run on the more efficient electric motor most of the time. The lighting industry , according to some statistics I read recently, has barely even SCRATCHED the surface in terms of replacing old legacy lighting systems with newer lights that will use half the energy.
    My friends who are still farming full time use a hell of a lot less diesel fuel per unit output than they used to, and less fertilizer as well. A plastic milk jug probably has only half as much plastic in it today as milk jugs did ten years ago.
    Building codes have been tightened up substantially over the last few decades , but when it comes to building codes, I suspect “we ain’t seen nothing yet” in terms of energy efficiency.
    We already know what the fuel economy standards are for new cars five and ten years down the road, the regulations were written last year.
    Maybe the most important factor of all will turn out be shrinking family size. My own family has gone from reproducing like rabbits a couple of generations previous to my own to about one point four or five kids per couple, four generations later, and the down trend may not have bottomed yet.
    It is paradoxical that we use MORE paper now than we did previous to the invention of the office computer that was supposed to lead us to the promised land of the paperless society, but we do get more done every year using less energy to do it. My monthly cell phone costs me less than the gasoline it saves me. I call the house every hour or so and check up on my ancient old Daddy without having to run back and forth to check on him, and I never have to wait for anything anymore when I need something in town. It will be on the counter when I get there, and if it is not in stock, I know without having to drive from the field to the house to call to find out.
    Peaking energy resources are going to present us with a bill from hell, sooner or later, and it will have to be paid.
    But the bill is going to arrive later than I thought.
    I expected it to be here before now.
    Renewables are the wild card. You can never tell when a wild card in a poker game will turn up just when you need it most, and convert a nothing hand into a straight, or a couple of low pairs to a full house.
    • Glenn Stehle says:
      Old Farmer Mac said:
      What all this boils down to is that while economists do have their heads out of sight up their butts in a lot of respects, they do know a few things, and one of the things they know about is the decoupling of economic growth from energy consumption.
      Is that what peakists believe?
      Matthew Schneider-Mayerson, in his survey of over 1000 peakists in 2011, found that it is most definitely not what most of them believe:
      Peak Politics is…also by necessity about oil itself, rightly labeled “the most powerful fuel and versatile substance ever discovered.” While peakists were mistaken about the immediacy and gravity of the oil peak, their assertion that petroleum depletion has the potential to cause “the end of our American way of life,” as a Virginia peakist put it, was not. Because of its seemingly inexhaustibility and price stability throughout the twentieth century the importance of petroleum (and energy in general) has rarely been reflected in American scholarship and nonfiction writing — like oxygen, oil has been indispensable, ubiquitous, and appreciated only when scarce….
      If you are reading these words digitally, petroleum was used in every step of your computer’s long and complicated commodity chain… One analysis estimates that each computer requires the consumption of over 150 gallons of petroleum before it reaches the consumer.
    • What all this boils down to is that while economists do have their heads out of sight up their butts in a lot of respects, they do know a few things, and one of the things they know about is the decoupling of economic growth from energy consumption.
      We JUST DON”T NEED AS MUCH , per capita, to live well, as we used to.
      Mac, using less is not decoupling. My new car needs a lot less gasoline to go a mile than my old car did. But neither my new car nor I have decoupled from gasoline.
      Growth on less energy is possible but growth without energy is impossible. And we can only economize so much. Improving the economic use of energy can only go so far. Eventually growth will depend entirely on more energy.
      • Old Farmer Mac says:
        For Glenn and Ron P,
        A lot of economists believe that economic growth can be decoupled or at least PARTIALLY decoupled from energy consumption.
        Now as to what “peakists” believe, I am unable to say with any certainty, because they believe differently among themselves and I am not even sure who is and is not included in this label. But painting with a broad brush, I would say that so called peakists do not believe that economic growth and energy consumption can be decoupled.
        English is a rather imprecise language and a given word can be interpreted differently depending on the person and the context.
        I don’t think very many economists believe energy use can be totally decoupled from economic growth, but rather that they believe it is possible for the economy to grow FASTER than energy consumption.
        Some people disagree with this position, and some even disagree about the precise definition of decoupling. I am personally comfortable using the word the way I have in the above comment, but Ron obviously interprets the word in a more cut and dried, either or sort of way.
        Here is a link to an article in the Washington Post that uses the word the same way I use it, in general terms.
        • On the chart the greatest change, by far, is to the right of the vertical line marking the present day. So most of the change, or growth, is projection, not history.
          But the main point, I think, is that the energy supply continues to increase. And they do not classify what type of energy increases by how much. I don’t believe that if energy started to decline that GDP could continue to increase. And when liquid transportation fuel starts to decline, that will be a different animal altogether. I do not believe that world GDP can continue to grow after that.

           photo GDP and Energy_zps9rc4vxzv.jpg
          • Czesio z Grajewa says:
            Energy and GDP didn’t decouple in percentage terms. The gap seems to be widening, because percentage of GDP increase is bigger than percentage of energy consumption growth.
            Good chart by Gail Tverberg:
            • BC says:
              Debt to GDP in the US increased at a cumulative differential order of exponential magnitude ffrom the early 1980s to 2007-08 when the threshold was hit and real GDP per capita has not grown since 2007-08 (or very little) with additional debt to wages and GDP.
              That is, since US peak oil production per capita in 1970 (down 45% since), the US systematically deindustrialized (offshoring, labor arbitrage, globalization, etc.), financialized, and feminized the economy (the fastest-growing sectors of the economy were gov’t, private health care and education, financial services, and retail in which 65-85% of jobs created were taken by females). We replaced well-paying, value-added, goods-producing employment (including engineers, technicians, machinists, supervisors, HR, IT, electricians, HVAC, shipping, logistics, etc.) with increasing debt to wages/salaries that have not grown in real terms in 50 years.
              In the meantime, the US has not created a single net new full-time, private-sector job since the mid- to late 1980s.
              Moreover, because of the level of debt to wages and GDP and the associated unprecedented asset price bubbles, total annual net flows to the financialized sectors of the US economy now equal total US GDP output, meaning that no growth of real GDP per capita is possible hereafter after net flows to the financialized sectors.
              Finally, world oil production per capita is no higher than in 2005, i.e., Peak Oil, and world C+C per capita is not much higher than in 2001.
              Peak Oil and Peak Debt (and asset bubbles) to GDP are highly interrelated/interdependent. We can’t grow debt to grow GDP per capita, which means we can’t afford to sustain profitable energy production and the energy demanded by the energy sector to sustain production.
              Further, that we can’t grow debt to grow oil production and real GDP per capita, neither can we continue the profitable build out of renewables at anywhere close to necessary scale AND maintain the fossil fuel infrastructure indefinitely hereafter.
              Something has to give and it will be growth of real GDP per capita and the further build out of renewables.
              • Caelan MacIntyre says:
                BC (et al.), who knows this? Do the so-called leaders/gov’s? If not and if so, what do you think they are thinking, going to do, and/or trying to do, respectively, and what do you think about it? Kick the can down the road? Sabre-rattle? Create chaos and confusion? Distract the populace? Step down and let people do their own thing? Debt jubilee/forgiveness? Start emergency UN summits on changing the economy to one of de-growth/steady-state?
                Extend and pretend/maintain illusions of normalcy? Ves and Watcher had a little chat about something of this in last thread, vis-a-vis KSA. Did you catch it? What do you think?

                What do you think is going to happen (timelines? how fast can some things unravel?) and/or is happening and, given what you know or think you know, what is the best course or some good courses of action?
                Should we all be preparing for a bail from the uneconomy ASAP and looking at local resilience, etc., a la lessons from Peak Oil 101?
                Lastly, what are you doing about this, about what you know (besides commenting here of course) and/or where are you coming from? What do you think of ecovillages, the Transition, rewilding, or permaculture movements?
                Additional comments/concerns?
                “If you still have a job, get everything in order, and quit. Do it as soon as you can, because we’ve never had a more important work to do.” ~ Kyle Chamberlin
                • BC says:
                  Caelan, very few know “this” in my experience. Most who know are not paid to inform the general public and instead use it as close-in knowledge for professional advantage, financial speculation, or as information with which to create misinformation/disinformation as shills for one firm or industry or another.
                  What I propose is controversial, “out there”, and would require a book or two to fully relate.
                  But to many, it would sound too much like “a man with a plan” and arguably unachievable, if not delusional under the circumstances.
              • MarbleZeppelin says:
                Yes BC, a lot of service sector jobs were added and some traditional industries fled to foreign shores for the advantages of low wages and less legal restrictions. The strange thing is that the US was the number one manufacturing country in the world two years ago and is still number two (China pushed us out, selling us crap products that fall apart quickly). What really knocked back the manufacturing sector jobs and even many service type jobs was automation. Here we use machines whenever possible. A large manufacturing facility can run with just a few workers. A worker and automation displaces employment.
                Without those jobs and with jobs getting relatively lower pay than previously, the consumer economy is weakened and the take from taxes is lower.

                As to your assertions on the impossibility of building out new profitable energy structures, I really don’t understand why that is. Wouldn’t profit making renewable energy sources service the debt versus unprofitable fossil fuels could not? Maybe you could explain your rationale to me, I just can’t wrap my head around that one.
                • farmboy says:
                  marble The reason those jobs left the US was for a better business environment, number one was taxes, other straws were environmental regulations, and wages/productive labor ratio ie. way to many spoiled brats.
                  Your idea that automation is to blame is ludicrous. How about you try to do without automation? Just disconect the thermostat from your fridge and hire 3 shifts to regulate the temperature with a switch. Keep them out of trouble by also including other responsabilities in the job description such as waking you up in the morning,instead of setting your alarm.
                  There fixed that for you, that will add lots of jobs and it would catch on with your neighbors and viola sooon everyone would have a job. Now wouldn’t that be a better world.
                  • MarbleZeppelin says:
                    farmboy, aptly named.
                    I hope you are spoofing, because to think you do not know the difference between factory automation and a furnace thermostat is very far fetched.
                    You said “marble The reason those jobs left the US was for a better business environment, number one was taxes, other straws were environmental regulations, and wages/productive labor ratio ie. way to many spoiled brats. ”
                    Yep, that is what I said, good interpretation, except for the spoiled brats part. I felt everyone knew the details and there was no need to expound on the subject.

                  • farmboy says:
                    Marble As I expected, you want the benefits of automation for yourself but then you want to force industries to do without.
                    Have you even thought this through? How would a nation go about making such stupid laws? That would only give industries more incentive to leave that nation.
                    Maybe you could start by only buying items that are made in the USA and that used no automation in their production.
                  • MarbleZeppelin says:
                    Farmboy, you are completely misinterpreting what I say. You are also not making much sense, take a pill.
              • Dennis Coyne says:
                Hi BC,
                At the World level GDP per capita continues to increase. The size of the fossil fuel sector will decrease as output decreases and the resources currently allocated for fossil fuel production will gradually shift to non- fossil fuel energy.
                Many of the problems you cite are due to more intensive use of capital ( more physical capital relative to workers than in earlier times).
                A better tax code that is more progressive would help reduce income inequality which is another source of inadequate demand which reduces income growth.
                The US should go back to pre 1965 income tax rates (adjusted for inflation and indexed to future inflation for tax brackets) and eliminate all tax loopholes and tax shelters, not a panacea, but a step in the right direction.
  6. Old Farmer Mac says:
    From today’s WSJ.
    I can only read the headline but that is enough.

    Updated Oct. 26, 2015 7:24 p.m. ET
    U.S. imports of foreign oil are rising again after a long decline, as the oil bust forces domestic producers to scale back.

    Less than a year after the Organization of the Petroleum Exporting Countries opted to continue production despite plummeting prices, ”
    The rest is behind the paywall, but the WSJ acknowledges the decline of domestic production as of today.
  7. Caelan MacIntyre says:
    Impending social unrest? Ya think?
    “Kid: ‘Daddy? Why are there rich people?’
    “Cae-Dad: ‘What do you mean by rich? You mean like in spirit?’
    Kid: ‘No-o-o-o-o… Like they have lots of big houses and cars and money!’
    Cae-Dad: ‘Ohhh, you mean those kinds. Well, you see, sweetie, our society allows some people to make more money than other people, working no harder than anyone else. Society then allows those with more money to acquire more land than others. Over time, this creates the dynamic for most, if not all, problems we have in society today, from landlessness, homelessness and poverty, to social unrest, war and civilizational collapse.’
    Kid: ‘Why does society allow that?!’
    Cae-Dad: ‘Corruption. Society uses force to uphold the laws that say that one person with more money can have more land than another with less money.’
    Kid: ‘Why can’t we stop that!?’
    Cae-Dad: ‘Corruption again: This setup is upheld by people with guns and weapons, or access to them, like cops, security guards and military people– people who often don’t understand this basic and very simple immoral core of our society.’
    Kid: ‘ 🙁
    Cae-Dad: ‘Ya; 🙁 ‘ ”
    ~ Caelan MacIntyre
    Comic caption:
    Edgar Johnson: “And this is my wife, Cynthia…”
    Mathilda Welling: “My pleasure. I feel that we are going to be such wonderful neighbors.”
    Ben Welling: “Looks like you lost more than your shirt.”
    Edgar: “Ya… But we’ve joined The Small House Movement… As you can see.”
    Ben: “Willingly?”
    Edgar: “Of course not.”

  8. Revi says:
    Great road map! Thanks. I like your idea that certain regions have already reached peak consumption.
  9. Enno Peters says:
    Alex (and others),
    ND released a new well status update. Although it still appears that the # new spuds in September was a measly 68 (may still be revised a little), or about 1 spud/rig/month, the number has jumped again in October. So far in October 84 wells were spud, and given revision history and the fact that the month isn’t over yet, I expect the final number to be around 100-110 or so, which means another jump in rig efficiency. Therefore, it appears too early to say that rig efficiency has dropped to the historical level in ND.
    The below graph assumes that the final October count will be 110, with an average of 68 rigs.
  10. R Walter says:
    When you are producing 10 million barrels per day and consuming 20 million barrels per day, you are dependent on another source, you’ve peaked a long time ago.
    The US should just buy KSA, own, then have the 10 million barrels per day as domestic production and forego the need to be a net importer of crude oil.
    The solution is so easy, it is what needs to be done. After that, buy Iran, then Iraq and so on. har
    I will do the unthinkable and quote one of the Koch Brothers, the shameless money hoarders they have become. Enough to drive anybody to drink, there is no other choice.
    “Far too many businesses have been all too eager to lobby for maintaining and increasing subsidies and mandates paid by taxpayers and consumers. This growing partnership between business and government is a destructive force, undermining not just our economy and our political system, but the very foundations of our culture.” – Charles G. Koch
  11. TechGuy says:
    Oh, this article is rich:
    “The U.S. plans to sell millions of barrels of crude oil from its Strategic Petroleum Reserve from 2018 until 2025 under a budget deal reached on Monday night by the White House and top lawmakers from both parties.”
    The news sent prices tumbling this morning. I would imagine a few Shale Drilller Execs broke out the hard stuff this morning. Got love the Federal gov’t: Buy at the top and sell at the bottom. Of course when the SPR is need the most it will be pushing up daisies.
    • Watcher says:
      58 million. 8% of the SPR. 2.5 days consumption. 5 days production.
      It’s nothing.
      • TechGuy says:
        I am sure it will change. Much more Oil will be sold than originally proposed. This is only the beginning.
  12. Rune Likvern says:
    Strictly not on the subject of this post, but….. a recurring theme on POB.
    Bakken oil companies declare bankruptcy
    “Even if we are successful at reducing our costs and increasing our liquidity through asset sales, we do not expect to have sufficient liquidity to satisfy our debt service obligations, meet other financial obligations and comply with restrictive covenants contained in our various credit facilities.”
    The company is the most recent operator in the state to declare bankruptcy, filing in mid-September in hopes of clearing more than $3.25 billion in debt.
    As part of the company’s restructuring agreement, second lien lenders own all of the equity of the reorganized company in exchange for providing at least $450 million of new capital to increase liquidity.
  13. The EIA’s Monthly Energy Review is out with US production numbers through September. US C+C production was down 169,000 bpd in September.
    The Monthly Energy Review now matches exactly the data reported in the EIA’s Petroleum Supply Monthly which only has data through July. However the new Petroleum Supply monthly with US and individual states production data through August is due out Friday.
    The data is in thousand barrels per day.

     photo US CC Productin_zpstrrrt38u.jpg
    • Watcher says:
      Given no significant shale oil output decline, would this not be legacy fields in decline, which were in decline regardless of price?
      • Huh? This is total US crude + condensate production. There is just no other way to put it. It is the total of all US 50 states and offshore production. But you are mistaken, there has been significant decline in shale production.


         photo Rystad Energy_zpski7mvuri.jpg
        But there has also been declines in most of the other producing states.
        • Watcher says:
          That’s BOE on the axis and labeled LTO.
          DMR says max NoDak output was 1.228 mbpd Dec. Now 1.186 mbpd. Abtout 40K decline.
          Chart deceptive.
          • Now 1.186 mbpd.
            No, 1.186 mbpd was their August production, not what they are producing now. The EIA chart above shows a huge decline in September. Also the chart is labeled “Historical and Forecasted”.
            I see nothing deceptive about the chart.
  14. Old Farmer Mac says:
    This is from Bloomberg a week ago.
    General Electric Co. sees battery costs falling 50 percent over the next five years, a decline that may mimic or even surpass the recent drop in costs for solar and wind power, Pratima Rangarajan, general manager for energy storage at GE, told hundreds of attendees at the Energy Storage North America conference in San Diego. GE has 40 MWh of operating energy storage systems running and plans to install another 65 MWh next year, she said.
    “We are ready to go to the next stage,” Rangarajan said, “which is the scaling stage.”

    When the building trades and government operated permitting offices finally get their act together the way Germans have, which MIGHT happen within five years but more likely imo will take ten years in this country, batteries and pv are probably going to be cheap enough that a hell of a lot of people are going to buy in just to save money. The price of cars such as the Leaf and the Volt will be far more competitive by then too.
    A lot of people in sunny places are going to find the dollars and cents arguments in favor of owning pv and batteries and an electrified automobile even without subsidies within the decade.
  15. Doodlebugger says:
    Question for Shallow Sand;
    Our local taxes (county, school, hospital) have on the average through the years averaged fairly close to one months net production per year. This year the valuations the assessors made in January were adjusted higher based on a probable price rebound that never came with the result being they consumed 1.5 months net production. I just wondered if you were seeing similar pain.
    • shallow sand says:
      Doodlebugger. The tax we paid locally in 2015 was determined based on valuations as of 1/1/14. So yes, same as you, but over time I suppose it all averages out. Hopefully what we pay in local taxes in 2016 and 2017 will be lower and the price higher than now, but who knows what oil prices will be?
  16. ezrydermike says:
    in case you’re wondering what billionaire captialists think…
    Gates is on a solo global lobbying campaign to press his species to accomplish something on a scale it has never attempted before. He wants human beings to invent their way out of the coming collision with planetary climate change, accelerating a transition to new forms of energy that might normally take a century or more. To head off a rise in average global temperatures of 2 degrees Celsius above preindustrial levels—the goal set by international agreement—Gates believes that by 2050, wealthy nations like China and the United States, the most prodigious belchers of greenhouse gases, must be adding no more carbon to the skies.
    • Fred Magyar says:
      Gates is on a solo global lobbying campaign to press his species to accomplish something on a scale it has never attempted before.
      Well I’m not surprised. Bill Gates is highly intelligent has access to knowledge and immense wealth and is therefore in a position to catalyze change. Maybe he can help convince others like himself that at the end of the day planetary issues such as the consequences of ecosystem destruction do not discriminate between the super wealthy and the rest of us.
      • Boomer II says:
        Gates is on a solo global lobbying campaign to press his species to accomplish something on a scale it has never attempted before.
        This is exactly what I have been saying would happen.
        While folks like the Kochs have been using their wealth in support of fossil fuels and related industries, there is a whole lot of tech millionaires/billionaires that care nothing about fossil fuels and can and likely will use their money to influence politics in support of energy technology.
        Politics in DC will change as the money changes.
        • wimbi says:
          And so will the tech. Just think what we could do in solar/wind with any small fraction of the money going down those sinkholes in ND and so on.
    • Longtimber says:
      How about it Billy? Why don’t you free mankind and Ditch the Wondows Registry … ?Vista for Reactor Control?

  17. AlexS says:
    The author of the post says: “The former Soviet Union consumes a little less than 40 exajoules. That is 8% of the global consumption and about 25% lower than their peak in 2009.”
    The data from BP “Statistical Review…” shows a different picture:
    In 2014, The former Soviet Union consumed 946.6 million tons of oil equivalent. That is 7.7% of the global consumption and 5.6% HIGHER than in 2009.
    2009 was not a peak, but a cyclical decline. The peak (so far) was in 2012. Since then, FSU primary energy consumption declined by 3.4%. But this trend will be reversed and consumption will return to growth

    FSU primary energy consumption (mtoe)
    • AlexS says:
      The author says: “Europe minus the Former Soviet Union consumes 60 exajoules per year. That equals 12 % of the world energy consumption. The decline since 2006 is 18%. That is significant and severe.”
      According to BP data, the decline in Europe’s ex FSU primary energy consumption between 2006 and 2014 was only 9.3%.

      • Verwimp says:
        Hi Alex,
        About Europe minus Former Soviet Union. Your chart is in Million tonnes of oil equivalent. My chart is in Joule. I invite you to visit the source website of this charts: http://www.mazamascience.com . You will see, if you go to an ‘all fuels’ tab, there is a clickable option “mtoe” or “J”. You see a difference between the two, especially on hydro and nuclear. The reason why is explained under the “data” tab in the upper right corner.
        I prefer J when comparing different sources of primary energy.
        The side effect, with relatively stable nucleair and hydro, and declining fossil fuels, is that the decline of the sum is downscaled when you check the data in mtoe.

        • AlexS says:
          Yes, I understand that different conversion ratios will show slightly different results

          • Dennis Coyne says:
            Hi Verwimp and AlexS,
            Is there a good explanation for the difference between the two sources?
            A conversion from Joules to Mtoe should not result in a significant change if done properly.
            • AlexS says:
              I am using data from BP Statistical Review of World Energy 2015 in mtoe (as stated).
              Verwimp is using the same numbers converted in joules. You should ask him about conversion factors for each energy source

            • Verwimp says:
              I cite the source of the data: “The primary energy values of both nuclear and hydroelectric power generation have been derived by calculating the equivalent amount of fossil fuel required to generate the same volume of electricity in a thermal power station, assuming a conversion efficiency of 38% (the average for OECD thermal power generation).
              This means that the data in the nuclear and hydroelectric worksheets in units of ‘mtoe’ (million tonnes of oil equivalent) are scaled up by a factor of 1/0.38 (=2.63). When fossil fuels are used primarily for generation of electricity, this scaling can be useful. It allows the amount of electrical energy available to consumers from nuclear and hydro power plants to be compared with the amount available to consumers from coal/oil/gas fired power plants.

              So, yes, there is a good explanation. But one needs to know what one wants to compare. I prefer to compare (or add-up) the Joule-based data, because electricity is only a tiny fraction of energy use.

              • Dennis Coyne says:
                Hi Verwimp,
                The conversion from tonnes of oil equivalent to exajoules should make no difference because the BP Statistical review makes exactly the same conversion for renewables and nuclear. In percentage terms the changes should be identical regardless of units.
      • AlexS says:
        The author says: “North America consumes 110 exajoules per year. That equals 22% of the world energy consumption. The d[c]line since 2008 is about 5%. That might not be statistically significant. Nevertheless: there has been no more growth since 2000”
        According to BP data primary energy consumption in North America in 2014 was virtually the same as in 2008 and only 1.8% lower than the 2007 peak level. Furthemore, there was a rising trend over the past 2 years.

        North America primary energy consumption (mtoe)
        • Verwimp says:
          “There was a rising trend over the past two years.” Right. But what are we talking about? Look at these guys (graph): They have experienced a rising trend!
          What my post was all about is to indicate a giant shift on a global scale. Where the FSU, the EU and the USA are looking at as bystanders.
          • Verwimp says:
            Or to put it the other way around: “Look who’s becoming important in the world! Things are shifting away from us!”
            • AlexS says:
              Yes, this is obvious
            • MarbleZeppelin says:
              That graph makes no sense. Eurasia is Europe and Asia combined while Asia Pacific also contains some of the same countries as Eurasia, such as China, India, Thailand, Vietnam, etc.
              • Doug Leighton says:
                Good point. Depending on context Asia-Pacific could include almost anything, like Mexico. So, among other confusing details, Eurasia and Asia-Pacific seem to be counting India and China twice.
              • MarbleZeppelin says:
                Assuming Eurasia mean Russia, that’s 1.4 billion people in Europe+Eurasia+North America using 47% of world energy. Then Asia Pacific with 4.2 billion people are using 40 percent of world energy.
                So Asia Pacific with three times the people uses less energy than EENA.

              • Verwimp says:
                BP, the source of the used data, splits up the world in the regions mentioned in the graph. That means: No countries are counted twice.
                They have just a particular way to define regions. They cut Asia in three pieces:
                – The Middle East.
                – Eurasia, (Turkey, Ukraine, Russia, …)
                – Asia Pacific (India, China, … but also Australia, New Sealand)
                Check BP statistical review. It’s a nice report. It’s fun-fun-fun guaranteed for the entire family.
                • MarbleZeppelin says:
                  Maybe BP needs to get with the rest of the world instead of making up it’s own definitions. Communication doesn’t work otherwise.
            • Glenn Stehle says:
              That’s an intriguing graph.
              I wonder what a similar graph showing GDP would look like, and how closely growth in GDP correlates with growth in energy consumption. I found this graph, and it looks like one might find a fairly close corellation between the two.
              • Verwimp says:
                I think your pie-charts indicate a close relation of GDP to Energy consumption indeed.
                On the other hand: One needs to realise between 1990 and 2013 the energy consumption of the G7 has increased only like 10% or something, while the GDP has more then doubled. (deindustrialization and growing service economy). For the Emerging 7 the GDP went fifteenfold, while the energy consumption went only threefold. So there is a connection, but it is not linear.
    • Verwimp says:
      Hi Alex,
      About Former Soviet Union: My text contains an annoying typo. It should have been ‘their peak in 1991’ instead of ‘2009’. I am sorry about that. You can see the 1991 peak in the chart. It’s their all time peak.
      I’ll ask Ron to fix the typo.

      • It has been fixed.
      • AlexS says:
        Thanks for clarification.
        In fact, FSU primary energy consumption in 2014 was 29.5% lower than in 1990 (absolute peak).
        But the decline occurred in the 90s and was due to a sharp economic contraction in all post-Soviet countries.
        Between 1990 and 1998 FSU energy consumption declined by 36%, but as economic growth resumed energy consumption increased by 14.3% in 1999-2012. In 2013-14 energy use declined by 3.4% due to weak economic performance.
        The above numbers mask significant differences between FSU countries. Thus, Russian energy consumption declined by 30% between 1990 and 1998, increased by 15.5% in 1999-2012 and was down 2% in the past 2 years.
        Ukraine experienced the sharpest drop in energy use of 51% between 1990 and 1998. Its consumption has remained relatively flat in 1999-2008 and further declined by almost 25% since then.
        By contrast, energy consumption in some oil and gas-rich countries in Central Asia has seen a sharp increase over the past 15 years.
        • Verwimp says:
          The FSU post 1990, including its ‘sattelite states’ is a catastrophe. Have you seen their demographic transition? The area lost 18.000.000 people since 1990.
        • Verwimp says:
          Here is the graph.
        • AlexS says:
          My point is that the sharp decline in FSU energy consumption occured in the 90s.
          It was due to country-specific factors and this trend reversed since 1999.
          For obvious reasons (changes in GDP structure, improvements in energy efficiency), growth in energy consumption substantially lagged growth in GDP.
          Energy consumption vs. real GDP growth (1989=100)
          GDP growth data from IMF database is for CIS (excludes 3 small Baltic countries)
          • Verwimp says:
            Alex, I like this discussion! Your focus on the Former Soviet Union is interesting, because the FSU is a really interesting case! Your remark that the FSU GDP started rising again since 1999, while consumption did not rise, might be explained by this graph. The production of oil was hit really hard post USSR-collapse. That production resumed in 1999. The local population, nor the local industries did profit from that renewed production. (Flat consumption). The large surplus was exported for money. So where did the profits go? Where is all that money? That is a question I have been asking myself for quite some time. Did it disappear into the pockets of an inner circle?
            • AlexS says:
              In energy exporting countries, such as Russia, Kazakhstan and Azerbaijan, there was a sharp improvement in personal income and living standards since the beginning of 2000s.
          • AlexS says:
            As regards demographics, we are speaking of the FSU, not Eastern Europe. So don’t compare apples with oranges.
            FSU population has actually increased by 5.2 million between 1990 and 2014, according to the World Bank data.
            These numbers, however mask significant differences between the countries. While the 3 Baltic countries lost on average about 20% of their population, the predominantly Muslim republics of Central Asia and Azerbaijan added more than a third.
            FSU population, 1990-2014 (millions)
            Data source: World Bank

        • AlexS says:
          FSU population: 2014 vs. 1990 (millions)
          (countries sorted by % change)
          Data source: World Bank
          • Verwimp says:
            Alex. Thank you very much! I just realised I need to plunge into the history, the demographic an other data of the central Asian republics. You indicated a blind spot in my view of the world.
  18. ezrydermike says:
    not a direct energy post, but what the f@#k?!?! How much could 60 billion buy us if used for energy R&D or education or….
    what the hell do we need long range strategic bombers for?
    Aerospace giant Northrop Grumman Corp. has won an intense four-year long competition to build the nation’s new fleet of long-range stealth bombers, a project likely to create thousands of jobs in Southern California.
    In an announcement at the Pentagon that took industry experts by surprise, the Air Force announced that Northrop had bested a team from Boeing Co. and Lockheed Martin Corp to build 80 to 100 strategic bombers over the next decade for an estimated $60 billion.
    • Longtimber says:
      IIRC, The US spent 33 Billion on WWII. Elon should build this bird and send them to Mars.
      60 billion will turn in fractional trillion, when 787’s would do the job and use less fuel.

    • Watcher says:
      It’s 6 billion a year.
      To supplement a B52 fleet that entered service in 1955.
      And most of the $6B is paid in salaries, that are taxed.
      And the $6B is printed from thin air and added to a “debt” that won’t be repaid.
      What’s the big deal.
      • If it’s intended to replace the B52 they could simply buy a KC46 fuel tanker derivative, give it a means to launch up to 30, 100 mile range, 500 kg warhead, missiles. It’s a lot cheaper, and much more practical.
    • MarbleZeppelin says:
      ezyrydermike, you do realize that the B52 was used in many wars for conventional bombing besides being a nuclear attack bomber?
      Think of it, high tech stealth bombers that might get through in case of nuclear war. Scary.
      Let them build the stealth fighters, stealth bombers, hypersonic cruise missiles. It’s a great deterrent.
      Much like a cat puffs and growls to look bigger and scarier than it is, or a cobra puffs out it’s hood. As long as we look really scary and ready to fight, we don’t have to fight.
      Remember the cold war? You know where kids had to stop school and go hide behind block walls to practice for nuclear war. Where thousands of nuclear missles were (and are) pointed at each other and nuclear subs played cat and mouse around the globe. That was expensive but it was the best war ever fought. We growled at each other, made all kinds of posturing and nobody ever really fought. That was the greatest step forward for mankind (one of the most aggressive creatures on earth). For once we didn’t kill thousands or millions of people. We did what the animals learned long ago within their groups and species, fight without killing each other.
      If it takes some expensive posturing, growling and showing our teeth, so what? That is far better than actually fighting a big war, especially now when everything from nuclear, chemical and biological weapons can be launched around the world.

      • ezrydermike says:
        do you even read what you post?
        issue is long range strategic stealth bombers, not land or sea based cruise missiles. we already have delivery systems that make these bombers obsolete
        stealth bombers are offensive 1st strike that lead not to deterrence but to fear that one will be taken out before one can respond. the opposite of the MADD, this leads to the thinking that a 1st strike can destroy another countries ability to respond. these are destabilizing.
        we don’t need more high tech penis extensions. there are too many in the world already and the US leads this charge.
        this is just a pork barrel gift to the MIC.
        greatest step forward for mankind? how about reducing the world’s arsenals?
        I must have missed the part that we stopped killing each other
        and yes, I am old enough to have gone through the effing joke of duck and cover. in reality it was assume the position and kiss your ass goodbye
        • MarbleZeppelin says:
          ezyrydr said “do you even read what you post?”
          I have to remember not to respond to you in the future. You are a real joker, ask a question, it gets answered, but you were just lurking with your own already prepared answers that make little sense and show you did not understand what I wrote. And you have a smart mouth.
          • Caelan MacIntyre says:
            “We growled at each other, made all kinds of posturing and nobody ever really fought…” ~ MarbleZeppelin
            Who’s ‘we’?
            “Many people’s thinking is permeated by state perspectives. One manifestation of this is the unstated identification of states or governments with the people in a country which is embodied in the words ‘we’ or ‘us.’ ‘We must negotiate sound disarmament treaties.’ ‘We must renounce first use of nuclear weapons.’ Those who make such statements implicitly identify with the state or government in question. It is important to avoid this identification, and to carefully distinguish states from people…
            By appealing to the state, activists indirectly strengthen the roots of many social problems, the problem of war in particular…” ~ Brian Martin, ‘Uprooting War’
            “You are a real joker… And you have a smart mouth.” ~ MarbleZeppelin
            Those look like ad-hominems.
            • MarbleZeppelin says:
              I am sorry I disturbed you folks with some advanced concepts. All the concepts I presented are well studied and documented. I will try to keep the level down as I usually do.
      • wimbi says:
        While I agree with all that, we do have to remember that in reality the deterrent failed, but was saved by mere common sense at the right time and place. We all know the story of the russian missile commander who did not act on a firing order falsely triggered by a flight of geese, because he did not trust the new radar.
        Did this really happen? It could have.
        Once upon a time, long long ago, I was a new radar crewman on a new small aircraft carrier making it’s early training runs.
        Bridge, CIC. we have a big target, bearing 035, range 20 miles, speed 52.
        CIC, bridge, Check that speed!
        Bridge, CIC – we did, all three of us, real big clear track, 52.
        CIC- bridge. Gimme your Chief
        C-B- Chief’s in the head.
        (New voice, the Captain)– In these waters, gotta be a blimp. There it is, coming out of that cloud.
        Moral of story. Experience helps. Problem, how to get experience in a nuclear exchange?
        • MarbleZeppelin says:
          Wimbi, what do mean the deterrent failed? You mean we are all radioactive dust now and I am typing from Paradise or Hell. Seems more like Limbo to me. 🙂
          Guess we have to accept the reality that there has not been a nuclear attack in 70 years, despite all the heightened threat. Now if only we can get the idiots to do the same thing with conventional warfare. Actually that is happening, but only where the opponents are somewhat equal in strength. Picking on small, weak and poorly defended countries seems to be the new deal, unless they have a strong ally and decent defenses like Iran.
          We have moved on to economic and population/religious wars. Less bloody but still death and suffering dealing, just nothing that the MSM would broadcast much about.
          • wimbi says:
            Sorry to have worded it to allow that interpretation. I meant that while the overall conclusion was as you say, but in detail, mere chance saved our asses. With all those screwup possibilities from all those weapons, it had to be that way. Logic is all well and good, but time and chance governeth all.
            My own solution is of course politically impossible. We and the other guys privately agree to play the game together, each one telling the other what they plan to do, and the other telling the one how they would counter it if they did.
            This way they both continue to conclude that “the only way to win is not to play.”
            And so they keep up the play so they don’t get tempted to play for real.
            • MarbleZeppelin says:
              No wimbi, not mere chance. People were put in place with the ability to interpret the situation and with the ability to cancel the response. That was part of the design, not chance. There was also a level above that guy who could have stopped it also. Those people knew what they were doing and the horrible consequences of making mistakes, so they put stopgap measures in place.
              There is no winning a nuclear exchange. Everybody knew that and played one-upmanship until it became stupid to continue. Now we have an armed peace, missiles, subs and planes ready to launch on a minute’s notice, but kept out of the public discussion. Good in one way, because there is not much one can do to save themselves if the nukes fly. Bad in another because without public pressure, the nukes will never really go away. Always minutes away from assured destruction, what a way to live.

              • wimbi says:
                I agree with all of that. Our difference is that I think we have lotsa evidence that no matter how careful we are, there is some sort of happenstance, like a suicidal copilot, to do the bad thing we hadn’t planned for.
                I like nuclear reactors, looked at just as a technology. I don’t like them because the risk, albeit small, has consequences way way too bad to risk.
                Especially when the same $ put on the ground beside my house, just keeps oozing out kw-hrs for me to use any way I want, and if a bad guy comes and does his damndest, all he gets for his work is cuts from the glass he broke.
                Or, if he is really stupid, electrocution.
                Every R&D guy gets his lesson in humility every day, if he is busy enough. I was very busy, and very humiliated.
                • MarbleZeppelin says:
                  You are right about happenstance. I had two books on unforeseen accidents, including fires at nuclear power plants, but I lent them out and they never got returned. One was by a professor at Rutgers U. Comes under the heading of “it’s not what you think of, it’s what you didn’t think of”
                  Yes solar PV is subject to rock throws and bullets. When I build my getaway cabin, I will put covers over the PV to help protect them. A couple of Rhodesian Ridgebacks will make them think twice.
                  As we move more toward a biological civilization, the threats should ease. Maybe. At least it won’t be nuclear war. Tritium has a half life of 25 years, so left untended the H-bombs turn to small fission bombs.
  19. Old Farmer Mac says:
    Call’em what you like, but Fernando is right about the Maduro regime.
    This prosecutor is in the USA seeking asylum. He ought to get it.
    • I think the Maduro groupies lost steam as the regime continues to destroy Venezuela.
      By the way, the Uruguayan press reports PDVSA has failed to deliver oil to Uruguay as payment for food Uruguay was sending. The Venezuelan regime has a communist pedigree, they like to set up Warsaw Pact style government to government deals. The Uruguayans sign the deal, and farm out the food market to private farming. From what I gather Venezuela lacks the oil production capacity to deliver the oil, the Uruguayans suspended the food deliveries. The Uruguay supply chain will dry up by January. Meanwhile the Uruguayans are going on the spot market to buy the missing volumes.
      The Venezuelan National Assembly elections are coming in early December. Brazil has refused to send an observer because they felt the Venezuelan regime wasn’t offering the guarantees the observers could observe. Meanwhile the regime is committing fraud and quite a few abuses (too numerous to document here). I think Venezuela will break out in serious shooting violence in early January.
      • Old Farmer Mac says:
        So Fernando,,
        You are probably the only person in the forum who really makes an effort to keep up on Cuban and Venezuelan politics so I would like to hear your opinion as to whether the regime will be able to keep selling SOME oil one serious fighting breaks out.
        It seems likely that if there are very many people around determined to burn down a refinery or blow up a pipeline, it will get burnt down or blown up, unless the regime is able to put a loyal soldier watching every two actual workers.
        Turn me loose with some matches and a can of gasoline and I could destroy a million dollars worth of equipment in a few minutes, even though it would be my very first actual experience as an arsonist. I doubt the regime will be able to watch EVERYTHING.
  20. Frugal says:
    Shell to halt construction of Carmon Creek project amid low oil prices
    The Anglo-Dutch major late on Tuesday said it would halt construction of the 80,000 barrel-per-day Carmon Creek project located in the province’s northwest, becoming the latest company to walk away from a major growth project as the rout in U.S. and global oil prices shows few signs of easing. Shell said the move will result in a $2-billion (U.S.) charge on its third-quarter results.
    It will be interesting to see what happens to Canadian oil production over the next year or so. Is it going to stagnate or is it going to drop?
  21. Longtimber says:
    L@@K what has hit the Fan, GUNS, DRUGS, OIL and TERRORISTS
    — ” Saudi prince and four others have been arrested after Beirut authorities foiled one of the country’s largest drug smuggling attempts, seizing two TONS of amphetamine Captagon pills and cocaine before they were loaded onto the prince’s private plane. Captagon? It’s reportedly common among ISIS fighters”
  22. shallow sand says:
    Some notes from Anadarko’s Q3 10Q.
    787,000 BOEPD, versus 849,000 BOEPD in Q3 2014. Decrease due mainly to $2 billion in asset sales in first nine months of 2015, on which they realized losses of $800 million.
    Lost $2.24 billion in Q3 2015, or $4.41 per share, $0.72 per share, ex items.
    They curtailed production in Marcellus voluntarily in Q3.
    Realized just under $26 per BOE companywide in Q3 2015 on sales, including a whopping $0.40 per gallon on NGLs.
    Started the year with $7.4 billion of cash and $15.1 billion of long term debt, 9 months later have $2.1 billion of cash and $15.9 billion of long term debt. That looks like a $6 billion cash burn in 9 months to me.
    But hey, they continue to increase production in the Eagle Ford Shale, Delaware Basin and Wattenberg Field through continued drilling of horizontal wells. So, therefore, no worries!
    • shallow sand says:
      SM Energy. Lost .34 per share, earned .05 per share ex items.
      Realized $22.84 per BOE, but with hedges realized $29.92 per BOE.
      Increased EFS production from Q2, drilled wells on 450′ spacing, going to test 312′ spacing (wow!). For reference, we drill 1000′ wells on 660′ spacing. 4000’+ vertical wells here drilled on 1,320′ spacing.
      Bakken production decreased 7% from Q2 to Q3. Have 47 DUC’s in Bakken.
      Have spent $1.1 billion of CAPEX in first 9 months, plan only $180 million in Q4. Looks like big CAPEX drop is coming in US in Q4, could result in very large production drop in First half of 2016.
      Interesting that SM Energy carries almost no cash, $197,000 as of 9/30/15. But they have $1.5 billion of borrowing capacity on their revolving line of credit, and looks like they think that is the same as cash. They do have $2.534 billion of long term debt, so they are mere pikers in that category, compared to Whiting ($5+ billion) and Continental ($7+ billion) which are similar in terms of BOEPD to SM Energy.
      SM Energy is considered a financially strong shale company by Wall Street.
      • Enno says:
        Interesting observations Shallow, thanks.
      • Glenn Stehle says:
        I wasn’t familiar with the vernacular of 415′ and 312′ spacing, so I went to an SM Energy investor presentation to see what they meant. As the illustration I have attached below shows, what they’re referring to is the distance between the lateral segments of the well.
        So to put that in the language I’m used to talking in, a 7,920′ lateral drilled with 640′ between laterals translates to 120 acre spacing. If we reduce that distance from 640′ to 415′, we’re talking 80 acre spacing. And if we drop it from 640 to 312′ we’re talking slightly less than 60 acre spacing.
        So yea, “WOW!”
        In comparison, Pioneer Resources in the Permian Basin is projecting its reserve estimates on 140-acre spacing on 75% of its acreage and downspacing to 100-acres on 25% of its acreage. And in the Permian Basin we’re talking oil reservoirs, which I would think would drain much smaller distances from the wellbore than a gas reservoir would.
        • coffeeguyzz says:
          What is happening in the EFS regarding down spacing is the thickness of the formation along with a smaller, more effective frac’d radius, is coming into play.
          Several companies have slides in their presentations showing ‘hi/lo’ placement in the 200′ thick ‘lower’ EF and some are placing laterals higher yet in so called ‘triple stacking’.
          I believe the most productive areas have 300′ thick payzone and the newer frac’d procedures are able to effectively access it.
          As far as being profitable? …whole ‘nother story.
      • Glenn Stehle says:
        Just for the fun of it, I thought I would do some back-of-the-napkin economics on some of the wells SM Energy drilled on 625′ spacing.
        And man, do the economics suck!
        Just north of the wells SM Energy is now drilling on 450′ spacing are wells which were drilled on 625′ spacing. I glanced at the production histories from several of these and they all look to have similar production profiles. So I just picked one out of the bunch, shown on the map below. It is the Galvan Ranch #A569H (Texas RRC lease #268237, Texas RRC District 1, Webb County, Texas).
        First production was in July 2012, and the latest available production is July 2015. So the well is three years old.
        In that three years, the Galvan Ranch #A569H has produced 2.27 BCF of gas and 45,000 barrels of condensate.
        If we use the product prices SM reports in its latest quarterly report ($2.77/mcf for gas and $15.18/bbl for condensate) and a 20% royalty, then SM Energy’s share of the production to date is worth $5.6 million.
        If we deduct the LOE, G&A, ad valorem taxes and production taxes from this, what’s left over is about $3 million.
        Current production from the Galvan Ranch #A569H looks to be about 35 mmcf of gas and 400 bbls condensate per month. If we perform the same calculations as above, the well is currently netting about $45,000 per month.
        SM Energy reports it has drilled 162 net well this year, for an average cost of $8 million each. So after three years, the company has only recovered $3 million of an $8 million well? And at $45,000 per month, it would take another 111 months for the well to pay out?
        If the objective is economic (that is, if the objective is to make a profit), why would anyone drill these wells on 625′ spacing, much less 450′ spacing?

      • Glenn Stehle says:
        SM Energy in its Q3 report says it has cut drilling cost YOY in the Eagle Ford by 28% and completion cost by 54%.
        But even if the company could cut total drilling and completion costs by 50%, from the $8 million average it has spent during the first nine months of 2015 to $4 million, the well economics would still suck big time.
        • MarbleZeppelin says:
          Glenn, your graphs are always fuzzy and hard to read. I would like to examine them but it’s too frustrating.
          I convert everything to JPEG and it comes out clearly.
    • Greenbub says:
      At this rate, they will be out of cash in three months. Then what happens?
      • We are setting up a vulture to buy distressed shale companies at the right price. Read my article “Interview with an oil man” and you will understand where this is headed.
        • HR says:
          Looks like New Orleans after Katrina hit. How in the world does a reasonable man make sense of those quarterly results?
          Is this some kind of joke? I’m not kidding. I can’t wrap my head around what shallow put up there. Those are not companies, they’re some kind of axe wielding lunatic.
          I don’t get it. They’re still drilling?
          • Could be drilling to hold acreage. If it’s for something else they are very optimistic. But in the end they become road kill and the remains will be consumed.
          • Ves says:
            They are not oil companies. They are financial companies that with the use of debt destroying the real industrial economy. They are killing the host. It would be very misleading conclusion, especially for people outside the oil industry to think that these are oil companies.

            • shallow sand says:
              Anadarko and SM are not fly by night organizations, they have been around for a long time.
              Clearly those of us here are missing something as both are divesting of legacy assets in a bear market (depressed asset prices) to keep drilling LTO and tight gas wells.
              As for holding acreage, unless leases are requiring incredible down spacing, it looks to me like a lot of the wells are completely discretionary.
              • Ves says:
                It does not matter if they have been around long time. Car manufactures that have been around 100 years are strictly selling debt these days just in the form of cars.
                • shallow sand says:
                  Ves, I was being somewhat sarcastic. It does seem like all of them are burning money, heck even the mightiest, ExxonMobil, is still drilling in both the Bakken and Permian, for reasons which we have debated here since last fall.
              • HR says:
                You know, I wonder if the chairman of andarko had to make this presentation to the faces of shareholders. Maybe the shareholders are in on the secret sauce these guys are using?
                The chairman should be honest and just say ” look, we are destroying this company as fast as we can, we could just take our cash out of the bank and pour gasoline on it and roast weenies but the gas and cash would give the weenies a bad taste.”
                I guess Fernando is right about the takeover but why run these businesses so poorly.
                I’m sorry gentlemen, I don’t get it. I’ve been running companies for a very long time and this doesn’t make any sense. Maybe the people running these outfits are geologists?

                • Cracker says:
                  The down spacing is likely a financial gimmick. If closer wells can be made to look like they are recovering additional oil, then reserves can be increased accordingly, thereby increasing the value of the company, and increasing the amount they can borrow to continue the shell game.
                  It doesn’t really have to produce more oil, it just has to be made to look like it for the benefit of Wall Street, who will continue to pour fake money down the tight rock boreholes.
                  It is survival, with desperate tactics, and mostly trying keeping one’s own salary as long as possible, and the arrogance of management plays a part. It is probably an illusion.
                  • Boomer II says:
                    The down spacing is likely a financial gimmick. If closer wells can be made to look like they are recovering additional oil, then reserves can be increased accordingly, thereby increasing the value of the company, and increasing the amount they can borrow to continue the shell game.
                    Wall Street usually rewards growth, even if the growth isn’t sustainable and isn’t financially wise.
                    And most of the US business and stock market is based on quarterly results. So as long as you deliver on those, no one asks about the future.
                    Therefore, the idea of dealing more wells for appearance’s sake seems to be BAU.
                  • Toolpush says:
                    I believe you are correct with your down spacing comment, increasing reserves and thus leveraging the company value. Following this thinking, may also explain the fascination with these multi-million pound fracs.
                    It is not just the increased flow from the fracced well that counts, it is the effect on the reserve figures, of the extrapolation of these numbers across the board that will boost the company value.
                    Whether it is possible to have these down spacings and massive frac, across the board is another point?
  23. Old Farmer Mac says:
    I just found this at the ATLANTIC magazine website.It’s the first time I have seen it and is apparently a new weekly feature.
    The subject matter apparently will consist mostly of very short summarizes of weather, climate, and energy news for those too lazy to dig deeper, BUT links are included to articles that go into detail.
    It will most likely be a great place to check up on weather and climate news and politics etc given the links.
  24. Old Farmer Mac says:
    According to this article, Vesta is claiming a sixty percent capacity factor for a wind farm under construction in Africa.
    • They are claiming it for rheLake Turkana site. Remember my “Close Enconters n the Chalbi”? The Chalbi is located due East of the lake (we were looking for oil in deposits which filled a non active branch coming off the main Rift Valley).
      I can’t recall the wind being particularly strong, but I didn’t spend time close to the lake. My guess is the project is located in a fairly unique spot. This means it won’t be easy to grow it a lot. Whether the claim makes sense or not is hard to tell.
  25. Political Economist says:
    In China’s Gansu province (which has the second largest wind installation by province in China; Gansu’s wind electricity reached 11 GW in 2014, about the same as UK’s total installation up to 2013), 42-54% of the wind power was abandoned during the first nine months of this year. In some regions, the wind abandonment ratio reached 60%.
    Longyuan power corporation reported that on the day of September 28, it had to abandon 79% of its wind power, a historical record. In 2014, the company lost 1.3 billion Chinese Yuan due to wind abandonment. It expects this year’s loss to be substantially bigger.
    • Old Farmer Mac says:
      If I understand this abandonment situation correctly, it sounds as if they are behind on building transmission lines.
      In the LAST ANALYSIS, the only really important and substantial reason we have to go with wind and solar power is to REDUCE our consumption of coal and gas.
      The arithmetic works out best when you over build wind and solar to some extent, because there are going to be plenty of times wind and solar farms are producing, but at a lot less than nameplate capacity.
      Overbuilding wind and solar capacity results in maximized savings of coal and gas, the stuff that comes out of holes in the ground that ya gotta pay for with precious foreign exchange if you are net importer.
      It sounds crazy, but the cheapest solution long term is to build wind and solar power farms so that you get as much juice as you need when they are operating at a LOT LESS than full output.
      If you build the transmission system to match the MAXIMUM out put, the transmission lines will be over sized for out more days than not.
      People are clever and will eventually find productive ways to use all or almost all of the power that can be generated and transmitted.
      If some production has to be curtailed, nothing is lost except the potential income.
      I have a truck that I use regularly that is hardly ever FULLY LOADED. But it is more economical to have one too big than one two small.
      • MarbleZeppelin says:
        Old Farmer said “It sounds crazy, but the cheapest solution long term is to build wind and solar power farms so that you get as much juice as you need when they are operating at a LOT LESS than full output.”
        Not crazy at all, designing for the low spots makes a lot of sense. That is where storage comes in, to help get through the low points. During the high points, electricity will be almost free and business can take advantage of that, as well as residential.
        Overbuilding is good since it will take a while to change to lower energy, more efficient lifestyles, infrastructure and equipment. As the energy needs drop with time, old wind towers and PV farms can be decommissioned. But that will be 40 to 50 years from now or more. Who knows what new ways and ideas will have popped up by then.
        Right now we need to stop screwing around and start funneling money, time and energy into more baby steps toward a sustainable world.
    • MarbleZeppelin says:
      Political Economist , since the article is in English, what do you mean by wind abandonment. Is that they are turned off or that they just shut them down permanently and walked away?
      • Political Economist says:
        Marble, I believe you meant “the article is not in English”. Chinese characters 弃风 (qi feng) literally means “abandoning wind”.
        It does not necessarily means shutting down the wind mill. But I suppose at times they decided to disconnect those wind mills from the grid.
        Regarding old farmer’s question, building transmission lines will help. But the article also says that despite new transmission lines, this year the province has been able to export far less electricity to neighboring provinces due to declining demand.
        The difficulty was partly created by China’s new power system “reform” that reduced the coordination level from large regions (in this case, the large region that matters is responsible for China’s entire Northwest) to provinces.
  26. wharf rat says:
    In US, new renewable installations 1,460 times more than new coal
    Renewable energy sources have accounted for more than 60 per cent of the more than 7,000MW of new electricity generating capacity brought online in the US in 2015, a new report has revealed.
    The report, the latest Energy Infrastructure Update from FERC, shows that wind energy was the major single contributor to new capacity in the first nine months of the year, accounting for 2,966 megawatts (MW) of the total 7,276 MW of new capacity – or more than 40 per cent – and beating out gas.
  27. wharf rat says:
    UC researchers present 10 scalable solutions for climate change
    University of California climate experts today (Oct. 27) announced 10 scalable solutions for moving the world towards carbon neutrality, a practical framework that outlines both immediate and longer-term actions for staving off catastrophic climate change.
    Gov. Jerry Brown, who joined UC President Janet Napolitano at the UC Carbon and Climate Neutrality Summit at UC San Diego, said the solutions from the UC Climate Solutions Group could help shape talks among global leaders at the United Nations Conference on Climate Change in Paris this November.
  28. Doug Leighton says:
    Old Farmer Mac:
    Solar storms and the particles they release result in spectacular phenomena such as auroras, but they can also pose a serious risk to our society. In extreme cases they have caused major power outages, and they could also lead to breakdowns of satellites and communication systems. According to a new study solar storms could be much more powerful than previously assumed. Researchers have now confirmed that Earth was hit by two extreme solar storms more than 1000 years ago.
    • MarbleZeppelin says:
      Since the polar bears seem to have survived those solar storms, research needs to be done on how their neural pathways are so resistant.
      I think I discussed the tree anomaly that got this research started, a while back. I guess as we convert to an electrically driven world Faraday Cages and particle protection clothing will be all the rage. Then as the magnetic poles reverse and the magnetic field turns off for a while, boy scouts will get lost since the GPS system will be burned out by the solar storms and compasses will become decorative. However, shortly after that a huge resurgence will occur in the compass making industry as north becomes south and vice versa.
      The big question then is, will we have to turn all the maps and globes upside down?
      The Aussie’s will have to get used to being Up Over instead of Down Under. They will probably like their turn at being on top. 🙂
    • Old Farmer Mac says:
      HI Doug,
      The link you posted at nine twenty four is the same one that prompted me to ask my original question. 😉
      My precise point is this, that we now know that solar storms probably much worse than the Carrington event have happened within the past thousand years.
      I do understand that scientists with reputations to maintain have to be VERY careful about what they say.
      But a layman can point out some stuff that scientists are obviously looking at – but not talking about very much publicly.
      The math professor who taught me probability theory told a story about continental drift quite often. The geologists didn’t want to recognize it and mostly avoided talking about it because they had no explanation for how it could come about and most of them QUESTIONED whether it had happened. ( this was a LONG time ago ).
      He would just laugh at them in conversational encounters and ask them which seemed more likely, that it WAS REAL, OR that something utterly inexplicable happened even though the odds were demonstrably billions of one against it, as calculated by a mathematician, using their own data.
      Recently large boulders were found way the hell up hillsides on an island, indicating that a super giant tsunami deposited them there. I am thinking it was VERY LIKELY that the presence of these otherwise inexplicable boulders was known to quite a few scientists who just never said much about them years ago, given that they were sitting right out in the open and as big as automobiles and entirely unlike the surrounding soil etc.
      Now we know super sized solar storms are possible. But we have no way of going back, that I know of, and checking past the last thousand years and we actually got lucky about discovering this last couple of super solar storms, they could have been missed easily enough.
      Maybe there have been solar storms within the last five thousand or ten thousand or million years a hundred times bigger than the Carrington event. Most likely there is no remaining evidence that we might discover.
      SO- I am wondering if astronomers are able to detect and measure solar storms on other stars, and if so, do they have a large enough data base assembled to calculate roughly what the odds are of such storms occurring within any given time frame, such as a year or a century. It actually seems likely to me that such detailed long term observations are impossible due to either budgetary or technical limitations or both, but it doesn’t cost anything to ask.
      I do know for a fact that if just a small portion of the larger transformers etc that are essential to the grid fail, we are up shit creek without a paddle. A partial but wide spread grid failure would not be the end of life as we know it, but it could bring on troubles that would make the ten worst earthquakes and hurricanes we know about , COMBINED, look like a rained out Sunday school picnic.
      Just try to imagine LA without electricity for a few weeks. And LA is just ONE city.
      There are hardly any spares for these transformers, may be one for every hundred in service so far as I can find out. Ordinarily they seldom fail, and so not many spares are kept. The lead time for obtaining one is months to years. Some other equipment might be damaged as well, simply because the power goes off or because of power surges etc.
      ALL we know for sure about these super storms is that there have been at least three within the last one thousand years. Beyond that- we don’t really know much if any thing at all about how often they occur.
      Anybody who fails to get my point can google the west coast floods that occurred during the American Civil War. Not one person in ten thousand realizes that flooding on that scale has happened in within the boundaries of the lower forty eight within the last couple of hundred years.
      I am not going to lose any sleep over the possibility of such a storm happening within my lifetime, given that I have more IMMEDIATE problems such as dieing of old age, but I find the possibility far more worthy of thought and investigation than searching for little green men who might be interested in talking to us.
      Actually for what it is worth, I do believe little green men ,with ray guns even, probably do exist somewhere in the universe, but I also believe there are fish in the large nearby lake I fish in once in a while.
      AND there ARE fish in that lake, but if you went out there and dropped some hooks in the water at any one randomly selected spot, the odds are extremely high you would not catch a fish. The odds of there being any little green men, or large red or orange ones, within say a couple of hundred light years, are slim indeed. Now expand your search area to a hundred thousand light years and your odds would be improved enough to make the likelihood of success interesting.
      • MarbleZeppelin says:
        Here you go OFM, some odds on destructive solar storms.
        12% in the next ten years. Seems high but that’s what NASA comes up with.

        I don’t think observing other stars will help much since stars vary dramatically in type and age, so their activity levels will be different than our little yellow dwarf G2V type star.
      • SO- I am wondering if astronomers are able to detect and measure solar storms on other stars, and if so, do they have a large enough data base assembled to calculate roughly what the odds are of such storms occurring within any given time frame, such as a year or a century.
        Mac, of course they have but such observations are little help in predicting what our sun might do. Every star is different and are now in different stages of their lifespan. We would have to log only stars like our sun in size and compisition and about half way through their lifespan as our sun is. And it would have to be a single star, not a double star system as double stars have gravitational interaction that creates different internal problems. Anyway tracking and logging only stars very similar to ours would be a difficult and time consuming task.
        For nearby Sun-like stars, more than 55 percent are confirmed to be in double, triple, or quadruple relationships. Total estimates are higher, with NASA’s Chandra website reporting that up to 80 percent of all stars are in multiple star relationships.

        Monster Stellar Flare Seen by NASA Scientists Dwarfs All Others

        Scientists using NASA’s Swift satellite have spotted a stellar flare on a nearby star so powerful that, had it been from our sun, it would have triggered a mass extinction on Earth. The flare was perhaps the most energetic magnetic stellar explosion ever detected.
        The flare was seen in December 2005 on a star slightly less massive than the sun, in a two-star system called II Pegasi in the constellation Pegasus. It was about a hundred million times more energetic than the sun’s typical solar flare, releasing energy equivalent to about 50 million trillion atomic bombs.
        Fortunately, our sun is now a stable star that doesn’t produce such powerful flares. And II Pegasi is at a safe distance of about 135 light-years from Earth.
      • MarbleZeppelin says:
        Ron brings up a good point about massive solar flares, they would cause an extinction event. So far there does not appear to be an extinction event, even a small one, related to solar flare activity. Keep your fingers crossed, we have enough to worry about.
        But if you see the night crawlers and other worms all coming out of the ground at once, quickly check to see if there is a massive solar event happening. Also look for bright flashes in the distance as substations blow (I’ve seen that one).
  29. Canadian oil industry to lose more than $2 billion in 2015
    The profitability of Canada’s oil extraction industry is being challenged by the sharp and prolonged weakness in prices. The industry is expected to post a pre-tax loss of $2.1 billion this year, compared to a profit of close to $6 billion in 2014, according to The Conference Board of Canada’s latest Canadian Industrial Outlook: Canada’s Oil Extraction Industry.
    ‘While Canadian oil companies have acted swiftly, delaying capital investments, cutting expenses, and reducing employment levels, profitability has plummeted,’ said Michael Burt, Director, Industrial Economic Trends, The Conference Board ofCanada. ‘However, these cost-cutting efforts should begin to bear fruit next year, as the industry is expected to slowly return to profitability, even as oil prices remain low by recent standards.’
    The Canadian oil industry is expected to post a pre-tax loss of more than $2 billion this year.
    Future global demand for crude will be limited by weaker economic growth prospects.
    Despite low prices, investment cutbacks, and a sharp decrease in conventional drilling activity, Canadian crude oil production is expected to continue growing over the next five years.

    • Frugal says:
      The Canadian oil patch is now in survival mode. Layoffs, cancelled projects, debt restructuring, and living off projects where the money has already been spent. Yet they think production will grow over the next five years — obviously this will only happen if oil prices go up.
  30. Doug Leighton says:
    An assessment shows that current climate commitments submitted by 155 countries for COP21 would increase global temperature around 3º C.
    • They should discuss what they think would be the level of emissions and the associated concentrations and forcings. Given the uncertainty in the climate sensitivity the 3 degrees seems pulled out of a hat. I bet the GISS E2 R model yields about 2 degrees C.
  31. Crude oil stocks are up over 123,000,000 barrels or about 34% since last September. Petroleum Supply Weekly That’s quite an increase in storage and is one thing keeping prices so low. International stocks are up also though the last data the IEA published is from August.
    OECD commercial inventories extended recent gains and rose by 28.8 mb in August to stand at 2 943 mb by end-month. Since this was nearly double the 15.0 mb five-year average build for the month, inventories’ surplus to average levels widened to 204 mb.

     photo Storage_zpsxktsqij3.jpg
    • Watcher says:
      The alleged 2-3 million bpd of oversupply for 450 days is 1.125 billion barrels.
      Note the chart shows only 100 million barrels of increased storage since summer 2014, and a decline in storage (increased consumption?) as the price fell from April.
      trala trala
      • Jeffrey J. Brown says:
        Also, it’s Crude + Condensate, not just actual crude oil:
        Combining the US and OPEC estimates, the US + OPEC ratio of condensate to C+C production may have increased from about 4.6% in 2005 to about 10% in 2014.  If this rate of increase in the global condensate to C+C ratio is indicative of total global data, it implies that actual global crude oil production (45 and lower API gravity) was approximately flat from 2005 to 2014, at about 70 million bpd.
        • I don’t think it’s indicative of global data. The major contributors of new gas production are (I think) Middle East, USA, Australia, and Central Asia/Azerbaijan (???). But I don’t think the Australian gas is rich in condensate. Azerbaijan’s is, but it’s not that much. I tossing this out to see if it sticks, I didn’t check a data base.
      • Daniel says:
        I am trying to find more data on this issue for a while now. The alleged over-production numbers don’t really match any storage increase I can find anywhere.
        Could somebody with more knowledge in this shine some light on this??

  32. AlexS says:
    Hess Slashes 2016 Drilling Budget 27 Percent on Oil Swoon
    Hess Corp. plans to cut spending by about 27 percent next year after its oil and natural gas business lost more than $2 million a day during the third quarter.
    Hess estimated its 2016 capital budget will fall to $2.9 billion to $3.1 billion from $4.1 billion this year . Daily oil and gas output will decline to the equivalent of 330,000 barrels to 350,000 barrels next year, an 8.7 percent drop from the full-year 2015 target, based on the mid-range of those numbers.
    The company posted a net loss of $279 million, or 98 cents a share, compared with profit of $1.01 billion, or $3.31, a year earlier, according to the statement. Excluding one-time items, the per-share loss was $1.03, beating the average estimated loss of $1.20 from analysts in a Bloomberg survey.
    Hess’s exploration and production unit lost $188 million during the quarter as a 53 percent plunge in the price the company received for each barrel of crude more than offset a 19 percent jump in production. Even with hedges in place intended to help the company lock in prices for its output, its average selling prices for crude was $45.66 a barrel, compared with $96.78 a year earlier.

    • AlexS says:
      Apparently U.S. E&P capex will be cut further next year. Given that the potential for additional cost cuts is limited, a significant increase in rig counts looks unlikely. The inventory of the DUCs (drilled but uncompleted wells) has been declining since 2Q15. Hence, a rebound in U.S. LTO production may be delayed until 2017.
      • shallow sand says:
        AlexS. Thanks for the Hess info. I think Whiting, Oasis and Continental will be interesting, given all are almost strictly LTO companies, small amounts of conventional production.
        • AlexS says:
          shallow sand,
          I think further capex cuts are inevitable for most US E&Ps next year. Oil prices are unlikely to be much higher than today, and companies intend (and will have) to spend within cashflows
  33. WeekendPeak says:
    Isn’t the author’s name of this post Bruno Verwimp, not Verwimp Bruno?

  34. shallow sand says:
    I have a question. I see that almost all upstream E & P’s are selling their midstream and water disposal businesses.
    Are these really businesses, or primarily infrastructure for company assets?
    For example, I suppose we could sell our tank batteries and gathering lines to someone else and then pay them rent. Same with our water disposal lines and injection/disposal wells. However, I question whether any of this would comply with the contractual requirements of our leases. Is this what these companies are doing? If so, and even if not entirely the same, how the heck is this a good thing, as all the MSM and investor sites seem to think.
    I am noticing very high “gathering and transportation” expenses for some of these companies. I do not understand how all of this works and would be interested in information about these matters.
    • Clueless says:
      “I suppose we could sell our tank batteries and gathering lines to someone else and then pay them rent. However, I question whether any of this would comply with the contractual requirements of our leases.”
      SS – You may have unique leases. But, in general, I was of the opinion that when a mineral owner leases his mineral rights, the lessee that acquires them is not obligated to personally operate the lease. Thus, they would not be required to own any of the equipment, etc. It used to be common for an original lessee to give the landowner a 1/8 royalty and then retain a 1/8 royalty for himself. He would then sell 100% of the working interest to an operator(s) who then had a 75% revenue interest, a so called “third for a quarter deal.” That came about because a 33 1/3% owner of the the 100% working interest has to pay 1/3 of the expenses for 25% of the revenue.
      I worked for a petroleum marketer that was hugely involved in the energy business. We had thousands of our tanks set on production locations where we charged “rent” by adding an amount to the normal selling price of oil, or methanol or whatever it was in the tanks.

    • Clueless says:
      “I suppose we could sell our tank batteries and gathering lines to someone else and then pay them rent. Same with our water disposal lines and injection/disposal wells. However, I question whether any of this would comply with the contractual requirements of our leases. ”
      You may have unique leases. But, I was of the opinion that the original lessee of the oil and gas rights did not have to operate the lease. Back in the day, the mineral owner would keep a 1/8 royalty, and then in many cases the original lessee would also retain a 1/8 royalty and sell 100% of the working interest (75% revenue interest). These were called a “third for a quarter deals.” [Because a 25% working interest owner had to pay 1/3 of the expenses for 1/4 of the revenue.]
      I worked for a petroleum marketing company that was huge in the energy business. We had thousands of OUR tanks set on production locations. We rented them out by charging an extra amount over the cost of lubricating oil, or methanol or whatever was in the tanks.

    • John S says:
      Shallow, I have some experience in this area. They are legitimate businesses. But the gas companies are very predatory. Once you hook up to them it’s impossible to get away.
      Also, it is a way for an operator to skirt any prohibition against deducting post production costs.
      • John S says:
        To further elaborate on midstream gathering companies, here is a recent article on SandRidge buying back its Piñon field system which it sold a few years ago to raise capital:
        SandRidge committed to a volumetric commitment when it sold the gathering system but when it stopped drilling the Piñon field it could not fulfill its commitment and had to pay a significant cash penalty.. I don’t trust many Oklahoma based operators…..
    • Clueless says:
      tried a post twice

    • Clueless says:
      “For example, I suppose we could sell our tank batteries and gathering lines to someone else and then pay them rent. Same with our water disposal lines and injection/disposal wells. However, I question whether any of this would comply with the contractual requirements of our leases.”
      Shallow Sand – You may have unique leases. But, I was of the opinion that the original lessee of oil and gas rights from the mineral owner had no obligation to operate the lease, and thus no obligation to own the equipment. Back in the day, the landowner would keep a 1/8 royalty. The original lessee would many times then also retain a 1/8 royalty and sell 100% of the working interest (75% revenue interest). These were commonly known as “third for a quarter” deals. [Because a 25% working interest owner had to pay 1/3 of the expenses for 25% of the revenue.]
      I worked for a petroleum marketing company that was very large in the energy business. We had thousands of OUR tanks on production locations. We would rent the tanks to the operator by charging an additional amount over the normal price for lubricating oil, or methanol or whatever was in the tank.

      • shallow sand says:
        Clueless and JohnS. Thanks for the replies. I guess when I think about it more, there would be no reason that we could not sell gathering and or water handling segments and I do not think lease provisions would be violated. We own the equipment, so as long as there is no lien on it, no problem. On the water disposal side, do the purchasers become the owners of the SWD wells? If the SWD wells are located on the leases themselves, that may cause some issues, however I am sure given how complex most of the modern shale leases are, this has all been covered.
        I suppose that the banks are not taking a security interest in the leasehold equipment? Seems like maybe they would want to? Or, maybe this is one way they were able to get their lines with the E & P’s paid down, and were glad to get the cash in exchange for releasing their interests in the leasehold equipment.
        Very interesting, seems like maybe another way to raise cash, but maybe also a better way to offload a lot of environmental responsibility to a third party. However, also may not be the most economic thing to do either, depending on what has to be sold.
        On another note, I seem to remember that Whiting sold an ORI out of some of their leases earlier this year. I wonder how much more of that has been going on?
        So many different things being done by these companies just to survive.
        Guess I am no longer surprised that companies are doing these things to DRILL AND COMPLETE MORE UNECONOMIC WELLS, as opposed to paying OPEX/paying debt principal.
        • John S says:
          Shallow, I didn’t see your comment. I posted up thread an article about SandRidge buying back a gathering system.
        • In 1999 I reviewed a development proposal which included a build-own-operate contract for the main process plant. The “operator” wanted to build flowlines to a plant inlet manifold, the BOO contractor had everything down to the sales points. This seems to be used by small companies which lack the engineering-operations know how to handle a medium size project. Tax wise it seemed ok, it offloads the DD&A, creates a higher steady Operating Cost. But the BOO contractor either wants volume guarantees or a fixed fee to cover risk. Over the years the industry lost capability to build plants.
    • Glenn Stehle says:
      shallow sand,
      I noticed those high “Transportation” expenses on SM Energy’s Q3 financials.
      I assumed they were talking about the high transportation costs for their oil production in North Dakota, so for the back-of-the-napkin calculations I made for the Eagle Ford (higher up on this thread) I didn’t include them.
      SM Energy is reporting it sold gas in Q3 for $2.77/MCF, which calculates to $16.62/BOE.
      If we include the “Transportation” expense on gas sales, then the total for LOE + G&A + ad valorem taxes + production taxes + Transportation expense looks to be over $14 per BOE.
      $16.62 – $14 leaves almost nothing.
      Is there any way that could possibly be true? Surely not.
      That would make drilling those new gas wells in the Eagle Ford beyond insane.
  35. R Walter says:
    Methinks the US gov was expecting taxes generated from income from the oil industry, royalty payments to mineral owners, etc.
    Instead, the US gov is looking at reduced revenues, so the solution is to sell some oil from the SPR.
    That’s all.
  36. Watcher says:
    Anadarko’s data above from SS
    Started the year with $7.4 billion of cash and $15.1 billion of long term debt, 9 months later have $2.1 billion of cash and $15.9 billion of long term debt. That looks like a $6 billion cash burn in 9 months to me.
    bit of an eyebrow raise. They pay 721 million dollars in dividends per year. That would eat that cash remaining quickly.
    The surprise is they didn’t borrow. A CFO would much rather finance that cash burn at low interest rates than watch dividend coverage shrink. They must have tried. Rates must not be low for them.
  37. Clueless says:
    I posted portion of my comment to see if it would post. It did. But, now to edit it and add the rest, system says it spam and cannot be edited.
    But the additional was (and this screen is jumping around a lot –
    “I used to work for a petroleum marketing company that was very large in the energy business. We had thousands of OUR tanks set on production locations. We charged rent for them by charging an extra amount over the normal price for lubricants, methanol or whatever was in them. So, I do not think that you need to own all of your equipment.”
  38. robert wilson says:
    I first encountered the always polite Michael C Lynch on the USENET (mclynch) during the 90’s. He was debating Jay Hanson and others. Our internet friendship continued on the Jay Hanson inspired sites (originally on One List). Recently Lynch has been a regular on Forbes. During the late 90’s he said that he was going to write a book. Apparently this is now happening. At $48 I do not plan buy this book but will be interested in any reviews. http://www.amazon.com/The-Peak-Scare-Coming-Flood/dp/1440831866
  39. MarbleZeppelin says:
    Here is a well written article explaining about Typhoon Patricia and why it did not do much deadly damage.
    “Last week, meteorologists were (rightly) cranking the sirens over Hurricane Patricia. In the span of just 30 hours, an ordinary tropical storm had mutated into the most powerful hurricane ever measured, with ferocious 200-mile-per-hour winds. And the cyclone was barreling right toward Mexico’s southwestern coast.
    But then … Patricia didn’t end up causing anywhere near as much devastation as feared. The hurricane hit Mexico’s coast at around 7 pm on Friday, a Category 5 storm with winds reaching upward of 165 mph. Within a day, the storm had weakened considerably, chewed up by mountainous terrain. So far, six deaths have been reported — far fewer than that from many other major hurricanes — and much of Mexico’s major infrastructure has survived intact.
    So what happened? It’d be wrong to say Patricia was overhyped. A similar-size typhoon hit the Philippines in 2013 and killed more than 6,300 people. Rather, chalk it up to luck and readiness. Patricia ended up passing through a lightly populated area. And, crucially, Mexico is getting much better at dealing with tropical storms. In the past, the government had been slow to respond to hurricane threats. This time around, orderly evacuation efforts likely saved lives.”
    For the rest of the article
  40. wharf rat says:
    Wind Power Now Cheaper Than Natural Gas for Xcel, CEO Says.
    Xcel is now the biggest U.S. provider of wind power. “We have a plan to add significant amounts of wind to our system,” Fowke said, including about 800 megawatts by 2020. “We’re going to be able to retire coal plants earlier than we expected. It’s going to help us reduce our carbon footprint 60 percent by 2030” in the upper Midwest. Note also, the shares of this company have gained 11 percent in the past year. http://www.bloomberg.com/news/articles/2015-10-23/wind-energy-cheaper-than-natural-gas-for-xcel-ceo-fowke-says
  41. shallow sand says:
    Whiting Petroleum Q3 summary.
    160,590 BOEPD in Q3, down from 170K in Q2.
    165,900 BOEPD first 9 months 2015.
    151-155K BOEPD Q4 guidance.
    Part of decrease due to $400 million of asset sales first 9 months, 11,600 BOEPD of mature conventional production, for average selling price of $34,500 per BOEPD. My comment would be that I bet in early 2014 they could have gotten 2-3 times as much for that production, depending on oil/gas ratios, which they do not disclose. If oil weighted, they got hammered.
    Still $5.2 billion of long term debt.
    Zero drawn on line of credit, commitment from banks is $3.5 billion.
    Lost $9.14 per share, ex items lost 17 cents per share. $1.7 billion write down on proved properties plus $870 million write down of goodwill (to zero) on Kodiak purchase are the big hits.
    Realized $37.86 per BOE in Q3, which includes $4.72 per bbl benefit from oil hedges.
    CAPEX Q3 $403.4 million. First 9 months CAPEX $1.989.9 billion.
    Claim can hold production flat at 145-147K BOE in 2016 by spending $1 billion in CAPEX, believe they will be cash flow neutral doing this.
    Completed 34 wells Q3 v 52 in Q2.
    Paid $76 million in rig early termination fees first 9 months.
    Two well pad used 7 million pounds of sand on each, IP average 5,224 BOE, both middle Bakken.
    By my calculations, full year non-CAPEX expenses will be about $22 per BOE, which includes OPEX, taxes, G & A and interest. Also, by my calculations, the first 9 months CAPEX per flowing BOE was $43. Production is falling and some of the production is gas and NGLs, so would need an oil price of $75+ in the field, or over $80 IMO to hold production flat and be cash flow neutral
    They will spend over $1 billion less in CAPEX in 2016, but state they will hold production flat and be CF neutral.
    We shall see about that, maybe oil prices will rise in 2016 and they will be able to spend more CAPEX.
    Looks like a lot of conventional assets were divested by the shale folks in the first 9 months, funny they didn’t see fit to sell when those oil weighted properties were fetching up to $150K per flowing BOE.
    They still own North Ward Estes. Wonder what they would take for it? 64K acres, 2,600′ low decline wells making 9,000 BOPD. Who will lend me some money I don’t have to care about paying back at 1% interest?? If Dennis is right and oil is $100 in the next 3 years, whoever does buy that is going to make a killing. They could have gotten $1.25 billion for it, or more, just 18 months ago. Think they’d let it go for $300 million or less?? Could sure do a lot of 7 million pound fracks with that $300 million. LOL.
    Maybe we can set up Peak Oil Barrel, LLC and make a run at it. LOL!!!
    • AlexS says:
      shallow sand,
      Thanks for all 3Q result comments
    • John S says:
      North Ward Estes is a problem child. Operationally speaking its bisected by Interstate 20 which makes for a lot on inconvenience for your field hands. Secondly, Whiting can not source enough CO2 for their needs. There just isn’t enough supply right now although some might could possibly become available. Finally, it is a very shallow reservoir,so there are technical issues which I am not qualified to discuss but perhaps MBP will do so.
      With all that said, I don’t think another Co2 company would want to acquire it.
      Just my humble opinion though.
      • shallow sand says:
        John S. Thanks for the information. I don’t know a lot about it, obviously. Just read some on the internet about it. It looks like the field was discovered in 1929 by Gulf Oil, who drilled 3 dry holes before number 4 hit.
        The ranch owner, George Washington O’Brien, donated a section of his ranch for the town of Wickett, named after Gulf’s head honcho at the time. It appears from aerial photos that the field surrounds the town, which likely means quite a bit of H2S monitors are required, as well as some very high insurance coverage.
        Appears Whiting bought most of the field in 2005 for about $459 million. It was producing 5,700 boepd gross then, and Whiting now has that up to about 11,700 gross BOEPD, with a total of about 2,300 producing and injection wells.
        Being split by I 20 is not convenient.
        Looks like cumulative production is at 400 million plus barrels of oil.
        It is interesting to me in that it is an 86 year old shallow field that still has quite a bit of upside left, based on what I have read. It would not surprise me to see Whiting sell it, this has been mentioned in some business news stories.
        • shallow sand says:
          Also noteworthy is in 2013, Whiting sold OK CO2 flood project producing 7,460 BOEPD for $859.8 million.
          Again, speaking in generalities, but note this year 11,600 BOEPD has been sold for $400 million.
          Different conclusions can be drawn, and agree all properties are not equal.
      • MBP says:
        There are issues with NWA because of the MMP needed for efficient sweep.
  42. AlexS says:
    Rystad Energy believes that EIA is overestimating declines in the U.S. oil production:
    Resilient US oil production will prompt additional volatility in the market
    Rystad Energy foresees upwards revisions to EIA US oil production figures in coming months, which could prompt additional volatility in the oil market.
    Forecasts in Rystad Energy’s October Global Oil Market Trends Report show exit-2015 US oil production at 9.3 million barrels per day, which is 300 thousand barrels per day higher than the prevailing EIA forecast. The difference between the two forecasts increases to 500 thousand barrels in June 2016.
    Rystad Energy’s view differs from EIA’s monthly US Lower 48 states onshore oil production forecast. Recently conducted research on US shale fracking activity, which is closer to actual production than drilling, shows that US horizontal oil production is more resilient and declining less rapidly than suggested by alternative models based on drilling activity as the only driver of well start-ups.
    “The key factor in the resiliency of US shale output is the dramatic reduction in first month’s decline in production from already-producing wells,” says Bjørnar Tonhaugen, VP Oil & Gas Markets at Rystad Energy. Across all US shale liquids plays, legacy production now declines 250 thousand barrels per day in the first month, while in January 2015 the decline was 350 thousand barrels per day. Thus, fewer wells are needed to keep production flat each month than at the start of 2015.
    Conventional non-shale onshore, the remaining part of US Lower 48 oil production, accounts for 3 million barrels per day of US oil production in 2015. Rystad Energy sees an almost 50% increase in plugging and abandonment activity in 2015 across major states with large conventional activity such as Texas and California.
    “Most plugged wells produced less than 15 barrels per day which means that higher abandonment activity has a limited effect on the US supply response. We estimate an additional 50 thousand barrels per day downside risk to US oil production in 2015 if the growth in plugging and abandonment were to continue,” says Bjørnar Tonhaugen. “Supply response is underway in non-OPEC countries through increased field decline and project delays. However, if the market expects the response to primarily come through a dramatic slowdown in US oil production, we warn of renewed volatility in the market as EIA’s monthly figures are revised higher.”

    US C+C production: Rystad Energy vs. EIA estimates (mb/d)
    • shallow sand says:
      AlexS. Thanks for the link. I wonder if this reduction in legacy decline is due to decreased activity in Eagle Ford and increased activity in the Permian Basin?
      Conventional South Texas has had a reputation for higher decline rates than conventional West Texas. Would make sense that this would also apply to unconventional, in general terms.
      Thus far, I do agree that actual production data out of ND and TX is showing a slight decrease through August. For the EIA to be correct, the decline will need to pick up steam soon.
      OPEC will have to cut, or the OPEC basket could stay below $60 for several years if the status quo from the shale companies in 2015 continues. Many OPEC nations will have a tough time with domestic budgets under that scenario. They would just have to hope the huge cuts by the IOCs to CAPEX begin to take hold quickly.
      I think OPEC would be wise to target a price, with an open threat to reopen the faucet if North American activity were to pick up significantly. But this is just one opinion from a somewhat informed observer.
      Come hell or high water, the large shale players will keep at it. It is either drill or die.
      • coffeeguyzz says:
        Alex, shallow
        In both the gas as well as oil unconventional wells, there is a growing belief that restricting original output can significantly boost longer term recovery rates.
        Some of the operators gave been using 18/64″ chokes and even 14/64″ versus the more commonly used 32/64 and finding equal or higher output at the 24 month timeframe than wells with larger chokes.

        Although the understanding of the mechanics is somewhat debated and no clear consensus agreed to, there is a growing belief that the vast amount of proppant used in recent years is disproportionately ‘dislodged’ with the higher pressure/volume leaving the wells and carrying too much recently emplaced proppant with it.
        I do not know if I am explaining this clearly, but, essentially, more operators are ‘slowly’ draining the original production so as not to dislodge the proppant.
        • Toolpush says:
          I would agree with the statement that companies were choking back their wells last year into early this year to gain long term production, but with the “miraculous improvements in productivity”, combined with increasing GOR, I feel your information may be old news. It appears more than likely those restricted chokes are now fully open. We will see shortly, if there is a sudden unexplained drop in production.
        • AlexS says:
          coffeeguyzz, Toolpush
          Thanks for your comments.
          Would be interesting to see some statistics or company case studies

          • coffeeguyzz says:
            Alex, Push
            There was a good article a few months back addressing this very issue, but I can neither find nor recall the source (NGI Daily?).
            The article described a half dozen operators in the EFS with differing MOs regarding choking. Bottom line was the low early producers surpassed or equaled the wider open guys at the 24 month mark.
            However, the proppant placement issue I mentioned is a fairly recent topic that has come to the fore as frac designs shifted to much higher complexity much closer to the well bore.
            Whereas 5/6 years ago, relatively lengthy fissures were desired 1,000′ either side of the lateral, and the fissures somewhat larger than now, today’s designs strive for a Medusa’s hair on a windy day result with countless, ultra narrow cracks 300’/500′ out.
            These wells are producing fine at the outset, but the dropoff is considered too large from the original engineering perspectives.
            Main culprit seems to be the ‘farthest’ out fissures not continuing to produce.
            No one seems to know definitively, but formation closure/shifting is suspect … possibly due to proppant crushing or embedment.
            Proppant might be moving towards wellbore too rapidly in early weeks and clogging fissures.
            I am unaware of anyone declaring to know what is going on, but in the meantime, the wells that are on restricted early flow seem to be outperforming their peers.

            Right now, Range may provide some guidance with their two Claysville wells in the Utica.
            The first, 11H, flowed 59 MMcf IP then dropped dramatically to about 5 MMcfd today. The second (9H?), just came online and is being restricted to 13 MMcfd. As these wells are on the same pad and in virtually identical rock, the distinction should prove instructive.
            The high overburden pressure being the cause of the dropoff was originally thought by many in this deep (near 12,000′) well, but results from similar deep Utica wells seems to be disproving this.

            • Toolpush says:
              Slow and steady usually wins the race, in the long term. My point is in these financially stressed time, short term thinking will be forced on the engineers by the accountants.
              If the company does not survive the next month, they don’t need to worry about next year!
              I feel they are buying time and hoping for a miracle. We wll see what happens.

  43. Boomer II says:
    I don’t think this has been posted here. If it has, sorry for the redundancy.
    When we talk about feeding billions of people, I’ve wondered why we aren’t focusing more on seaweed and bugs.
    Is Seaweed the Next Superfood? – The New Yorker: Seaweed, which requires neither fresh water nor fertilizer, is one of the world’s most sustainable and nutritious crops. It absorbs dissolved nitrogen, phosphorous, and carbon dioxide directly from the sea—its footprint is negative—and proliferates at a terrific rate. Smith’s kelp can grow as much as three-quarters of an inch a day, maturing from pinhead to ten-foot plant in the course of a winter, between hurricane seasons. It is resilient, built to take a lashing, but if a storm wipes out the crop he can just start over. Every year, he harvests between thirty and sixty tons of it, about the same per-acre yield as a potato farmer.
    • wimbi says:
      Dried and powdered makes great fuel for gas turbines- just blow the resulting dust back out into the kelp bed.
    • TechGuy says:
      Seaweed? very likely contaminated. Seafood is now loaded with heavy metals. Not a good idea to eat from a sewer and we pretty much turned the seas into a giant septic tank.
      I think Seaweed is being promoted because we depleted the fish stocks in the ocean, and probably close to a billion people regularly eat seafood.
      • Boomer II says:
        Good point.
        A few thoughts:
        1. Maybe some seaweed could be grown in less polluted water.
        2. People who are starving probably would eat something with heavy metals.
        3. Perhaps polluted seaweed can be used for non-food purposes. And perhaps seaweed can be used as a way to mop up some pollutants.

        • Fred Magyar says:
          Seaweed? very likely contaminated. Seafood is now loaded with heavy metals. Not a good idea to eat from a sewer and we pretty much turned the seas into a giant septic tank.
          While there are certainly problem areas offshore in many parts of the world I’m still a really big fan of all kinds of seaweed! I’d definitely like to see more offshore seaweed farms.
          Check out the 2015 Buckminster Fuller Institute challenge winner.
          Imagine a vertical underwater garden: seaweed and mussels grow on floating ropes, stacked above oyster and clam cages below. Imagine a farm designed to restore rather than deplete our oceans.
          • wimbi says:
            How about same idea in rivers? And rent out the island to fishermen. Money!
            And, don’t forget to put a big PV array on top, and spin the island to track sun.
            Man! just loads of fun here.
  44. R Walter says:
    Petroleum cars for week 42 2015 are 8,717.
    The 2014 number for week 42 was 12,156.
    Crude oil shipped to Japan is on sale for 41.90 USD today for a barrel.
  45. Frugal says:
    Shell’s profit slammed by big Arctic, Canadian writeoffs
    Royal Dutch Shell on Thursday reported a hefty $8.2-billion charge, equivalent to around 5 per cent of its market value, due to write-offs on projects in the Alaskan Arctic and Canada as Europe’s biggest oil producer grapples with weak oil prices.
    Does anybody here know if Shell has given up on the Alaskan Arctic?
    • Fred Magyar says:
      Does anybody here know if Shell has given up on the Alaskan Arctic?
      CGEP: Global Oil Market Forecasting: Main Approaches & Key Drivers
      Steve Kopits back in February of 2014 gave this talk at Columbia where he mentions that Shell had to borrow money to pay its dividends to shareholders. (Time 47:31).
      Obviously I’m just a naive outside observer but frankly I’ve been having a very hard time lately seeing how any of the Oil Majors continue being viable businesses. They seem to be dead men walking.
      Maybe someone will come along with a smartphone app and uberize the oil business 🙂
      • shallow sand says:
        Fred, look at COP just released Q3 numbers if you want to see the definition of unsustainable.
        They have no refining, they are the largest oil company in the world with no refining segment, I believe. They spun it off awhile back.
        The cash burn continues to be enormous.
        • John S says:
          Shallow, now I am going to have to take a look ConocoPhillips. Since I am an “XCON” I have a pension stuck there. Maybe I should get it out since I can take a lump sum payment. I’ve let it sit there for years.
          • Watcher says:
            Visualize scenarios:
            You extract lump sum. You invest it. You lose huge. You have less to fund retirement. Or you turn out to be a genius (or your coin flips of 10 heads in a row happen) and you pick for your investment a spectacular winner and get a bigger retirement.
            You leave it alone. Company gets smashed. Tries to cut the pension off. Lawsuit. Results: Company forced to pay, forced into bankruptcy, pension given priority over bond holders or anyone else. OR. Lawsuit lost. PBGC steps in and covers pension lost (Pension Benefits Guaranty Corp). You’ll get something like 70-80% of expected pension payments, backed by the US govt.
            In this upcoming environment, hard to see how yanking the lump sum is optimal.
          • TechGuy says:
            In my opinion I would take the Lump sum and stick in a low risk investment, ie low yield AAA rated bonds. The issue is that with Pension, there is a lot of pressure on Pension fund managers to take risks in a very low yield, zero Alpha economy. Thus putting your Pension in risk. My motto is that if you don’t have direct access to your funds, you don’t really own it. In the past I’ve always opted for 401K over pension plans to avoid it from getting spent or mal-invested by someone else.
            Since about 2000, I stopped putting any money into retirement funds since I think they are a bad deal, since the gov’t can at any time change the rules, and its very likely that taxes will be significantly higher in the future than they are today. I am more than a decade away being eligible to withdraw from retirement accounts. Currently, All of my free capital is in cash, very short term AAA bonds or in Precious metals.
            However, you need to do the right paperwork and stick in a IRA or some tax deferred account so you don’t get slammed with huge tax bill. Or see if Conoco will let you withdraw it over a few years so the amount you withdraw does increase your tax bill significantly. Do a bit of research to figure out the best option for you before you yank it.
      • Jeffrey J. Brown says:
        WSJ: Cash Crunch Clouds Future for Oil Firms
        Spending on new projects, share buybacks and dividends outstrips cash flow

        The world’s biggest oil companies are struggling to generate enough cash to cover their spending and dividends, despite efforts to slash billions of dollars from their budgets in the face of tumbling oil prices.
        Spending on new projects, share buybacks and dividends at four of the biggest oil companies known as the supermajors— Royal Dutch Shell PLC, BP PLC, Exxon Mobil Corp. and Chevron Corp. —outstripped cash flow by more than a combined $20 billion in the first half of 2015, according to a Wall Street Journal analysis.
        Analysts say they expect the companies to reveal continuing shortfalls when they report earnings this week, after a third quarter in which oil prices fell to their lowest levels since the financial crisis. Brent crude, the global benchmark, averaged roughly $50 a barrel in the third quarter, compared with more than $60 a barrel in the second and around $100 in 2014.
        The cash crunch underscores the cloudy future facing Exxon, Chevron, Shell and BP amid a 16-month slump in oil prices. After a decade when high oil prices supported megaprojects and steadily escalating payouts to shareholders, the supermajors have slashed spending by more than $30 billion in recent months, laying off workers and delaying projects. More cuts are expected. . . .
        The supermajors were having trouble covering spending with cash even before the oil price crashed. According to a Wall Street Journal analysis, none covered its dividend with cash flow in 2013—a year when the price of Brent averaged comfortably above $100 a barrel.
      • Jeffrey J. Brown says:
        As I have periodically noted, the trillions of dollars spent on global upstream capex since 2005 resulted in a strong increase in global gas, condensate and NGL production, but probably little or no increase in actual global crude oil production(45 and lower API gravity crude)–which makes one wonder about actual global crude oil production rates going forward, given the large cutbacks in global upstream capex.
      • Does anybody here know if Shell has given up on the Alaskan Arctic?
        Yes Shell has abandoned all its arctic adventures.
        Sun sets on Shell Oil’s Arctic quest
        The energy giant’s other Arctic rig, the Noble Discoverer, left Dutch Harbor for Everett, Washington, on Monday.
        Other ships in Shell’s Arctic fleet are expected to leave Alaska over the next couple of weeks, and the company has not disclosed the fate of the 400 employees who have worked on the project in Anchorage.
        But the departure of the 30-story-tall Polar Pioneer is the most visible sign that Shell’s 8-year hunt for oil in the Arctic Ocean has come to an end.
        Shell announced on Sept. 27 that it was abandoning Arctic exploration “for the foreseeable future.”
      • Old Farmer Mac says:
        I don’t know if any of the links Alex S posted include what SHELL top management said about pulling out. But the company position is that they did NOT pull out because the price of oil is low at this time.
        IN CONTEXT, I read this statement to mean that Shell management thinks the price WILL be up by the time they could actually bring any new production in the Arctic to market.
        The implication is that EITHER they just don’t want to spend the money NOW because of the low price putting them in a bind for cash, OR ELSE they were disappointed with the wells they managed to drill. I did not keep the link.
  46. John S says:
    This headline and link is for Shallow: U.S. Shale Profits Beating Big Oil Rivals
    Of course it is Fox News
    • Watcher says:
      It’s also accurate. The article quotes a Platts analysis of 2014 results.
      Dated, but everything is eventually.
    • Boomer II says:
      The headline said profits, but the article talked about growth. It is certainly possible to grow rapidly and still not make a profit. That is the norm for many tech companies.
    • shallow sand says:
      John S. Hard for me to follow what time period is being referenced in that article or how “profits” are being measured. I think Enno and Toolpush have commented that shale CAPEX and reserves are written down over too long of a time period compared to the steep decline rates, which juices earnings on a GAAP basis, despite the companies burning through cash year after year.
      What do you think about COP exiting deep water exploration?
      • shallow sand says:
        John S. ConocoPhillips hasn’t released their 10Q yet, but their press release indicates they have been cash flow negative to the tune of $4.8 billion during the first 9 months of 2015.
        They are huge, $66 billion market cap, but IMO this is still pretty bad.
        With all the losses and write downs I am reading about, and the billions of long term debt all of these companies are carrying, I am not feeling so bad about things.
        Marathon Oil announced a dividend cut. They seem to be a smaller version of COP, worldwide production, but chasing shale the most. Wonder if COP will bite the bullet, given $2.7 billion of the burn is dividend payments.
  47. Clueless says:
    Ves says: “the total cost of production is never less than A (salary) + B (other costs).” and “So the total rate of flow of price (A+B) will always tend to exceed the rate of flow of total individual purchasing power (A).”
    I advised Ves that “total individual purchasing power” is VASTLY greater than “A,” which is his notation for only “salary.”
    Ves, advises me that I am too stupid to understand his equation.
    • Ves says:
      Yes, it is “total individual purchasing power” vastly greater than “A” only as illusion when you introduce debt and attach interest to it. Isn’t it clueless? So nothing changed in the equation because you did not increase purchasing power to balance the cost. The system is still unstable since self liquidating market is impossible.

      • Clueless says:
        So, a guy who bought a Picasso in 1955 for $1000, and sold it last year for $100,000,000 does not really have $100 million to spend – it is all an “illusion.”
        Now I get it!!

        • Ves says:
          I thought we already covered zero-sum game. Buying and selling to each other does not create an added value. Yes, the guy who sold Picasso last year gained $100,000,000. But the guy who sold that same Picasso in 1955 lost $100,000,000. That is called zero-sum game. It is the same for buying and selling real estate, stocks etc. But this is not what we were debating. We were talking about activities that create an added value within current economic system.
          Let me try with flour since you did not understand example with oil. You have flour and baker creates an added value in the form of bread, croissant or pretzels. In order to create that added value baker has to pay himself or/and hire someone to help him out. So that is A. He also needs kitchen equipment (B).
          So as this process goes on through time there is a rate of flow of prices that has to be higher than A+B. Otherwise there is no profit and baker might as well sit at home. This shows that price of inflation and so an ever increasing loss of your purchasing power is built into the system. So the system is unstable.

  48. John S says:
    And Now…….On To The Environment
    Chevron’s Star Witness In 9.5 Billion Ecuador Pollution Claim admits, “I Lied”
    • Clueless says:
      I probably have some of this wrong. But, Ecuador had a joint venture with Texaco and Ecuador was the majority party. Then they kicked Texaco out and took 100%. Later, Chevron bought Texaco. Then Ecuador sued Chevron for environmental damage that occurred when Ecuador was the majority owner with Texaco.
      This is like you marrying a divorced woman. Then, her ex-husband is accused of murder. The DA comes and arrests you for the murder. Just does not seem right.

      • John S says:
        Justice delayed is Justice Denied!
        What was Exxon’s true penalty for the Exxon Valdez? I have always heard that npv for the fines and penalties was zero because of the (what) 20 yr delay.
        I think the difference here is in the trial venue.
        In any case, when a corporation is acquired, the purchaser buy both the assets and the liabilities.
        IF the allegation that Chevron’s witness lied turns out to be true then maybe Ecuador will collect a judgement from Chevron’s assets in Canada. Wait and see.
    • shallow sand says:
      A reason I suspect shale is so popular is that it is in the lower 48 of the United States, onshore and mostly on privately owned land. Less risky than practically anywhere else in the world for many reasons. Best workforce and technology. I am sure the industry workforce would rather be here than places like Iraq, Iran, Libya, Venezuela, etc. We finally get to come home and drill wells on dry land in safe areas. We aren’t going to let economic viability get in the way. Besides, its better to slowly burn cash and hope for a commodity rebound than to have another Macando, Libya shut-in, Venezuela nationalization, etc.
      Not commenting on who is right/wrong in the Chevron/Ecuador dispute, BTW. I don’t know the facts.
      • TechGuy says:
        “A reason I suspect shale is so popular is that it is in the lower 48 of the United States, onshore and mostly on privately owned land.”
        Shale is “popular” because Wall Street threw money at the Shale drillers. Shale Drilling was also promoted as the next big thing. Lots of people started buying because like Tech-Stocks (Dot-Com bubble), and real estate (Housing bubble), the prices only go up! I am sure Gulf Drilling would have remained very strong if it wasn’t for the BP Accident.
    • wharf rat says:
      “On To The Environment”
      Why not?
      Protests Are Putting A Serious Dent In Tar Sands Expansion http://thinkprogress.org/climate/2015/10/29/3717335/pipeline-opposition-stopping-tar-sands-expansion/
      Bad Karma the Texas Way
      Damage from Patricia, the strongest hurricane ever measured in the Western Hemisphere, may cost the U.S. billions from floods, even after the storm spared the largest cities in Mexico.
      Flooding in Texas may lead to more than $3 billion in losses, though it’s too early to project the extent of damages, according to Chuck Watson, director of research and development at Kinetic Analysis Corp. Losses in Mexico are likely to be less than $2 billion, he said.
  49. ezrydermike says:
    no mention of peak fossil fuels…
    Think We Can’t Stabilize the Climate While Fostering Growth? Think Again.
    Long-term investments in clean energy would curb emissions and create millions of jobs around the globe.
    By Robert Pollin

  50. Watcher says:
    Concerning Choke:
    Studies have shown that choking a well could improve the long-term recovery between 10-15% over a 30-year period – however, what is the optimum choke strategy to employ? How do you tailor choke strategies to specific pressure regimes across Eagle Ford reservoirs?
    15% ain’t much. Would seem easy thing to sacrifice for near term survival.
  51. Toolpush says:
    Special Feature: Henry Hub falls under $2 Thursday, October 29, 2015 – 12:37 PM
    The NYMEX November gas contract dropped below $2/MMBtu during intraday trading on October 26, the first time a front-month contract had done so in over three years. The magnitude of the drop took much of the market by surprise, though market fundamentals have been pointing to a strong downward correction since early in the summer (See Southeast Weekly Features May 7, July 21). The root cause has been fundamental oversupply from the Northeast, which could worsen come November 1 with the start of two new backhaul expansions. See Page 2.

    Good to see Heinrich’s favourite source is agreeing with my thinking, that the Marcellus/Utica is pipeline constrained and the new pipeline reversals/expansions are correcting that issue and effecting the HH price in a downward fashion.
    Of course we will have to wait to see how long and how low the price can stay down?

    • coffeeguyzz says:
      If it means anything to learn by observing what the operators there are doing with their money, the proposed build out of a completely separate gathering system for future Utica production should speak volumes.
      The ultra dry (98%+ methane), ultra high pressure (9,000 psi+ @ the outset, dropping to 6,000 psi while on restricted choke) would call for a separate gathering system to not commingle with the much wetter, lower pressure Marcellus gas that is being accessed from, quite literally, the sane pads.
      This commitment to new infrastructure should allay any and all concerns on the magnitude of future Utica production.
      • Toolpush says:
        Yeah Coffee,
        I do believe there is plenty of gas there. We can see what price they can produce in the short term. My question is, what long term price they can survive with?
        Interesting they are building a parallel high pressure gathering system to the current lower pressure system.

        • coffeeguyzz says:
          As I’ve mentioned a few times in the past to shallow, the economics of all this escapes me as it seems to make little sense.
          However, if there is a way to produce this gas (let alone oil @~$50 WTI) at freakin $2 per mmbtu and still stay in business, we are living in a new world.

          I just cannot see it and do not for a moment think it is sustainable … and yet here we are producing record amounts of oil and gas.
          The future amounts of gas emanating from the Appalachian Basin, however, will be profound and long lasting as it contains amongst the largest amounts of hydrocarbons on the planet … and that’s not including the dreaded coal.
          • Watcher says:
            If you don’t have to pay back your loans, there are no costs, and revenue = profit.
            • Glenn Stehle says:
              The financial economy has completely disconnected from the real economy. The phenoneon is so extreme that “fictitious economy” would be an accurate name for our current financial economy.
              The green capitalists are sore because they haven’t been able to get in on the scam, at least not to the extent the carbon capitalists have. But that doesn’t keep them from trying.
              In the end, however, what happens in the real economy is what will determine our future.
    • Heinrich Leopold says:
      On the surface everything looks fine in the brave new world of abundant and cheap natgas. And it is all economical as otherwise companies could not find fresh capital for drilling new wells – or is it? However, if we look a little bit closer, there are huge cracks in the system. Take Range Resources RRC, the poster child and mother of all shale gas companies drilling monster wells in the trendy Utica and Marcellus area. Production tripled over the last five years and annual growth has been 20% on average (CAGR). So, is this the Microsoft of the gas business? If we look at the financial numbers only: not exactly. After five years of torrid production growth, revenue is still at a five year low, accompagnied by a huge loss and the company is relying on its hedge book only to make new investments. As natgas prices are now at a record low, new hedges do not make much sense. In the contrary, hedges are extremely dangerous as the sligthes price rise comes with huge hedging losses. And the bond market? RRC has five times debt to revenue (over 5 bn versus 1 bn revenue ex hedges). For any other company this would be the end of the road. So, the bond market is shut for Range as well. Range can only rely on bank loans for future expansions. This shows already up in below chart where capex is just at a 188 mill USD – five year low. You can see that it took Range around two years to recover from the price fall in 2008. It has been just the price recovery in 2013/2014 which provided Range with enough capital (over hedges and high prices) to fund the following two years. However, this is about to end and capital spending and net wells (at just 20) are at a five year low. As there is a six to nine months time lag from funding drilling to actual production, Range will likely experience a slowdown in production very soon. The internal production numbers of total natgas production shows that this is also the case for the whole natgas market. Although inventory numbers are at record numbers, there has been a breakdown of natgas production numbers over the latest three months. There is a time lag of six months until this comes to the surface, yet it will come and provides an excellent investment opportunity, which will take anyone by surprise. Any investor knows with hindsight that he missed many opportunities, because he could not have seen it when it was just right before his eyes. This is one of these opportunities. If everybody would agree with me, the opportunity would have already gone.
      • Longtimber says:
        Do we agree there should be opportunity in Nat Gas ??
        With Utilities being NatGas slaves, some are going to make a killing..
        But which horse to ponder? Or shotgun with something like FSNGX ?
        Quotes from Notebooks of Lazarus Long … Robert Heinlein

        “Certainly the game is rigged. Don’t let that stop you; if you don’t bet, you can’t win.”
        “It has long been known that one horse can run faster than another–but which one? Differences are crucial.”
        • Longtimber says:
          With most Nat Gas being Regional – A peak at national demands.
        • Heinrich Leopold says:
          This is the next question: how to play this opportunity? It will be very likely a short spike. As soon as prices rise, there will be new hedges which will bring down prices over time. There is just a short window for maybe three to six months – similar to the spike in 2013/14. What is surprising now is that production numbers indicate that the decline is super fast and companies will be surprised how fast a shale correction will be. In any case I will not buy a company as most companies are hedged and actually will fall when prices spike. The best thing is in my view to buy options on futures.
          • HR says:
            I thought that about 35% of the natgas from the frackers was being flared? That’s what I was told, is this incorrect?
            • coffeeguyzz says:
              At the moment, 18% of a company’s produced gas can be flared in North Dakota before stiff penalties kick in (testing is still, I believe, exempt).
              This will incrementally drop to zero in a few years time.

              The biggest reason for this flaring is the vast geographical expanse that wells needed to be drilled in a relatively brief (3/5 year timeframe) so as to hold the acreage by having ‘producers’ fulfill leasing agreements. There was no way gathering lines could be installed in a timely fashion to capture the gas.
              I don’t know about the Niobrara, Powder River, EFS and Permian, but I’ve never heard of flaring issues being raised anywhere except the Bakken.

              Addendum: If you are wondering about flaring in the Appalachian basin, there is virtually NO flaring there as it is close to 100% gas play … they produce nothing without gathering lines already in place.
              The other plays, being oil focused, think the associated gas is a bit of a pain in the ass to handle.

  52. Old Farmer Mac says:
    I copied this from a piece by Ugo Bardi, an old TOD hand, from RESILIENCE.
    This quote is the last few sentences of the article which was about the role of religion in Rome right before the Visigoths arrived.
    ” When Rome fell to the Visigoths, in 410 A.D., it was left to another Christian thinker, Augustine of Hippo, to explain in his “De Civitate Dei” (The City of God) that the purpose of Christianity never was that of saving a rotten empire.
    In the end, empires are just constructions of the human mind; structures that persist for times long enough that some people tend to endow them with the virtue of eternal life: Rome was said to be the “eternal city” and our empire seems to be based on the idea that economic growth can last forever. But empires come and go in cycles, they are as impermanent as the morning dew; they just last a little longer. So, we are going to follow the example of the Roman Empire in its descent toward disappearance. And it may well be that, up to the last moment, we’ll hope that some scientific miracle will save us. Then, it will be the task of someone, in the future, to explain that the purpose of Science never was that of saving a rotten empire.”
    I disagree about specific points, but in the end, I have to agree with the hard core doomer folks that we are living in a rotten empire, and that it is not going to last.
  53. HR says:
    Rysted energy? Anybody know them?
    They’re claiming that US production down to 7.7 mbd by the end of the year.

    I know they’re Norwegians so no square head jokes.
  54. ezrydermike says:
    China will abandon its one-child policy after 35 years and allow all couples to have two children, authorities announced Thursday as they unveiled the outlines of the country’s next five-year economic plan.
    The one-child policy was implemented in 1980 to control the country’s explosive population growth. China says the law has prevented 400 million births, but even so, China is the world’s most populous nation, with more than 1.3 billion people.
    In recent decades, that massive population combined with rapid industrialization and urbanization have led to severe strains on natural resources, including water, and contributed significantly to problems such as air pollution.
    So why would China want to encourage more families to have babies? Here’s a look at the situation:
    • Old Farmer Mac says:
      Something that seems to TOTALLY escape the people who are FIXATED on the concentration of wealth in the hands of the one percent is that MONEY is ONLY a means of keeping track of who owns what and facilitating the exchange of goods and services.
      If you are stranded on a desert island, a wallet stuffed with hundred dollar bills will not enable you to buy a meal or even a swallow of water.
      It takes PEOPLE to provide goods and services, and to consume goods and services.
      China is now at the point the nation must be looking at the provision of goods and services for an aging population. In times past, the old people were fewer, and looked after by family. Now they will be the responsibility of the state for the most part.
      No tax rate, no matter how high or how low, will provide the necessary goods and services to look after the aged population China will have to deal with soon. It takes PEOPLE.
      Some have sort of sniffed at me , implying I have manure on my boots ( true enough, quite often) and am unable to understand that MONEY will suffice if only we tax the rich. I am not opposed to taxing the rich, but money will not buy non existent doctors, or non existent food, or drugs, or electricity or security or the services of non existent carpenters and plumbers and mechanics.
      Marxists may not understand human nature, but they sure as hell got one thing right. PEOPLE provide goods and services, not money. Money is a multiplier of course, in the form of useful tools and infrastructure.But it does not appear that any economy anywhere is going to be productive enough anytime soon for one or two working people to properly support two or more non working elderly plus raise kids and pay all the OTHER bills.
      In the last analysis, the question becomes how many people a working person can support out of taxes on his income while supporting himself and his own kids. There is a limit to how many, for damned sure.
      If you are married with one kid, and you and your wife are the children of one child only grandparents, then in essence, you and your wife are going to have to PRODUCE enough to support yourselves, your kid, and your four elderly family members.This is a grossly oversimplified picture of course, but lower the birth rate low enough fast enough, and you arrive at the scenario I just painted.
      The Chinese are long term thinkers and planners. They see the big picture. They are now doing what they HAVE TO DO, in the short to medium term.
      Of course they are also gambling that they will be able to support a somewhat larger population later on. The demographic projections indicate the population will peak at about the same level within a year or two in any case-based on the ASSUMPTION that Chinese women are not going to have over two children on average going forward.
      This assumption seems likely to hold to me, but I am no China expert. OTOH, urban Chinese obviously don’t need a lot of kids to work in the family rice paddy.
  55. ezrydermike says:
    But from climate change denial to corporate malfeasance, resistance to enforceable environmental protection is rampant. Seeking any conceivable path forward, many young leaders are exchanging their sympathy for the victims of environmental damage for the concerns of the regulated community. They turn away from enforceability-based approaches and promote more conservative techniques that they hope will impress and persuade reticent and cynical policymakers and power brokers.
    If this is environmentalism at all, it is “desperate environmentalism,” characterized not by awe, enthusiasm and enjoyment of nature but by appeasement. It relies on utilitarian efficiencies, cost-benefit analyses, private sector indulgences and anthropocentric divvying of natural resources. It champions voluntary commitments, tweaks to corporate supply chains, protection not of the last great places on Earth but of those places that yield profit or services. From market-friendly cap-and-trade to profit-driven corporate social responsibility, desperate environmentalists angle for the least-bad of the worst options rather than the robust and enforceable safeguards that once defined the movement.
    At best, the desperate form of environmentalism is a greyhound chasing a rabbit lure futilely around the track. At worst it is the ratcheting of individually good policies into a sweeping, embedded ideology from which the movement cannot return.
  56. R Walter says:
    Here’s what Chevron says:
    Fraud, Bribery, False Allegations
    Chevron has never operated in Ecuador. Texaco Petroleum (TexPet), which became a subsidiary of Chevron in 2001, was a minority partner in an oil-production consortium in Ecuador along with the state-owned oil company, Petroecuador, from 1964 to 1992. After TexPet turned its remaining share of the oil operations over to Petroecuador in 1992, pursuant to an agreement with Ecuador, TexPet conducted a remediation of selected production sites while Petroecuador committed to perform any remaining cleanup. The government of Ecuador oversaw and certified the successful completion of TexPet’s remediation and fully released TexPet (827 KB) from further environmental liability. Petroecuador, however, failed to conduct the cleanup it promised and has continued to operate and expand oil operations in the former concession over the past 20 years.
    Lots of finger-pointing.
  57. If over fishing does not kill off the fish then warmer waters will.
    “The Gulf of Maine cod is a wake-up call” for better coordination between climate scientists and fisheries management
    New England cod stocks are on the verge of collapse, numbering at three to four percent of what scientists say are sustainable levels.
    During the same time, this fishery’s managers did reduce quotas, but not enough – presumably because of a lack of realization about the rapidly warming waters and their stark effects on fish.
    Unusual warming in the waters off the northeastern USA state of Maine has killed off vast numbers of cod, further endangering a valuable and iconic fishery despite years of fishing restrictions, researchers said Thursday.
    The incredibly fast rate of warming in the waters off New England is largely due to a northward shift in the Gulf Stream, an ocean current bringing warm water up from the tip of Florida. These factors add to the steady pace of warming caused by global climate change.
    “Fishers stayed well within their limits for cod, and yet stocks continued to decline” says Andrew Pershing, chief scientific officer of the Gulf of Maine Research Institute (GMRI) and lead author of the study.
  58. R Walter says:
    For today’s short history lesson, relevant to the discussion, please read the story of the Bluenose.
    An excerpt:
    “Before she raced, the Bluenose had to prove herself on the Grand Banks. The rules of the Fisherman’s Competition demanded that any entrant work at least one season in the fishery. Besides, the Bluenose had to pay her own way – she was a fishing schooner, not a racing yacht. Today, with Atlantic cod stocks threatened, it is almost inconceivable that during the first decades on this century over one billion pounds of cod were caught each year on the Grand Banks. The Bluenose had a good first season, and she would more than prove her worth in subsequent years, landing a record 646,000 pounds in one haul in 1923.”
    More at:
    The only curve on the graph that is incorrect is the pollution curve, it won’t decrease as time goes on. Humans pile junk and garbage until hell won’t have it.
    • Old Farmer Mac says:
      “Bluenose sailed to England in 1935 as Canada’s representative in the celebration of the twenty-fifth year of George V’s reign. The king was impressed by the Canadian beauty. On the way home, however, Bluenose encountered the worst storm of the many she had faced over the years. She keeled over and stayed down a full five minutes, masts and all. Then, with a shudder, the great boat righted herself again. Walters denied that he had ever doubted her strength. Her legend now included rising from the grave. ”
      This is the sort of story that inspires awe and reverence in peoples hearts.
      And it is the sort of story that changes people’s minds about things like collapsing fisheries and climate change IF you leave out the preaching.
      Frontal assaults on prejudice and ignorance can and do work, eventually, but planting a little seed of knowledge inside the reinforced concrete skulls of climate denialists is a technique can can work better sometimes.
      I would never confront a True Believer Christian who actually believes man cannot fuck up his God’s creation beyond MANKIND’S kinds ability to repair it. There are some of that sort no doubt but my impression is that they are few and far between and mostly the propaganda invention of anti religious elements.
      What I WOULD to is simply talk to him about how many houses there are now in places we used to walk for miles without encountering a road, how the nearest traffic lights and supermarkets are now only half as far away as they used to be, and the old folks we just barely knew who were the last of our nearby coal miners- because the mines were worked out, not because of the so called war on coal..
      People ARE willing to think, to some extent at least, if you allow them the dignity of doing it for themselves and refrain from describing them in unpleasant terms.
      INCIDENTALLY,when you get right down to the essence of the matter, most of the environmentalists I know of personally think of Mother Nature in ways VERY similar to the ways religious people think of their Sky Daddies. ( or Stone Daddies or Snake Daddies or whichever, lol.)
      God will punish us according to Christian theology. Nature will punish us according to environmental scientists. In either case God will fix things by getting rid of us, or Nature will fix things by getting rid of us. In either case, the natural world will be restored – if God is inclined to bother, that Godly restoration being a point not much discussed by any preachers I know personally.)
      God tells us how we should behave in order to lead happy productive lives. So do environmental scientists. I could point out more parallels but explaining them would take some time.Time now to take care of some chores.
      I AM NOT argueing that the scientists aren’t better advisors. They are, but they are perhaps less likely to be LISTENED to by scientifically illiterate people – and scientifically illiterate people my friends are the large majority even in a country such as the USA.
      • MarbleZeppelin says:
        Old Farmer, nice parallel between God’s laws and Nature’s laws. Maybe they are one in the same. Or are you saying that scientists are the new priests and prophets of our age, the leaders of the new religion?
        Nature does not punish, there is no good and evil in nature. Nature just is, if we don’t know the rules then injury or death occurs. Our stupidity.
        Good and evil were invented by man. Most of religion’s laws and man’s laws are to protect property rights, with the downside of aiding the fleecing of the general public and to use them as cannon fodder to project power and protect property rights.
        Power and property rights are the important thing in man-world. Nature “forgives and forgets” if you are quick enough to get away or successfully stop your opponent. Man’s laws never forget and never forgive, they will chase you to the ends of the earth to wreak vengeance upon you if you stray.
        You are under control, do not cross the line, do not walk here or there as you please, go to work, do as you are told, hide at home if you can, eat and don’t eat at the law’s pleasure, die and be buried away from nature, never re-enter nature. Never, ever cross the lines without permission. Owned and subjugated from day one.

        • Old Farmer Mac says:
          I would not personally go so far as to say science is a new religion or THE new religion, but there are plenty of people who DO see it this way.
          Any direct comparison of any older existing religion with science as scientifically literate people understand science is bound to break down, the analogy or metaphor cannot be taken quite so far in my own opinion.
          BUT there are never the less parallels worthy of thought, and insights to be gained.
          As Lord Chesterfield said, when people quit believing in God, they do not hence forward believe in NOTHING.
          Most of us believe in the TRIBE , which in times gone by would have been the BAND of hunter gatherers we were part of. Nowadays the tribe has grown into the nation state, and some of us absolutely believe in our nation state. There were dyed in the wool nazis, and there are dyed in the wool yankees these days.
          I do not think the typical western European citizen believes in his country in any fashion that could properly be said to be RELIGIOUS in the traditional sense of the word, but the state does nowadays fill most of the role God used to fill for such people, supplying them with a code of behavior, a safety net, a sense of identity, a sense of belonging to something bigger and more permanent than themselves.
          You are dead on about good and evil being arbitrary human intellectual constructs, and that nature does not deal in good and evil.This is one place the comparison breaks down.
          Science might be getting pretty close to a defacto religion for technocopian type individuals. That sort of people seem to believe that science, or maybe more properly speaking technology derived from science, is going to not only save our collective butts from collapse but actually provide us with a secular equivalent of a Christian Paradise. LIFE without problems, plenty of everything, no troubles etc.
          The only real differences are that the technocopians are not promising to bring back the dead, grant us eternal life, and burn the doubters and sinners in hell forever.
          Most of the well educated people I know these days seem to be gradually moving away from a traditional religious system of values and toward the modern Euro model of substituting the state for the former GOD alpha leader, allowing the state to assume most or all the functions once serviced by the church. We have a hundred time as many social workers passing out food stamps as we do church volunteers in church kitchens serving meals to the down and out for instance.
          • MarbleZeppelin says:
            You present some very good points, Old Farmer Mac.
            From a broad point of view, science does not fully fit as a religion. But from narrower definitions and from what it provides society, it is very much like a religion.
            My definition of religion is “way of life”. Science, engineering and technology form the new triumvirate of our way of life. Little gets done without calling upon one or several of those. Even the ill-defined word progress has had to bow to representing scientific or technological breakthroughs.
            Science also has provided two of the critical things that religion has historically provided, a creation story and a view of our place in the universe or at least in the world. In fact science has done such a great job at both of those and explaining the universe that there is little wonder why it seems attractive to many people. The deep and growing understanding of nature that science has provided is far beyond what religions provide.

            As far as promising eternal life, science has not gone that far yet, but it is dangling the carrots of much longer life and much greater health in front of the world.
            In a way science is a belief system. We believe by using logic and the scientific method that we can unravel the secrets of the universe. So far that has proven to be true. For most people, much of science is not comprehensible, but the results are very evident, they live with them every day so the credibility gap is closed. They believe in science.
            Science is also human, scientists fully admit to making mistakes and learning from them. It also provides a very soothing framework. No need for supernatural intervention, amazing things can be done by just understanding and manipulating nature. In that way there is no real treading upon some of the other supernatural based religions. We are just using what was somehow put into existence. The rest is left to the priests and shaman. Very convenient for those who want to believe in science and in the existence of supernatural beings.
  59. John S says:
    I found this today in our local paper, The Midland Reporter Telegram, dated October 14th:
    Clayton Williams Energy seeking a merger, selling assets, or recapitalizing itself. CWI has retained Goldman Sachs to serve as its financial advisor.
    Shallow if you don’t have enough to do, CWI may be a good company to look into for a perspective in Permain Basin unconventional performance.
    CWI has been very active in the unconventional plays in the Midland and Delaware Basins. Clayton Williams is a former Texas Republican gubernatorial candidate (1990 I think) and a notorious Texas A&M graduate.
  60. The Wet One says:
    Just because this article is relevant to a lot of what is discussed here, I’m providing the link:
    “Anti-knowledge,” or even better, politicized, organized and ideologically coherent and active anti-knowledge is, in my view, a potent force at work these days.
    Think about it.
  61. The Wet One says:
    Just because this article is relevant to a lot of what is discussed here, I’m providing the link:
    “Anti-knowledge,” or even better, politicized, organized and ideologically coherent and active anti-knowledge is, in my view, a potent force at work these days.
    What are your thoughts on anti-knowledge and those who follow behind its banner? Are they influential or not? Are they a threat or just a sideshow?
  62. ezrydermike says:
    and now the Buddhists speak out….
    Global Buddhist Climate Change Collective (GBCCC)
    Galvanizing Buddhist Climate Action
    Buddhist Climate Change Statement to World Leaders 2015
  63. Greenbub says:
    Oil rigs fell sixteen.
  64. Toolpush says:
    Baker Hughes rig count is out.
    Land rigs down 12
    Oil down 16
    gas up 4
    Horizontal down 14
    Eagle Ford down 2 to 75
    Williston down 1 to 63

    Strange both horizontal and oil are down 14 & 16 respectively, which sound like shale wells . Yet the main shale plays are only down 5? Not sure what area was mainly hit.
    Eagle Ford continues it decline, trying very hard to catch the Bakken rig count.
    The BH Bakken/Williston count seems to be getting further away from the ND govt count which currently stands at 69, and only has 2 rigs as MIRU.
    They must have a few rigs sitting on wells, but not drilling. Workovers maybe?

  65. ezrydermike says:
    every 2 years the DOE has a program called the Solar Decathalon.
    “The U.S. Department of Energy Solar Decathlon challenges collegiate teams to design, build, and operate solar-powered houses that are cost-effective, energy-efficient, and attractive. The winner of the competition is the team that best blends affordability, consumer appeal, and design excellence with optimal energy production and maximum efficiency.”
    This year is was held out here in Irvine, CA.
    If you poke around on the web site you can see what the kids are thinking about. Some pretty cool stuff.
    The winner this year was Stevens Institute of Technology, which to be honest, I have never heard of.

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