Peak Oil, peak Gas Peak Coal.

[Admiral Valdemar]

So, you're hoping we get a dramatic, temporary shock to the public consciousness NOW so that we won't get a sustained ongoing clusterfuck 10 years from now, right?

Yes.

And yet, no.



Human nature is a fickle thing, quite hard to predict. While we can easily make the downward slope more tolerable with collective, informed action, the way government works and how society reacts to such crises is no cause for optimism. It doesn't help that we have the media like CNBC spouting off about the price being down to speculators, the US Congress voting to sue OPEC and the likes of GM and Ford simply cutting back on Hummer and F-250 production to save pennies.

If the shock is too much, we'll get stupid decisions like rushing through more coal plants, building shoddy nuclear ones (especially some plans for Florida based ones being in areas prone to sea level rise within their lifetime) or thinking hard economic sanctions or war are a good answer. Like in Three Days of the Condor, people won't care about the how, just you getting them their heat and food and leisure back at any cost.

I moderate a large motorist and haulier board that was partly behind the September 2000 fuel protests over here that nearly collapsed our economy. Believe me when I say I don't hold out much hope for these people accepting action that must be done to avoid a far larger fall later on.

[Surlethe]

Oh, wow. More vague Doom'n'Gloom(TM). If you're going to post your pessimism, please at least have the decency to make specific claims supported by logic and evidence, rather than handwaving and smoke-blowing.

What's wrong? I thought you were looking into this with me?, or at least were last year.

Oh, I am. I just find that your level of pessimism is unwarranted.

The massive increase in oil prices is reason enough, but on top of that we have a sudden sizeable drop in oil exports to the US with constant declines in stocks, refiner margins are razor thin, many large corporations cannot withstand $100/bbl. oil for long, to say nothing of it rising faster and the likes of KSA and Iran are talking of voluntarily cutting exports to save oil for their future.

This is precisely what I find annoying. You drop a series of unsourced (save the oil exporting data - more on that in a little bit) claims and use them to 'support' huge claims, like "major export crisis by the end of the summer". It's going to take a lot more to establish that, over the next three months, the US will lose a significant fraction of its imports.

And regarding the crude import drops, that's hardly a 'significant drop'. For example, we experienced a far bigger drop in 2002 (Aug-Sep), from 11,890 kbbl/day to 11,075 kbbl/day in the space of 30 days. The decreases you point to as "major" really look like, from a quick examination of the historical data, they're just noise.

In fact, your president and his aides constantly harassing the KSA oil gurus has pissed them off, because I can't think of another reason to stick such a blatant finger up at the US there.

That's simply a free market in operation. Price gouging is to be expected, since nobody else can undercut them and make a profit.

Iran is also noticing you're going to lose around 20% of your oil within the next several years, meaning more Persian imports, hence the number of VLCCs currently floating in the gulf there containing 20 mb of crude to market.

The writing is on the wall. It's just the media, despite being more keen to report this now, still doesn't get it. We had two peak oil programmes on TV last night here and The Indy had a nice big front-page spread on the "shock" (only a shock if you can't grasp finite resources) on Saturday.

Oh yes, the writing is on the wall indeed. We've had some media attention in the US, too. The thing is, while I recognize that oil dependance is going to cause the economy to contract and probably put us into a major, decades-long depression, I just can't get on board with what seems like your perpetual glee at welcoming the Apocalypse.

[The Duchess of Zeon]

I'd not even know where to begin with a century long prediction, which is about as much folly as giving a precise date for the wheels coming off now. We could be scrounging for cockroaches next weekend if a rogue space rock hits us, but that's beside the point. The life we currently live is over. It's time to adapt quickly, because the situation is drastically getting out of hand and switching to gas or coal won't solve squat.

I just wish I had an EV, a large garden and one of these buried in my yard. Fortunately, the UK is practically self-sufficient in food, provided we cut out a lot of meat use. The bigger problem is the crashing North Sea and our reliance on foreign gas.

*shrugs*

I'd be happy with an equivalent income of $10,000 USD in modern dollars today, gross before taxes, per person, with three people (as long as the other two were particular individuals I have in mind) living together in the same one-bedroom apartment. If that's the amount of disposable income that highly educated professionals end up making--I'll be fine with it, as long as it takes about 25 years for our incomes to plummet by the 90% or so that would entail. That gives me enough time to accomplish what I need to accomplish with the money I could make, which means living in such circumstances long before that to save up enough disposable income. I don't mind the prospect of it. I don't know why anyone else would, either, it just means more snuggles. Space is overrated.

That said, I'm going to move to France once I get my degree most likely, anyhow; the combination of the 85% of power being produced by nuclear, the massive intact canal system and the huge electrified railroad net, along with the highest food production in the entire EU, really does mean that they're probably the best off of all the present industrial powers in the world, and I won't lack for employment.

[CaptainZoidberg]

Valdemar,

Can you attach a quantitivate meaning to words like "shockwave" and "collapse" so that we can objectively measure if your predictions were right?

Like:

The global Gross Domestic Product (PPP) will decline 50% from its June 2008 value by June 2011.

as opposed to:

The economy will collapse by June 2011.

That way there can be not doubt as to whether you were right or not.

[Admiral Valdemar]

Oh, I am. I just find that your level of pessimism is unwarranted.

And yet, this same line last year was the party line and things are worse than my pessimistic expectations described then.

This is precisely what I find annoying. You drop a series of unsourced (save the oil exporting data - more on that in a little bit) claims and use them to 'support' huge claims, like "major export crisis by the end of the summer". It's going to take a lot more to establish that, over the next three months, the US will lose a significant fraction of its imports.

Sorry, but I've posted plenty of links over the last few months about oil price, airlines going bankrupt and Saudi changes in oil policy. These are hardly difficult to find.

And regarding the crude import drops, that's hardly a 'significant drop'. For example, we experienced a far bigger drop in 2002 (Aug-Sep), from 11,890 kbbl/day to 11,075 kbbl/day in the space of 30 days. The decreases you point to as "major" really look like, from a quick examination of the historical data, they're just noise.

Uh...

Last four weeks ending May 23rd:

6.683 mbpd
6.130
5.173
4.996

That's simply a free market in operation. Price gouging is to be expected, since nobody else can undercut them and make a profit.

Which is not a good thing.

Oh yes, the writing is on the wall indeed. We've had some media attention in the US, too. The thing is, while I recognize that oil dependance is going to cause the economy to contract and probably put us into a major, decades-long depression, I just can't get on board with what seems like your perpetual glee at welcoming the Apocalypse.

Glee? You think I derive pleasure from seeing my bills rocket every month in a job I'm very unlikely to see a pay rise anywhere near base inflation? Yeah. I'm fucking ecstatic.

Anyone else want to come out and flat out state that they envision me sitting in a dark room wringing my hands at the thought of society's walls falling all around me? Should I work on my Dr. Evil laugh, or will the nefarious glint in my eye suffice?

[CaptainChewbacca]

Doctor Evil really doesn't have a signature laugh, he just has that pinky thing.

So, go with the glint.

[Galvatron]

I hate reading Valdemar's posts now. He's the harbinger of the apocalypse.

When does Resident Evil 5 come out?

1/10/08. I can't wait either, but least I have a PS3 for it now.

I assume you mean 2009. Will we still be around by then?

[Admiral Valdemar]

Valdemar,

Can you attach a quantitivate meaning to words like "shockwave" and "collapse" so that we can objectively measure if your predictions were right?

Like:

The global Gross Domestic Product (PPP) will decline 50% from its June 2008 value by June 2011.

as opposed to:

The economy will collapse by June 2011.

That way there can be not doubt as to whether you were right or not.

Just looking at Mexico, they are expected to have zero net exports by 2014, where they currently supply around 1.2 mbpd of C+C for the US. That is an amount that will have to be sourced from elsewhere in an already strained oil market.

If you want me to give you some authoritative analysis on the exact effects and how major then I simply can't. I don't have the time myself, nor can anyone account for black swans. Needless to say, the export decline is accelerating and that in itself will be a watershed for most major powers given our import land status.



By the way, in the ten minutes since I last checked the oil price, it's gone from $123 to $127. Last week it was at $130, then $121 yesterday. That pull-back didn't last very long.

I assume you mean 2009. Will we still be around by then?

Nuh-uh, I heard 2008. But this isn't concrete and I expect 1Q09 more likely anyway. I plan to avoid the roaming mobs from Mad Max until I play the game (those would be the ones everyone assumes I picture when I talk of a less than rosy future).

[Guardsman Bass]

That's the idea, and it's better than getting a clusterfuck 20 years from now, when we will also be dealing with some of the emerging nasty shit from global warming.

[The Duchess of Zeon]

Glee? You think I derive pleasure from seeing my bills rocket every month in a job I'm very unlikely to see a pay rise anywhere near base inflation? Yeah. I'm fucking ecstatic.

You're actually suffering more than extremely minor increases in the prices of goods over there? Granted: Everything we do in Washington state is electric (and the electricity comes from dams)--heating, cooking, etc--everything, and the transportation costs with public transportation have increased but not severely. There are also only slight increases in food, they can be easily sunk by buying in enormous bulk and eschewing fancy things.

One thing you should really warn yourself about is the prospect of applying what you're experiencing personally to the entire world.

[The Duchess of Zeon]

I also have to admit that I don't understand how someone that worried about the future could ever, ever justify buying the expense of a PS3. I haven't purchased a single luxury item since July of 2006 (literally).

[Admiral Valdemar]

You're actually suffering more than extremely minor increases in the prices of goods over there? Granted: Everything we do in Washington state is electric (and the electricity comes from dams)--heating, cooking, etc--everything, and the transportation costs with public transportation have increased but not severely. There are also only slight increases in food, they can be easily sunk by buying in enormous bulk and eschewing fancy things.

One thing you should really warn yourself about is the prospect of applying what you're experiencing personally to the entire world.

My petrol costs have gone from 85p a litre when I got my car last summer to 120p today. My gas bill has gone up 40% and electricity around 25% with another 40% in the pipeline. Food rationing for bulk items is in place here as it has been put in place Stateside, and the weekly shop is going up all the time with just the necessities. I'm not eating dirt cookies, but I'm not a happy bunny.

And I live a very frugal (no Marina, I'm not tilling the land and carrying plague) life with my biggest leisure expenses being transport to see my family and girlfriend. I know people at work who are thinking of quitting because they can't even afford to drive to the place any more. I'd hate to be someone who smokes, drinks, has a fair sized saloon (read: sedan) and with a mortgage and kids.

I also have to admit that I don't understand how someone that worried about the future could ever, ever justify buying the expense of a PS3. I haven't purchased a single luxury item since July of 2006 (literally).

If I can't have some fun in my life then I don't see the point in living. I'm not one to go out and get pissed with people in bars, so I buy books, DVDs and games. Since my PC is older than Stonehenge and I've not the cash nor time to go about making a decent gaming PC right now, this was a better option. And it's shiny.

[CaptainZoidberg]

Just looking at Mexico, they are expected to have zero net exports by 2014, where they currently supply around 1.2 mbpd of C+C for the US. That is an amount that will have to be sourced from elsewhere in an already strained oil market.

Well, actually I meant a definite statistic on how the economy would be impacted, like a change on the Human Development Index, GDP per capita, or median household income - a way of objectively knowing if your predictions about standard of living turn out to be true.



By the way, in the ten minutes since I last checked the oil price, it's gone from $123 to $127. Last week it was at $130, then $121 yesterday. That pull-back didn't last very long.

Nuh-uh, I heard 2008. But this isn't concrete and I expect 1Q09 more likely anyway. I plan to avoid the roaming mobs from Mad Max until I play the game (those would be the ones everyone assumes I picture when I talk of a less than rosy future).

So by 2009, you expect us to have an economic collapse, like, negative 10% per capita GDP growth? (I should note that in our recession right now, GDP growth corrected for inflation is at about 2.2%, while population growth is at about .9%).

[Admiral Valdemar]

Well, actually I meant a definite statistic on how the economy would be impacted, like a change on the Human Development Index, GDP per capita, or median household income - a way of objectively knowing if your predictions about standard of living turn out to be true.

I have a paper somewhere I found on GDP linkage with energy. I'll see where it is. You can often get a good idea on how living standards will be affected by how the economy grows (or doesn't) which is related to available energy. Many tout the fact that oil isn't as big a part of the economy as it was in the '70s, but this is simply because more is leveraged per unit energy today than back then.

So by 2009, you expect us to have an economic collapse, like, negative 10% per capita GDP growth? (I should note that in our recession right now, GDP growth corrected for inflation is at about 2.2%, while population growth is at about .9%).

That was tongue in cheek. I'm thinking the Mad Max reference would be obvious.

*wrings hands*

[CJvR]

I especially love the "peak coal" idea, here, since there are more recoverable reserves of coal in England alone, right now, than have been consumed in the entire history of the Earth

Quite, if we burn all the fossile fuels available to us we are likely going to have far bigger problems than running out of them.

btw isn't it possible to convert coal into liquid fuel? Germany did so on a grande scale during WWII IIRC.

[CaptainChewbacca]

I especially love the "peak coal" idea, here, since there are more recoverable reserves of coal in England alone, right now, than have been consumed in the entire history of the Earth

Quite, if we burn all the fossile fuels available to us we are likely going to have far bigger problems than running out of them.

btw isn't it possible to convert coal into liquid fuel? Germany did so on a grande scale during WWII IIRC.

Its hideously expensive in both equipment and energy input.

[CaptainZoidberg]

I have a paper somewhere I found on GDP linkage with energy. I'll see where it is. You can often get a good idea on how living standards will be affected by how the economy grows (or doesn't) which is related to available energy. Many tout the fact that oil isn't as big a part of the economy as it was in the '70s, but this is simply because more is leveraged per unit energy today than back then.

Correlation is not a sufficient condition for causation. It's not like you can just bring out your graph, draw a line based on the linear regression function, and say that our GDP will fall to a certain level.

Case in point, there's a huge correlation between the capabilities of PCs and the capabilities of gaming machines. But no one in their right mind would conclude that starting to use the NES again would make our PCs slower.

Nevertheless, I'm curious just how big you're expecting this to be. Are we talking no GDP growth (which is pretty bad by current standards), slow GDP decline, or a massive drop-off?

That was tongue in cheek. I'm thinking the Mad Max reference would be obvious.

*wrings hands*

Oh, I know. I was just curious what your actual prediction was.

[Stuart Mackey]

Its hideously expensive in both equipment and energy input.

NZ (read Solid Energy, our Coal SOE) reckons its viable here at over $60 dollars a barrel.

[Admiral Valdemar]

Correlation is not a sufficient condition for causation. It's not like you can just bring out your graph, draw a line based on the linear regression function, and say that our GDP will fall to a certain level.

I'd look into the work of Robert Solow, Reiner Kummel and Robert Ayres. They have worked out that for a 1% increase in energy inputs can give a 0.7% increase in GDP, and vice versa. That's the basic equation used by economists, although there are special circumstances that can affect things too to varying degrees e.g. currency collapse.

Case in point, there's a huge correlation between the capabilities of PCs and the capabilities of gaming machines. But no one in their right mind would conclude that starting to use the NES again would make our PCs slower.

I don't see how this has any bearing on energy and GDP. You need a certain amount of energy to give you a certain amount of work. If energy declines, the best you can do to off-set it when there are no additional inputs coming on-stream is to improve efficiency, which in itself can be troublesome (Jevons' paradox).

Nevertheless, I'm curious just how big you're expecting this to be. Are we talking no GDP growth (which is pretty bad by current standards), slow GDP decline, or a massive drop-off?

That depends on how fast the declines set in. A couple of percent would see a long drawn out recession/depression that may be countered if industry and governments work hard to rectify the situation. The worst case scenarios are total government meltdown for nations that are reliant on imports and economic storms for those reliant on exports.

Oh, I know. I was just curious what your actual prediction was.

There are a great many, again, this isn't a cut and dry "By year 20XX, this will happen, meaning this and this and then that's it". As with climate change, we use models for various scenarios, not one "Bang, you're dead" or "It's going to be a bumpy, if tolerable ride". The more pessimistic ones have been trending better with reality thus far.

[Surlethe]

Oh, I am. I just find that your level of pessimism is unwarranted.

And yet, this same line last year was the party line and things are worse than my pessimistic expectations described then.

How so?

This is precisely what I find annoying. You drop a series of unsourced (save the oil exporting data - more on that in a little bit) claims and use them to 'support' huge claims, like "major export crisis by the end of the summer". It's going to take a lot more to establish that, over the next three months, the US will lose a significant fraction of its imports.

Sorry, but I've posted plenty of links over the last few months about oil price, airlines going bankrupt and Saudi changes in oil policy. These are hardly difficult to find.

That doesn't excuse your vagueness -- e.g., am I supposed to read your mind and get "airlines" out of "many large corporations"? -- nor does it establish that the US will lose a significant fraction of its imports by September.

And regarding the crude import drops, that's hardly a 'significant drop'. For example, we experienced a far bigger drop in 2002 (Aug-Sep), from 11,890 kbbl/day to 11,075 kbbl/day in the space of 30 days. The decreases you point to as "major" really look like, from a quick examination of the historical data, they're just noise.

Uh...

Last four weeks ending May 23rd:

6.683 mbpd
6.130
5.173
4.996

Uh, the link you gave was to monthly averages, ending in March.

That's simply a free market in operation. Price gouging is to be expected, since nobody else can undercut them and make a profit.

Which is not a good thing.

Naturally, but that's the way it works.

Oh yes, the writing is on the wall indeed. We've had some media attention in the US, too. The thing is, while I recognize that oil dependance is going to cause the economy to contract and probably put us into a major, decades-long depression, I just can't get on board with what seems like your perpetual glee at welcoming the Apocalypse.

Glee? You think I derive pleasure from seeing my bills rocket every month in a job I'm very unlikely to see a pay rise anywhere near base inflation? Yeah. I'm fucking ecstatic.

I take it back; you're not happy about it. But you don't really do much to make me think you're correct about your assessment of the situation, either.

[Galvatron]

I assume you mean 2009. Will we still be around by then?

Nuh-uh, I heard 2008. But this isn't concrete and I expect 1Q09 more likely anyway. I plan to avoid the roaming mobs from Mad Max until I play the game (those would be the ones everyone assumes I picture when I talk of a less than rosy future).

I have a steel hockey mask ready to go. And I WILL get your precious juice...and your copy of RE5.

[Admiral Valdemar]

How so?

The price increase and inventory draws thanks to export declines. They're not things I expected anything like as bad now. I was thinking maybe $100 oil by end of summer, if a bad hurricane season hit.

That doesn't excuse your vagueness -- e.g., am I supposed to read your mind and get "airlines" out of "many large corporations"? -- nor does it establish that the US will lose a significant fraction of its imports by September.

You just need to watch the news. Every day for the past two months, BBC Breakfast has had the economics correspondent go on about companies cutting back thanks to increased commodity prices, which feed into the credit problems and property and so on. Our general economic slowdown is being made more of a problem as energy prices rise because of the fundamentals.

Uh, the link you gave was to monthly averages, ending in March.

Hmm, thought that was the link there. I shall have to go hunting for the figures again, but either way, there have been draws on the crude inventories thanks to lower import rates and an increase in refinery utilisation.

EDIT: Apologies. Link found, I had a lot of others mixed up in my Glipper cache.

Mexico and Venezuela are hitting problems, and that's the bottom line. For every barrel they don't ship out, that's one the US either needs to replace or learn to live without. Replacement means someone going without elsewhere, and that's why prices are rallying so much (along with other factors like heavy sour being the main type of crude in those tankers Iran is holding and no one can refine).

I take it back; you're not happy about it. But you don't really do much to make me think you're correct about your assessment of the situation, either.

For curiosity's sake, what would be your assessment, if only to see how you gauge our current situation and how it will play out this summer?

[CaptainZoidberg]

I'd look into the work of Robert Solow, Reiner Kummel and Robert Ayres. They have worked out that for a 1% increase in energy inputs can give a 0.7% increase in GDP, and vice versa. That's the basic equation used by economists, although there are special circumstances that can affect things too to varying degrees e.g. currency collapse.

So, if you expect oil to peak by 2010, then you'd expect energy production in 2012 to be energy production in 2008 (bell curve, look at this http://upload.wikimedia.org/wikipedia/e ... o_2005.png)

I don't see how this has any bearing on energy and GDP. You need a certain amount of energy to give you a certain amount of work. If energy declines, the best you can do to off-set it when there are no additional inputs coming on-stream is to improve efficiency, which in itself can be troublesome (Jevons' paradox).

GDP isn't a measure of work though.

There are a great many, again, this isn't a cut and dry "By year 20XX, this will happen, meaning this and this and then that's it". As with climate change, we use models for various scenarios, not one "Bang, you're dead" or "It's going to be a bumpy, if tolerable ride". The more pessimistic ones have been trending better with reality thus far.

How are we supposed to know if you're right if it isn't going to be cut and dry? Jehovah's Witness has been saying that the world is about to end for years, but no one can ever say "No, you're wrong", because they never make it cut and dry.

I'm just asking for a specific, cut and dry number, so we can unambiguously go back and say if you were right or not.

[The Duchess of Zeon]

No, production will level off during what's called a "plateau" starting in 2011, which will hopefully last for about 10 years, and maybe longer. This will be gained, however, only by the forced pumping of more oil from the fields, which will serve to reduce the size of the reserves (by such things as salt-water injection to allow more aggressive pumping), causing more rapid declines at the end of the plateau.

[The Duchess of Zeon]

I especially love the "peak coal" idea, here, since there are more recoverable reserves of coal in England alone, right now, than have been consumed in the entire history of the Earth

Quite, if we burn all the fossile fuels available to us we are likely going to have far bigger problems than running out of them.

btw isn't it possible to convert coal into liquid fuel? Germany did so on a grande scale during WWII IIRC.

Fischer-Trosch process. And peak coal is ludicrous--the world has enough for at least 120 years even with continuing increases in consumption, and more likely 250 years. The problem is that a lot of that coal is dirty brown coal which will release much more pollutants in the atmosphere for the amount of energy produced, and costs more to extract for its energy yield, meaning a smaller net gain in energy.

Peak gas, on the other hand, is certainly going to happen within the next 75 years.