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15911Re: [gaiapc] Could oil demand peak in a few years?

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  • Steve Kurtz
    28 Dec, 2017


      On Dec 28, 2017, at 1:09 PM, Jada Thacker jadathacker@... [gaiapc] <gaiapc@...> wrote:


      Steve said: "Some of he above examples I gave can be years into the future for settlement. The prices are agreed upon between buyer and seller in advance. Thus no curves are involved except the contract prices themselves over time."

      This is precisely beside the point, however. Contracts between buyers and sellers are words on a piece of paper agreeing to a quantity of a medium-of-exchange (i.e., money). But words do not discover and physically produce oil, or ensure its profitability once produced, or provide consumers with the wherewithal to buy the necessities oil makes possible. Contracts for future settlement may indeed manipulate the market, but they do not ultimately determine present or future economic reality.

      False, Jada. The vast majority, I estimate well over 95%, of physical deliveries of oil that have occurred this century have been fulfillment of the types of  contracts I’ve described. You are speculating on future events, shooting from the hip. Force Majeure actions happen on rare occasions when acts of war, natural catastrophes, etc. prevent a delivery from taking place. This list fully understands that money provides no intrinsic caloric (nor nutritional) value. Yet, until the global economy is based on some other medium of exchange, these forward and future contracts will continue *as they have done for many decades, to provide the best curves that humans can determine. Theoretical supply and demand is less solid than real, open market feedback. Peak oiler predictions have been wrong. It is finite, of course. I have a few pieces posted on a Peak Oil site:


      The web site is run/owned by a personal friend near Ottawa. When he saw the piece about peak demand, he replied that he was no longer predicting!

      In fact, money itself does not determine economic reality. Easy-to-produce (high-EROI) oil has determined economic reality in our industrialized economy for the last century. Since there is no more easy-to-produce oil, our economic reality is rapidly changing and cannot continue to feed the parasitic casino of financialized capitalism without killing the host society in the process.

      I’m surprised that you are so certain of the future. Recall Neils Bohr! "Prediction is difficult, especially about the future.”


       Recall natural gas traded over 400% higher than the present price around 15 years ago. Look, I agree that throughput should decline for the benefit of other species, and for long term well being for our progeny. Guess what? Humans ain’t going that route. Voluntary simplicity isn’t in the genes (so to speak) of the vast majority. The MPP and MEPP are the ruling principles that reality follows with rare exceptions.(that make the rule)

      Good luck in your predictions and in a caloric currency! I hope you’re right, but I’ll wager for charity that you are not. Peak oilers predicted $300 crude a decade or more ago. It might go bad to $30 in a global depression/debt deflation. Who knows! ;-) 

      Steve

      This cannot be understood unless one has internalized the fact that energy backs the value of all media of exchange (i.e., money), not the other way around. 

      Jada  


      On Thursday, December 28, 2017 8:03 AM, "Steve Kurtz kurtzs@... [gaiapc]" <gaiapc@...> wrote:


       


      On Dec 27, 2017, at 12:49 PM, Jada Thacker jadathacker@... [gaiapc] <gaiapc@...> wrote:


      For any discussion of "peak demand" to be sensible, it seems to me we first need to know what we're all talking about. What is "demand," anyway? Is there a consensus operational definition of the term? Do we all agree on which measurable activity constitutes "demand?”

      Jada,

      Demand in markets (crude oil is one), the quantity bid for equals the demand.



      According to energy forecasters, "demand" apparently is assumed to be "projected consumption." Problem: that which is not produced cannot be consumed. Hence, a nonexistent commodity cannot be "demanded.”

      The Futures (on exchanges) and Forward (off exchange) markets are contracts for future delivery. They constitute real demand. There are a buyer and seller for every contract.



      According to orthodox economics, "demand" is what automatically occurs at a given price for a commodity that possesses utility. But as Gail Tverberg repeatedly points out at her blog www.ourfiniteworld.com , supply/demand curves work fine until they don't. Problem: that which is not affordable will not be demanded, regardless of supply and demand curves. 


      Some of he above examples I gave can be years into the future for settlement. The prices are agreed upon between buyer and seller in advance. Thus no curves are involved except the contract prices themselves over time. Delivery in the future is another matter!

      Steve

      As usual, energy forecasters don't know much about economics, and economists don't know much about oil production. As a result, they end up talking past each other. As Gail points out, however, oil that cannot be sold for a profit will not continue to be produced, and people who need stuff that oil makes possible will not buy what they cannot afford, much less what isn't produced in the first place.

      Nick is altogether correct that Wall Street investment shenanigans are responsible for the current uber-debt-financed production of high-priced, unconventional oil/gas.. Similarly, consumer debt historically allowed consumers to "consume beyond their means." But this only works as long as the debt level remains serviceable. For producer and consumer alike, those days are numbered. 

      So what does "peak demand" mean in a country where energy majors are selling oil at a loss (while borrowing to pay stock dividends), and where consumers -- who have not seen a real wage increase in decades -- increasingly cannot afford to buy the stuff made possible only by oil (even when oil is sold at a loss)? 

      With regard to "peak demand," maybe this would be an excellent time to put on an old Rollings Stones album and hum along with the lyrics to "You Can't Always Get What You Want."

      Jada

         


      On Tuesday, December 26, 2017 4:44 AM, "'narguimbau@...' narguimbau@... [gaiapc]" <gaiapc@...> wrote:


       
      The optimisticprojections call primarily for efficiency increases, whichcan be wiped out byincreased use of more efficient vehicles or coal generators, and of course inpeople turning to "efficient" gas-guzzling suvs. Everything is predicted to begin in2020, which just happens to be the year consumption MUST peak to meet the 2-degree limit.  Electric cars appear to be counted as "full wins," but the electricity for them will come primarily from fissil generators..  The companies are determined to burn everything they have and then some, and the banks will help them.   The shale  oil and gas has always been a losing proposition but has continued because of constant influx of investments coming apparently fromWall SSt-managedretirement accounts.  They are determined tomake fossil production keep on increasing because the GDP and oil production track eac other and because petrodollars insure consumer spending.  When you look at the flat or increasing oil comsumption over the last decade, it is remarkable because my prediction of a production cras starting in 2012 was shared by everyone - the military, World Bank, Petrobrazil and IEA staff, and then it didn't happen.  Part of it is explained by investment in uneconomical resources such as shale and tar which prior to around 2012 weren't expected to go economically, and part can be explained by pushing the existing resources to artificially exceed the Hubbard curve.  Same thing.So there are lots of questions about.projections of decreased production.  The industry wants to keep the trillion-tonne "budget" for allowed production because it is worth over $100 trillion for them.  Too much money for them to allow demand to shrink.

      But we shall see.

      On 12/25/2017 10:42 PM, Luis Gutierrez ltg4263@... [gaiapc] wrote:
       
      I hope these projections are right.  Not sure that all the "renewable" alternatives are really renewable.

      Luis

      On Mon, Dec 25, 2017 at 6:30 AM, Steve Kurtz kurtzs@... [gaiapc] <gaiapc@...> wrote:
       





      —————————————
      Doubt is not a pleasant condition, but certainty is absurd.
      Voltaire (1770)






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      —————————————
      Doubt is not a pleasant condition, but certainty is absurd.
      Voltaire (1770)





      —————————————
      Doubt is not a pleasant condition, but certainty is absurd.
      Voltaire (1770)

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