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Could oil demand peak in a few years?

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  • Steve Kurtz
    ... ————————————— Doubt is not a pleasant condition, but certainty is absurd. Voltaire (1770)
    Message 1 of 17 , 25 Dec, 2017





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

    • Luis Gutierrez
      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
      Message 2 of 17 , 25 Dec, 2017
        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)


      • narguimbau@earthlink.net
        The optimisticprojections call primarily for efficiency increases, whichcan be wiped out byincreased use of more efficient vehicles or coal generators, and of
        Message 3 of 17 , 26 Dec, 2017

          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)



        • Jada Thacker
          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
          Message 4 of 17 , 27 Dec, 2017
            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?"

            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."

            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. 

            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)






            Virus-free. www.avg.com
          • narguimbau@earthlink.net
            Because of the unexplained difference between production since the once-predicted 2008 peak and the production crash that I and many many others predicted for
            Message 5 of 17 , 27 Dec, 2017

              Because of the unexplained difference between production since the once-predicted 2008 peak and the production crash that I and many many others predicted for post-2012, I'm beginning to think Wall Street investment shenanigans arte also responsible for the level of production of conventional as well as unconventional crude.

              Strangely, I think Gail's  "oil that cannot be sold at a profit will not continue to be produced" is at least misleading, because the profit may come from somewhere else than sale of the oil.  It may come from an inveestment, with investments being spent on getting the oil out of the ground and expecting it to be sold at a profit later.  Profit may come from sale of the lease rather than sale of the oil, and the value of the lease is pure guesswork.  Once the well is drilled, oil will be sold to pay for the drilling no matter how poor the return is.  The "break-even point" for shale oil is said to be $80/barrel and the "break-even point for fracked natural gas is said to be over $6/thousand cubic feet,  which are prices never met,  but drilling and selling continues with abandon, not very clearly why,  making it unclear why we are said to have or ever to have had any viable reserves of either or are just carrying on to create an illusion.  Investment in Bakkin in fact, was considered a fool's errand for decades because it was known to have huge reserves that were  economically inviable, and that still is probably true..  You tell me what supports it.


              On 12/27/2017 12:49 PM, Jada Thacker jadathacker@... [gaiapc] wrote:.

              As Gail points out, however, oil that cannot be sold for a profit will not continue to be produced,

              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. 



            • Jada Thacker
              Nick, I don t think Gail is intending to mislead. She s correctly pointing out that for-profit businesses do in fact have to make a profit to be viable in the
              Message 6 of 17 , 27 Dec, 2017
                Nick, I don't think Gail is intending to mislead. She's correctly pointing out that for-profit businesses do in fact have to make a profit to be viable in the long term. And you are right, too: money is being made on oil/gas lease sales, on the receipt of "fake" (borrowed) oil company dividends, on oil company stock/bond speculation, and no doubt oil company CEO's are making a bundle on bonuses that increase with stock by-backs.

                But sooner or later, the compounding interest on the unpaid debt that was incurred by producing unprofitable oil/gas will outstrip the oil companies' ability to pay or roll over. And when that happens the creditors holding all that debt will start to see the value of those debt assets evaporating. That's going to be an insurmountable problem. According to Chris Martenson, energy companies borrowed $300 billion to finance the so-far unprofitable fracking boom. These same companies are showing huge losses, slashing or canceling future exploration and production budgets, and still borrowing more money. There is an end to this game.

                Money ultimately has value only because it is exchangeable for consumable energy products, not the other way around. Wall Street and orthodox economists, on the other hand, think energy products have value because they are exchangeable for money. Energy comes from nature; money comes from human artifice. It's said "nature bats last" because it does.

                You may be right that investment shenanigans also are involved with conventional production, but I tend to doubt it. Most legacy "stripper" wells were drilled and paid for a long time ago (I helped with this!); while legacy wells produce only 10 barrels a day (more or less) there are a half a million of them, which accounts for about half of US domestic production. The deep offshore and fracking accounts for the lion's share of the debt, and all of the increase in domestic production since the North Slope oil dwindled to a trickle. 

                I haven't read Richard Heinberg's book Snake Oil about the fracking "revolution," but I have heard him claim elsewhere that the whole thing is basically an investment bubble. Not only is it unprofitable at prices society can afford, but most of what it produces is so light it isn't even considered "oil" by API metrics and must be mixed with heavier petroleum, such as tar sands stuff (which in its raw state also is not API oil), to be refinable.

                While you wonder about US "viable reserves" with good reason to do so, that is not an industry term. Of several definitions for "reserves," the most apt is "proven reserves." Proven reserves by definition must be demonstrably producible at current levels of technology and price. So, according to the industry's own metric, it appears all the additional oil produced in the US since conventional (legacy stripper wells) peaked production in 2005 no longer meets the definition of "proven reserves" because it is now unaffordable even at a break-even price.

                You asked "what supports" the fracking phenomenon. My judgment is that unaffordable debt explains it -- both from the production end and the consumption end. Along with a lot of other folks out there, I expect a "bigger than major" reshuffle of the deck of debt cards, and maybe sooner than later.

                Jada 


                On Wednesday, December 27, 2017 7:04 PM, "'narguimbau@...' narguimbau@... [gaiapc]" <gaiapc@...> wrote:


                 
                Because of the unexplained difference between production since the once-predicted 2008 peak and the production crash that I and many many others predicted for post-2012, I'm beginning to think Wall Street investment shenanigans arte also responsible for the level of production of conventional as well as unconventional crude.
                Strangely, I think Gail's  "oil that cannot be sold at a profit will not continue to be produced" is at least misleading, because the profit may come from somewhere else than sale of the oil.  It may come from an inveestment, with investments being spent on getting the oil out of the ground and expecting it to be sold at a profit later.  Profit may come from sale of the lease rather than sale of the oil, and the value of the lease is pure guesswork.  Once the well is drilled, oil will be sold to pay for the drilling no matter how poor the return is.  The "break-even point" for shale oil is said to be $80/barrel and the "break-even point for fracked natural gas is said to be over $6/thousand cubic feet,  which are prices never met,  but drilling and selling continues with abandon, not very clearly why,  making it unclear why we are said to have or ever to have had any viable reserves of either or are just carrying on to create an illusion.  Investment in Bakkin in fact, was considered a fool's errand for decades because it was known to have huge reserves that were  economically inviable, and that still is probably true..  You tell me what supports it.

                On 12/27/2017 12:49 PM, Jada Thacker jadathacker@... [gaiapc] wrote:.

                As Gail points out, however, oil that cannot be sold for a profit will not continue to be produced,

                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. 





              • Steve Kurtz
                ... Jada, Demand in markets (crude oil is one), the quantity bid for equals the demand. ... The Futures (on exchanges) and Forward (off exchange) markets are
                Message 7 of 17 , 28 Dec, 2017


                  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)






                  Virus-free. www.avg.com


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

                • Jada Thacker
                  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
                  Message 8 of 17 , 28 Dec, 2017
                    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.

                    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.

                    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)






                    altVirus-free. www.avg.com


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



                  • Luis Gutierrez
                    Is it conceivable that more easy-to-produce high EROI oil can still be found? Luis On Thu, Dec 28, 2017 at 1:09 PM, Jada Thacker jadathacker@sbcglobal.net ...
                    Message 9 of 17 , 28 Dec, 2017
                      Is it conceivable that more easy-to-produce high EROI oil can still be found?

                      Luis

                      On Thu, 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.

                      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.

                      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 definiti on 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@...' na rguimbau@... [ 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)






                      altVirus-free. www.avg.com


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




                    • Steve Kurtz
                      ... 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
                      Message 10 of 17 , 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)






                        altVirus-free. www.avg.com


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





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

                      • Steve Kurtz
                        With a thawing arctic, I expect drilling to gear up pronto. I’m not happy about that. Russian oil exploration and drilling rigs have been seen heading that
                        Message 11 of 17 , 28 Dec, 2017
                          With a thawing arctic, I expect drilling to gear up pronto. I’m not happy about that. Russian oil exploration and drilling rigs have been seen heading that way recently. DJT wants to open up areas for exploration that had been off limits. Again I’m not happy. Meanwhile, oil accounts for a small % of the fuel used to make electricity. I posted the source and chart.

                          Steve

                          On Dec 28, 2017, at 1:55 PM, Luis Gutierrez ltg4263@... [gaiapc] <gaiapc@...> wrote:


                          Is it conceivable that more easy-to-produce high EROI oil can still be found?

                          Luis

                          On Thu, 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.

                          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.

                          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 definiti on 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@...' na rguimbau@... [ 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)






                          altVirus-free. www.avg.com


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







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

                        • narguimbau@earthlink.net
                          How much oil has actually been found in the last decade?  I mean petroleum. ... How much oil has actually been found in the last decade?  I mean petroleum.
                          Message 12 of 17 , 28 Dec, 2017

                            How much oil has actually been found in the last decade?  I mean petroleum.


                            On 12/28/2017 2:08 PM, Steve Kurtz kurtzs@... [gaiapc] wrote:
                             

                            With a thawing arctic, I expect drilling to gear up pronto. I’m not happy about that. Russian oil exploration and drilling rigs have been seen heading that way recently. DJT wants to open up areas for exploration that had been off limits. Again I’m not happy. Meanwhile, oil accounts for a small % of the fuel used to make electricity. I posted the source and chart.


                            Steve

                            On Dec 28, 2017, at 1:55 PM, Luis Gutierrez ltg4263@... [gaiapc] <gaiapc@...> wrote:


                            Is it conceivable that more easy-to-produce high EROI oil can still be found?

                            Luis

                            On Thu, 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.

                            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.

                            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 definiti on 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@...' na rguimbau@... [ 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

                            (Message over 64 KB, truncated)
                          • narguimbau@earthlink.net
                            There s a chart of discoveries in roughly that category showing them to have peaked approximately 40 years ago and been down hill ever since.  As geologist
                            Message 13 of 17 , 28 Dec, 2017

                              There's a chart of discoveries in roughly that category showing them to have peaked approximately 40 years ago and been down hill ever since.  As geologist Campbell famously said around 30 years ago, "If you haven't discovered it you can't produce it."


                              On 12/28/2017 1:55 PM, Luis Gutierrez ltg4263@... [gaiapc] wrote:
                               
                              Is it conceivable that more easy-to-produce high EROI oil can still be found?

                              Luis

                            • Steve Kurtz
                              No idea. I just look at the supply-demand balance over time as reflected in prices. Prices are good feedback in my opinion. If supply dwindles and demand
                              Message 14 of 17 , 28 Dec, 2017
                                No idea. I just look at the supply-demand balance over time as reflected in prices. Prices are good feedback in my opinion. If  supply dwindles and demand doesn’t prices will rise in capitalist markets. Might well happen!

                                Steve

                                On Dec 28, 2017, at 7:12 PM, 'narguimbau@...' narguimbau@... [gaiapc] <gaiapc@...> wrote:


                                How much oil has actually been found in the last decade?  I mean petroleum.


                                On 12/28/2017 2:08 PM, Steve Kurtz kurtzs@... [gaiapc] wrote:
                                 

                                With a thawing arctic, I expect drilling to gear up pronto. I’m not happy about that. Russian oil exploration and drilling rigs have been seen heading that way recently. DJT wants to open up areas for exploration that had been off limits. Again I’m not happy. Meanwhile, oil accounts for a small % of the fuel used to make electricity. I posted the source and chart.


                                Steve

                                On Dec 28, 2017, at 1:55 PM, Luis Gutierrez ltg4263@... [gaiapc] <gaiapc@...> wrote:


                                Is it conceivable that more easy-to-produce high EROI oil can still be found?

                                Luis

                                On Thu, 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.

                                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.

                                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 definiti on 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@...' na rguimbau@... [ 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)






                                altVirus-free. www.avg.com


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







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




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

                              • RUBEN NELSON
                                Given the above, the answer to your question, Luis, is, Yes, it is conceivable, but as an assertion it is not credible‎. Ruben Sent from my BlackBerry 10
                                Message 15 of 17 , 28 Dec, 2017
                                  Given the above, the answer to your question, Luis, is, "Yes, it is conceivable, but as an assertion it is not credible‎."
                                  Ruben

                                  Sent from my BlackBerry 10 smartphone on the TELUS network.
                                  From: 'narguimbau@...' narguimbau@... [gaiapc]
                                  Sent: Thursday, December 28, 2017 5:26 PM
                                  To: gaiapc@...
                                  Reply To: gaiapc@...
                                  Subject: Re: [gaiapc] Could oil demand peak in a few years?


                                   

                                  There's a chart of discoveries in roughly that category showing them to have peaked approximately 40 years ago and been down hill ever since.  As geologist Campbell famously said around 30 years ago, "If you haven't discovered it you can't produce it."


                                  On 12/28/2017 1:55 PM, Luis Gutierrez ltg4263@... [gaiapc] wrote:
                                   
                                  Is it conceivable that more easy-to-produce high EROI oil can still be found?

                                  Luis

                                • howe@megalink.net
                                  Now, we re on the ultimate subject! See www.percapitaoil.com. I m working on a new site which covers all the bases : ASPOS...Association for study of post oil
                                  Message 16 of 17 , 29 Dec, 2017
                                    Now, we're on the ultimate subject!
                                    See www.percapitaoil.com.
                                    I'm working on a new site which covers all the bases : ASPOS...Association for study of post oil survival.  All my ASPO USA friends have disappeared.
                                     
                                    It's -16f here in Maine this morning.  Mainers are burning through FINITE heating oil, like there's no tomorrow, which there won't be for oil.
                                    We use wood,(cut with gas-powered chain saw) and electric back up.
                                      Brrrr.
                                    What happened to global warming?  This is the coldest stretch we've seen since moving here from Colorado 40 years ago.
                                     
                                    Happy New year.  I think 2018 will be the year of the global energy crash..including the hyper-stock market, once the Trump prophesies run their course.
                                     
                                    John
                                     
                                     
                                     

                                    From: "Steve Kurtz kurtzs@... [gaiapc]" <gaiapc@...>
                                    Sent: Thursday, December 28, 2017 7:40 PM
                                    To: "gaiapc@..." <gaiapc@...>
                                    Subject: Re: [gaiapc] Could oil demand peak in a few years?
                                     
                                     

                                    No idea. I just look at the supply-demand balance over time as reflected in prices. Prices are good feedback in my opinion. If  supply dwindles and demand doesn’t prices will rise in capitalist markets. Might well happen!

                                     
                                    Steve
                                     
                                    On Dec 28, 2017, at 7:12 PM, 'narguimbau@...' narguimbau@... [gaiapc] <gaiapc@...> wrote:
                                     
                                     

                                    How much oil has actually been found in the last decade?  I mean petroleum.

                                     
                                    On 12/28/2017 2:08 PM, Steve Kurtz kurtzs@... [gaiapc] wrote:
                                     

                                    With a thawing arctic, I expect drilling to gear up pronto. I’m not happy about that. Russian oil exploration and drilling rigs have been seen heading that way recently. DJT wants to open up areas for exploration that had been off limits. Again I’m not happy. Meanwhile, oil accounts for a small % of the fuel used to make electricity. I posted the source and chart.

                                     
                                    Steve
                                     
                                    On Dec 28, 2017, at 1:55 PM, Luis Gutierrez ltg4263@... [gaiapc] <gaiapc@...> wrote:
                                     
                                     
                                    Is it conceivable that more easy-to-produce high EROI oil can still be found?
                                     
                                    Luis
                                     
                                    On Thu, 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.
                                     
                                    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.
                                     
                                    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 definiti on 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@...' na rguimbau@... [ 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)

                                     
                                     
                                    altVirus-free. www.avg.com
                                     
                                     
                                    —————————————
                                    Doubt is not a pleasant condition, but certainty is absurd.
                                    Voltaire (1770)

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

                                     

                                  • narguimbau@earthlink.net
                                    I don t think Gail is INTENDING to mislead either.  She does great work.  My thought generally is that production of gas and oil is being supported when it
                                    Message 17 of 17 , 29 Dec, 2017

                                      I don't think Gail is INTENDING to mislead either.  She does great work.  My thought generally is that production of gas and oil is being supported when it isn't really profitable to protect a GDP that will crumble when the unsupported production itself crumbles.  The reason I suspect shenanigans as to conventional crude is that it climbed to a predicted peak and then just stayed there, violating almost universally-held expectations that after the peak it would follow the Hubbert curve downwards.  Flat production after the expected peak says they are forcing production, turning conventional crude into something that is being produced uneconomically and perhaps even with EROI less than 1..  That will result in not much time in conventional crude production REALLY tumbling.  2008 was a mark of approximately 1 trllion barrels left of convional crude, and obviously with that constraint demand will peak soon because they will be trying to sell stuff which is eroi<1.  I'm not going to quibble about what "demand" is.


                                      On 12/27/2017 10:31 PM, Jada Thacker jadathacker@... [gaiapc] wrote:
                                       
                                      Nick, I don't think Gail is intending to mislead. She's correctly pointing out that for-profit businesses do in fact have to make a profit to be viable in the long term. And you are right, too: money is being made on oil/gas lease sales, on the receipt of "fake" (borrowed) oil company dividends, on oil company stock/bond speculation, and no doubt oil company CEO's are making a bundle on bonuses that increase with stock by-backs.

                                      But sooner or later, the compounding interest on the unpaid debt that was incurred by producing unprofitable oil/gas will outstrip the oil companies' ability to pay or roll over. And when that happens the creditors holding all that debt will start to see the value of those debt assets evaporating. That's going to be an insurmountable problem. According to Chris Martenson, energy companies borrowed $300 billion to finance the so-far unprofitable fracking boom. These same companies are showing huge losses, slashing or canceling future exploration and production budgets, and still borrowing more money. There is an end to this game.

                                      Money ultimately has value only because it is exchangeable for consumable energy products, not the other way around. Wall Street and orthodox economists, on the other hand, think energy products have value because they are exchangeable for money. Energy comes from nature; money comes from human artifice. It's said "nature bats last" because it does.

                                      You may be right that investment shenanigans also are involved with conventional production, but I tend to doubt it. Most legacy "stripper" wells were drilled and paid for a long time ago (I helped with this!); while legacy wells produce only 10 barrels a day (more or less) there are a half a million of them, which accounts for about half of US domestic production. The deep offshore and fracking accounts for the lion's share of the debt, and all of the increase in domestic production since the North Slope oil dwindled to a trickle. 

                                      I haven't read Richard Heinberg's book Snake Oil about the fracking "revolution," but I have heard him claim elsewhere that the whole thing is basically an investment bubble. Not only is it unprofitable at prices society can afford, but most of what it produces is so light it isn't even considered "oil" by API metrics and must be mixed with heavier petroleum, such as tar sands stuff (which in its raw state also is not API oil), to be refinable.

                                      While you wonder about US "viable reserves" with good reason to do so, that is not an industry term. Of several definitions for "reserves," the most apt is "proven reserves." Proven reserves by definition must be demonstrably producible at current levels of technology and price. So, according to the industry's own metric, it appears all the additional oil produced in the US since conventional (legacy stripper wells) peaked production in 2005 no longer meets the definition of "proven reserves" because it is now unaffordable even at a break-even price.

                                      You asked "what supports" the fracking phenomenon. My judgment is that unaffordable debt explains it -- both from the production end and the consumption end. Along with a lot of other folks out there, I expect a "bigger than major" reshuffle of the deck of debt cards, and maybe sooner than later.

                                      Jada 


                                      On Wednesday, December 27, 2017 7:04 PM, "'narguimbau@...' narguimbau@... [gaiapc]" <gaiapc@...> wrote:


                                       
                                      Because of the unexplained difference between production since the once-predicted 2008 peak and the production crash that I and many many others predicted for post-2012, I'm beginning to think Wall Street investment shenanigans arte also responsible for the level of production of conventional as well as unconventional crude.
                                      Strangely, I think Gail's  "oil that cannot be sold at a profit will not continue to be produced" is at least misleading, because the profit may come from somewhere else than sale of the oil.  It may come from an inveestment, with investments being spent on getting the oil out of the ground and expecting it to be sold at a profit later.  Profit may come from sale of the lease rather than sale of the oil, and the value of the lease is pure guesswork.  Once the well is drilled, oil will be sold to pay for the drilling no matter how poor the return is.  The "break-even point" for shale oil is said to be $80/barrel and the "break-even point for fracked natural gas is said to be over $6/thousand cubic feet,  which are prices never met,  but drilling and selling continues with abandon, not very clearly why,  making it unclear why we are said to have or ever to have had any viable reserves of either or are just carrying on to create an illusion.  Investment in Bakkin in fact, was considered a fool's errand for decades because it was known to have huge reserves that were  economically inviable, and that still is probably true..  You tell me what supports it.

                                      On 12/27/2017 12:49 PM, Jada Thacker jadathacker@... [gaiapc] wrote:.

                                      As Gail points out, however, oil that cannot be sold for a profit will not continue to be produced,

                                      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. 






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