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I ended last week’s post on the topic of Confirmation Bias* with these questions:

After all, who among us wants to be wrong about important matters on which we’ve staked no small amount of credibility?

But what if being wrong about those important matters winds up being the least of our problems?

It’s human nature to seek out information, evidence, opinions, etc which support positions we’ve taken on a wide variety of topics. Contentious political and social issues provide glaring examples of this from both the left and right sides of the various debates. Climate change is certainly one of the more noteworthy subjects.

So is peak oil. I’m of the clear opinion that our future energy needs are not going to be based on an endless, forever abundant, affordable, easily accessible fossil fuel supply. I’m not alone, of course. There is an equally vocal, and more prominent contingent on the other side of this debate, claiming we peak oil proponents are nothing more than doom-and-gloom messengers who’ve been consistently wrong in predictions.

That’s the starting point.

The conflicts arise in part because of what one relies upon to support his or her position. In some instances, there are actual facts in dispute [some shaded to suit one’s inclinations, of course]. But in too many other instances—peak oil and climate change among them—one side has a clear tendency to not just restrict the facts relied upon to a select and duly-massaged few, they also completely ignore a more substantial and substantive body of evidence.

Offering statements with an assortment of qualifiers [“if”; “possible”; “could”; “potential”, etc] may offer those proponents some assurances that they are essentially correct. But to ignore an entire body of evidence contradicting—or least casting some reasonable doubt—on their staked positions calls into question motivations for disseminating partial truths.

…click on the above link to read the rest of the article…

Peak Oil: Are We Not Better Than This? Pt 1

April 1, 2016

Peak Oil: Are We Not Better Than This? Pt 1

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I’ll confess that I hesitated before starting this series. It was too easy to again just dive into mockery and sarcasm over pieces written several weeks ago by those who refuse to give credence to the concept of peak oil and/or its implications. [It’s also the gateway to yet another round of verbal grenade lobbing which generates a lot of high-five’s with fellow ideologues, but little else.]

I’ve contributed my share of mocking on numerous occasions, to be sure. It’s just part of the ongoing Left-Right hostilities….Tiresome. Pointless. Embarrassing. Damaging … always.

That exercise would have been gratifying to me, but only me. I need to have a more enlightened response to the question posed above. Doing more of the same will produce more of the same, and few of us seem to be benefitting from that strategy these days.

At first glance the subject matter of this series [Friday-only, and for a number of weeks to follow] may seem to be yet another opportunity to take down yet another [two, actually] light-on-facts, right-wing Happy Talk offerings generated for public consumption. Like so many others of similar content and intent, they played well to the far reaches of the Right, judging by most of the comments, and they were consistent with the messages offered in opposition to all things Obama and/or progressives.

Neither those comments nor the material offered by the two writers for their respective conservative publications [American Thinker and Townhall, to be discussed later in this series] were much different than countless others supporting the same essential message: but for President Obama, America would be great, yadda, yadda, yadda; and we have more than enough energy resources available to us for almost forever, yadda, yadda, yadda.

…click on the above link to read the rest of the article…

US shale oil peak in 2015

March 30, 2016

US shale oil peak in 2015

The recent EIA drilling productivity reports show a peaking of shale oil production in the main production regions. https://www.eia.gov/petroleum/drilling/

Fig 1: Bakken production change from old/new wells

The 1st panel shows that the number of drilling rigs has dropped sharply but the initial well production per rig has increased from 450 b/d to 750 b/d. The 2^nd panel depicts the monthly production decline in old wells, which has stabilized at around 60 kb/d. This is the volume needed to keep production flat but the 3^rd panel shows that new wells offset only about half of the decline. That is why in panel 4 overall production declines.

Fig 2: History of production change

We see that in 2015 production from new wells declined abruptly. The intersection point with old wells corresponds to the peak in production. The old wells decline has moderated suggesting that more and more old wells have entered their phase of final, flat production at very low levels.

…click on the above link to read the rest of the article…

Peak Oil: We All Do This, But…. Pt 1

March 30, 2016

Peak Oil: We All Do This, But…. Pt 1

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Confirmation bias is the tendency of individuals to pay attention to or believe information that confirms the personal values and beliefs they already hold, rather than allowing their beliefs to be changed by new information.
It’s a powerful force that many researchers have suggested plays a key role in the persistence of phenomena such as climate doubt. With an overwhelming abundance of evidence pointing to the existence of anthropogenic climate change, for instance, many scientists have questioned why skepticism continues to be pervasive in society. Sociologists have suggested that the reason has to do with the fact that it’s difficult to change an individual’s worldview simply by presenting new information. Confirmation bias, rather, leads people to seek out evidence — however small or poorly supported — that supports their existing personal beliefs. [1]

Seems to be a simple enough explanation….We can all [present company included] insist that we’re always objective and always looking at all sides of important issues, but … not really. Human nature is what it is. This is true for conservatives and progressives—denials and finger-pointing duly noted.

For the great majority of issues, questions, and concerns that pop up on our daily radar screens, this psychological short-cut is certainly handy, and rarely a cause of any great trouble in our lives. It’s a different story for matters whose scope and impact extends beyond today in our own little worlds.

Climate change is certainly one such issue, as was explored in Chelsea Harvey’s above-referenced Washington Post article about a study which examined the spread of misinformation online. Any number of contentious political/economic/cultural topics likewise fall under that widening umbrella. The report’s lead author offered one of the main conclusions validating the impact of confirmation bias as it relates to the spread of climate change denial:

…click on the above link to read the rest of the article…

Peak Oil: Are We Not Better Than This? Intro

March 28, 2016

Peak Oil: Are We Not Better Than This? Intro

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One-sided stories or news features serve many purposes. Unfortunately for the public, serving their interests is rarely if ever one of the objectives … or outcomes.

Who among us doesn’t want an endless parade of good news about issues great, inconsequential, and all in between? For almost all of us, we have enough issues and concerns and challenges to deal with as it is. Devoting time and effort to learn about or involve ourselves in social and political issues outside of matters directly and personally impacting us right now isn’t usually at the top of our “To-Do” lists. If we could assure ourselves that such issues wouldn’t affect us now or later, then we could indeed completely ignore them and let the chosen others deal with them.

Life tends not to work that way, however. Economic, cultural, and political issues influence and impact most aspects of our lives, even if we rarely acknowledge that fact or notice any direct bearing on our daily lives. Energy considerations—and certainly climate change—can be added to that list.So while few of us have the opportunity, means, or capabilities to immerse ourselves in those broader public conversations and policies, we should at a minimum expect that whatever our level of understanding or awareness, it is the product of an honest and complete dissemination of facts and concerns which will affect us—if not today, then soon enough. Idealistic perhaps, but it would be nice if we didn’t have to plead for truth-telling and full disclosures.

There are few if any business, social, or political endeavors which are not designed to influence others in some way.

…click on the above link to read the rest of the article…

Peak Oil: Choosing Chaos … or Not

March 23, 2016

Peak Oil: Choosing Chaos … or Not

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If/when a petroleum shortage impacts it will concentrate minds wonderfully. But when it comes the window of opportunity could be brief and risky. If things deteriorate too far too fast there could easily be too much chaos for sense to prevail and for us to organize cooperative local alternative systems. [1]

“Too much chaos” is certainly one problem-solving approach! Perhaps it should not be the first one, however.

Unfortunately, the more often the more prominent voices—those unwilling to share with followers the full scope of our future fossil fuel/energy supply challenges—are given forums for public consumption, the greater the odds that “too much chaos” will be the strategy available to all of us.

Of course, none of this is going to happen next month or next year, or perhaps not for several more years. But that’s not a reason to set it aside for now. The scope of adaptation to a diminished and ever-diminishing thereafter fossil fuel supply does not lend itself to anything close to a quick-fix.

The challenge now is all the greater because we’re presently in the midst of an over-supply of oil, and prices have dropped to or near historic lows. That’s obviously not a problem for consumers … today.

So why is oil so cheap? There are various contributing factors relating both to supply (production rate) and demand. The main supply factor is that production of U.S. shale oil has increased rapidly to 3.5 million barrels a day, along with the renewed oil production from Iraq and Libya. Saudi produce one third of OPEC’s output, and this time they have refused to cut production because they want to keep (grow?) their share of the market.
At the same time, demand has fallen because the global economy (especially China) has slowed down.

…click on the above link to read the rest of the article…

An Empirical Model For Oil Prices and Some Implications

March 21, 2016

An Empirical Model For Oil Prices and Some Implications

Introduction

This work is preliminary. It is a preview of part of a paper I am writing with Aude Illig. There are three main reasons I am making this post. The first is as a public service. There are many people reading this blog who are directly affected by oil prices and who have to make decisions based on future oil prices. Having a model to understand the dynamics of oil prices is of use to them. The second reason is that some people reading this blog model oil extraction. These models either omit price considerations or make assumptions on them. Our model is a large improvement on these assumptions so it should improve their extraction models. The final reason is that I consider the quality of the comments on this blog to be high. I believe that the feedback I get from this post will improve the quality of the final paper. Indeed, Dennis Coyne has already provided valuable feedback after previewing the post. This study has been a humbling experience. Get ready to throw out everything you thought you knew about oil prices.

The model does not by any means explain all oil price variation. What is remarkable is that with only one data set, it explains so much. Many factors may affect the price of oil. This model provides a base to which other variables can be added to find what explains oil prices.

I was asked to write a chapter titled “Strategies for an Economy Facing Energy Constraints” for a book last year which I wrote with my daughter. I do not think the book will be published but the chapter may be of interest to some. I have posted the pdf file on line and will refer to it often [2].

…click on the above link to read the rest of the article…

Peak Oil: Simplicity Has Its Disadvantages

March 15, 2016

Peak Oil: Simplicity Has Its Disadvantages

Few of us appreciate just how much we rely upon inexpensive, readily-available supplies of energy to live our lives.

[W]hat future awaits us if we cannot be courageous and honest enough to plan for that future with the full range and understanding of all the facts now at our disposal? [1]

While there’s surely some benefit derived in keeping things simple for readers and followers, I’m still unclear as to what the long-term benefits are for them [and the rest of us] when the full range of facts and considerations about our future energy supply are kept off of the discussion table. It’s a defining characteristic of the conservative personality that they tend to prefer closure quickly; and this is so for matters both simple and complex.

But latching onto to one or two pieces of information or opinions in matters of greater complexity and accepting them as the final say can lead to bigger problems down the road when the majority of facts and considerations are ignored—or worse, not disclosed at all to those without the means to collect details on their own.

The issues surrounding the concept of peak oil are not a contest between progressive views and conservative ones. Peak Oil is about the facts on and in the ground. No one denies the great advantages and production increases for which tight oil production in the past few years is responsible. But that’s just a factual statement. It’s not the sum total of energy considerations and concerns today and/or tomorrow, despite the fact it tends to be couched that way by some.

…click on the above link to read the rest of the article…

Energy Wars of Attrition: The Irony of Oil Abundance

March 9, 2016

Energy Wars of Attrition: The Irony of Oil Abundance

Three and a half years ago, the International Energy Agency (IEA) triggered headlines around the world by predicting that the United States would overtake Saudi Arabia to become the world’s leading oil producer by 2020 and, together with Canada, would become a net exporter of oil around 2030. Overnight, a new strain of American energy triumphalism appeared and experts began speaking of “Saudi America,” a reinvigorated U.S.A. animated by copious streams of oil and natural gas, much of it obtained through the then-pioneering technique of hydro-fracking. “This is a real energy revolution,” the Wall Street Journal crowed in an editorial heralding the IEA pronouncement.

The most immediate effect of this “revolution,” its boosters proclaimed, would be to banish any likelihood of a “peak” in world oil production and subsequent petroleum scarcity. The peak oil theorists, who flourished in the early years of the twenty-first century, warned that global output was likely to reach its maximum attainable level in the near future, possibly as early as 2012, and then commence an irreversible decline as the major reserves of energy were tapped dry. The proponents of this outlook did not, however, foresee the coming of hydro-fracking and the exploitation of previously inaccessible reserves of oil and natural gas in underground shale formations.

Understandably enough, the stunning increase in North American oil production in the past few years simply wasn’t on their radar. According to the Energy Information Administration (EIA) of the Department of Energy, U.S. crude output rose from 5.5 million barrels per day in 2010 to 9.2 million barrels as 2016 began, an increase of 3.7 million barrels per day in what can only be considered the relative blink of an eye. Similarly unexpected was the success of Canadian producers in extracting oil (in the form of bitumen, a semi-solid petroleum substance) from the tar sands of Alberta.

…click on the above link to read the rest of the article…

Peak Oil: The Underlying Reality

March 8, 2016

Peak Oil: The Underlying Reality

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Sir, Martin Wolf, in ‘Cheap oil puts humanity on a slippery slope’ (December 2) states: ‘The emergence of shale oil underlines what was already fairly clear, namely, that the global supply capacity is not only enormous but expanding. Forget peak oil.’ He is mistaken. Even the International Energy Agency acknowledges that conventional oil production peaked in 2005. Add other sources of liquid production, in particular tight oil (often misleadingly called shale oil) production from the US, and there has been a modest increase since then, giving a kind of ‘undulating plateau’ as Shell would have it. What the burst of unconventional production from the US has done is to mask the underlying reality of peak oil. This will become apparent as the tight oil potential itself proves limited in time. [1]

There are certain realities about the recent spike in U.S. fossil fuel production which can be masked or misrepresented in only so many ways. Tight oil production generated from hydraulic fracturing [fracking] has shown itself to be more expensive and not as energy “dense” or efficient, for starters. [No one can dispute what an impressive effort it proved itself to be in the past few years, of course.]

But current production and cost issues call into question the level of short-term production spikes we might expect from fracking efforts in the next few years. Fracking is a more expensive, time-consuming process. The production rate of fracked wells declines very quickly, so more and more wells must be drilled to keep pace. Prime locations are not infinite, so that limitation must refactored in. It requires high prices in order to supply the needed investment and effort Low prices are good news for consumers, but there’s a price to be paid there, too.

…click on the above link to read the rest of the article…

Peak oil in the South China Sea (part 1)

March 6, 2016

Peak oil in the South China Sea (part 1)

The recent deployment of missile launchers and jet fighters on Woody Island of the Paracel islands have put the spotlight on the South China Sea (SCS).

Fig 1: The 200 mile Economic Exclusion Zone claimed by China around Woody Island and the overlapping 108 nm range of the HQ-9 SAM system. Image via ISI. [Image Sat International] http://defense-update.com/20160218_woody_island_hq9.html

In this post, we focus on oil production around the SCS.

Oil production (crude and NGLs)

Fig 2: Black triangles denote country peaks, the red triangle shows the SCS peak

Oil production in 2015 was down around 14% from the peak in 2001.

Fig 3: China dominates all of South China Sea’s adjoining countries

Fig 4: China’s monthly production 2013-2015

Although production in 2015 was higher than in 2013 and 2014 it seems that production in the 4^thquarter will not be much different from the previous years. A 100 kb/d difference is just 1% of China’s 2015 demand of 11.2 mb/d (IEA January Oil Market Report, p 57)

Chart of the Day: No turning back for China’s oil production

21/11/2015
China’s domestic oil production likely peaked this year and is about to enter a long-term structural decline, according to Nomura.
http://www.scmp.com/business/commodities/article/1881188/chart-day-no-turning-back-chinas-oil-production

Fig 5: Production of 3 oil majors in China

…click on the above link to read the rest of the article…

Peak Oil: Just A Distraction Pt 3

February 23, 2016

Peak Oil: Just A Distraction Pt 3

… [T]here is no intellectually honest way to believe that the world can continue its near-total reliance on fossil fuels for much more than another decade — a paltry window of opportunity. We also know that we cannot wait until they go into decline before reaching for renewables and efficiency, simply because the scale of the challenge is so vast, and the alternatives are starting from such a low level that they will need decades of investment before they are ready to assume the load. The data is clear, and the mathematics are really quite straightforward. [1]

We’re not going to suddenly discover magical amounts of fossil fuel reserves though magical technologies because the Republican Party controls the House and/or because too many of its members are beholden to the industry. Energy resources don’t concern themselves so much with political ideology.

What’s left [and there are still substantial amounts left] is going to be harder to find, extract, and pay for. The quality and quantity will simply not be there in the manner we’ve come to expect. That’s the reality, and those are the facts.

What that means is that in time we’re going to have to make do with less just when we need it all more than ever, and just when millions more have asserted at this same time their needs and demands for the same finite amounts. Party affiliations shouldn’t be expected to change any of that.

The important issue is that no matter what words one uses or how the issues are characterized, the energy supply we’ve long relied upon to power our society to its impressive heights is no longer what it once was.

…click on the above link to read the rest of the article…

Foiled by Oil

February 18, 2016

Foiled by Oil

“Pemex revenues are down 70% in the past 18 months. That is what Peak Oil looks like.”

“Oil in the ground is wealth only on paper – you may own that oil, but it earns you nothing until you recover and sell it. Yet paper wealth is still wealth. It goes on your balance sheet as an asset that you can sell. You can use it as collateral to borrow cash and buy other assets.”

— Bill Mauldin

People do use their oil shares to buy houses, cars, planes and college educations. When crude oil prices hit $140 per barrel, pension funds and college endowments rejoiced.

Our 2006 book, The Post-Petroleum Survival Guide and Cookbook was published just as conventional hydrocarbons struck their all-time global production top and began to decline (a picture that emerged only years later). The book challenged readers to consider how they might cope with $20 per gallon gasoline and the absence of public transit alternatives.

It also described the undulating top we now see, where high price destroys demand, which crashes price, which boosts demand, which raises price, and so on. Think of this part as the whoop-de-doos after the roller coaster cranks its way to the top and lets gravity take over.

Lately there have been a spate of articles in the financial press beating up on Peak Oil theorists for being so widely wrong in their predictions. They point to charts showing global oil production rising from 86.5 million barrels per day in 2008 to 96 million in 2015. Of course, they are mixing apples and oranges. What peaked, right on schedule in 2006, was conventional liquids.

After 2006 Big Oil played its hole card, unconventional oil and gas. Those inside the sector had been telling the Peak Oilers about this all along, but it still caught some incautious prophets out on a hoisted petard.

…click on the above link to read the rest of the article…

Peak Oil: Just A Distraction Pt 2

February 16, 2016

Peak Oil: Just A Distraction Pt 2

In the end, does the choice of words really matter?
The “Yes, we’ve reached Peak Oil” versus the “No, we have not” is a distraction—and I’ve done my part to contribute.

But without recognizing and accepting the simple truth that we’re drawing down a finite and depleting resource which necessitates almost unimaginable adaptations and transitions to Plan B, the limits of human ingenuity and technological prowess will inevitably be reached if we keep tweaking the one finite resource mankind has relied upon more than any other.

And thus the heart of the matter.

The wells won’t run dry next week or next month. The sky is not falling. But the peak rate of conventional crude oil production was reached a decade ago. That’s an important fact glossed over by those disputing the message about our future oil supply. For all the Happy Talk courtesy of fossil fuel industry cheerleaders picking nits, that fact alone is an enormous problem.

The higher production totals of recent years are a genuinely impressive achievement, and should not be discounted. But shale production has shown itself to be what peak oil advocates said it would be: a costly, time-consuming, technology-intensive effort with a relatively limited shelf life.

Today’s low, low prices and declining demand owing to current economic conditions, when combined with a less than enthusiastic investment climate and the high debt levels carried by most oil producing companies, is squeezing that pipeline. The “glut” spoken of is a reflection of these factors much more so than a testament to how much oil industry can produce with just a snap of the fingers.

The diminished funding has resulted in severe reduction in exploration projects. They won’t start back up overnight if or when economic conditions improve.

…click on the above link to read the rest of the article…

A Market Collapse Is On The Horizon

February 13, 2016

A Market Collapse Is On The Horizon

1. Growth in debt
2. Growth in the economy
3. Growth in cheap-to-extract energy supplies
4. Inflation in the cost of producing commodities
5. Growth in asset prices, such as the price of shares of stock and of farmland
6. Growth in wages of non-elite workers
7. Population growth

It looks to me as though this linkage is about to cause a very substantial disruption to the economy, as oil limits, as well as other energy limits, cause a rapid shift from the benevolent version of the economic supercycle to the portion of the economic supercycle reflecting contraction. Many people have talked about Peak Oil, the Limits to Growth, and the Debt Supercycle without realizing that the underlying problem is really the same–the fact the we are reaching the limits of a finite world.

There are actually a number of different kinds of limits to a finite world, all leading toward the rising cost of commodity production. I will discuss these in more detail later. In the past, the contraction phase of the supercycle seems to have been caused primarily by too high a population relative to resources. This time, depleting fossil fuels–particularly oil–plays a major role. Other limits contributing to the end of the current debt supercycle include rising pollution and depletion of resources other than fossil fuels.

The problem of reaching limits in a finite world manifests itself in an unexpected way: slowing wage growth for non-elite workers. Lower wages mean that these workers become less able to afford the output of the system. These problems first lead to commodity oversupply and very low commodity prices. Eventually these problems lead to falling asset prices and widespread debt defaults.

…click on the above link to read the rest of the article…

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