art berman – Olduvai.ca

July 8, 2024 Readings

July 8, 2024

July 8, 2024 Readings

Flooding Across the Midwest May Have Wiped Out Up to 1 Million Acres of Crops, New Estimates Now Show | AgWeb

Let’s Stop Arguing About An Imaginary Energy Transition | Art Berman

The Normalization of Madness – by Geoffrey Deihl

“Overlapping Emergencies” Pushes Countries To Bolster Food Supply Stocks | ZeroHedge

A Revolutionary Library–Justin McAfee

The Meme That Is Destroying The World, Part IV–Steve Keen

Have We Been in Recession for Years?–Money Metals

GM To Pay $146 Million In Penalties For Emission Violations On 5.9 Million Older Vehicles | ZeroHedge

IEA’s Staggering Oil Glut is Staggeringly Unlikely

June 16, 2024

IEA’s Staggering Oil Glut is Staggeringly Unlikely

The International Energy Agency (IEA) has become a dishonest broker of information because of its renewable energy bias. This week, it reported that there will be a staggering oil glut by the end of the decade.

“Total supply capacity is forecast to rise to nearly 114 million barrels a day by 2030 – a staggering 8 million barrels per day above projected global demand…This would result in levels of spare capacity never seen before other than at the height of the Covid-19 lockdowns in 2020.”

IEA Oil 2024

It’s important to clarify that the surplus in question pertains to spare capacity, not actual supply. Spare or excess oil capacity arises from production exceeding demand. Understanding the oil supply-demand balances that lead to excess capacity is critical.

Reproducing the IEA’s projections to 2030 from its Oil 2024 report was challenging because it did not include OPEC oil supply data for the projection period (Figure 1). Omitting a third of the world’s supply is significant and makes IEA’s conclusions difficult to verify. When comparing data from OPEC, discrepancies were found in the 2022 and 2023 data compared to IEA’s table.

Figure 1. IEA Table 1b WORLD OIL SUPPLY AND DEMAND - WEO Regions. Source: IEA Oil 2024. — Figure 1. IEA Table 1b WORLD OIL SUPPLY AND DEMAND – WEO Regions. Source: IEA Oil 2024.

Figure 2 shows that the IEA’s projected oil supply-demand surplus of 6.3 million barrels of oil per day (mmb/d) by 2030 is nearly seventy times greater than the average projections from OPEC and the U.S. Energy Information Administration (EIA) for the same period.

This significant discrepancy raises a red flag, suggesting potential issues with the IEA’s calculations, assumptions, or both. In two decades of monitoring these three agencies, I’ve never encountered a discrepancy of this magnitude.

Figure 2. IEA expects world oil supply-demand balance to exceed 6 mmb/d 2029-2030.
OPEC and EIA expect supply and demand to be near balance after 2025.
Source: IEA, OPEC, EIA & Labyrinth Consulting Services, Inc.

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

Energy Wars | Art Berman

June 9, 2024

Energy Wars | Art Berman

We have to save ourselves from ourselves

Whoever controls the energy supply controls the new world order.

Russia and China are deepening their relationship, Western allies in the Middle East are joining the fossil-fuelled BRICS alliance spanning the globe, and the Wagner group is loosening Europe’s grip of Africa. The tectonic plates of geopolitics are shifting along new fault lines as rising powers focus on securing resources while the old Empire in the West pretends it can decouple economies and energy. The world is at war, but only one side is being honest about what for.

Acclaimed energy expert Art Berman says this is the culmination of millennia of human fallibility. This is a conversation that takes us from 3000 BCE and the discovery of what he calls the most disruptive technology humans ever had right up to today and the energy wars blooming around the world. We discuss our psychological disposition to immaturity, our cognitive shortcomings when examining complexity, the secrets of holy texts and even morality. Art explains how energy is reshaping geopolitical alliances, which leaders understand the reality of our situation, and why technology cannot solve our problems.

The Biggest Risks of This Decade

May 20, 2024

The Biggest Risks of This Decade

Since the 2020 pandemic, many things have changed, but nothing more than geopolitics. Wars and clashes that used to be largely national have given way to more regional conflicts that threaten to upend the current world order. The Ukraine War and Israel-Iran conflicts have the potential to lead to world war.

The international arena once dominated by the United States has gradually changed into a more multipolar stage. China and India have grown in economic and military significance, and Russia and Iran have reasserted their influence. Rising world powers are increasingly challenging the over-extended leading power.

“The disintegration of the old order is visible everywhere…It is close to collapse.”

The Economist

Half of world’s nations feel that they are victims of economic and political inequality. A similar sentiment is found in the rising tide of populism—even in rich countries—because most people know that their economic situation has worsened in recent decades. At the core of both is the higher cost of energy and materials.

Figure 1 shows that oil price, inflation and interest rates rise and fall in tandem, and are considerably higher now than during the period before the Covid pandemic. The Ukraine War contributed to an energy shock that has moderated but oil prices have averaged nearly 60% higher after 2020 than they were in the six previous years. U.S. interest rates and inflation are more than three times higher.

Figure 1. U.S. inflation and oil price fell in 2023 but federal funds rate increased. Inflation was lower in Q1 2024, oil price rose and federal funds rate was marginally higher.
Source: St. Louis Federal Reserve Bank, EIA & Labyrinth Consulting Services, Inc.

French president Emmanuel Macron observed in 2022 that these changes are probably secular.

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

A Renewable Energy Transition Violates The Maximum Power Principle

May 19, 2024

A Renewable Energy Transition Violates The Maximum Power Principle

We all want solutions to the world’s many crises but do we understand the underlying problems?

Everything in nature, including human society, relies on energy for production, consumption, recycling, and sustainability. Therefore, to understand things, we must first examine how energy is turned into work and power.

Steel, concrete, plastic, and fertilizer are fundamental to modern civilization yet we have no idea how to make any of them at scale without fossil fuels. Those who think that the solution to our climate crisis is to end the use of fossil fuels do not understand this. Ending fossil fuels would cause society to collapse, and result in more short-term human death and suffering than is expected even in the worst-case scenarios for global heating.

Those who think that a solution is to substitute renewable energy for fossil fuels don’t understand this either. Even if true, we’re a long way from that. At present, wind and solar account for only two-and-half percent of global energy consumption, and all renewables—including hydroelectric and nuclear energy—account for only seven percent using the direct equivalent method.

The larger problem is that energy substitution is only a theory. It is naive and flawed because it only considers amounts of energy while ignoring rates of energy output.

Society runs on power, not energy. Energy is the potential to do work. Energy must be converted into work for anything to happen in the physical world. Work takes place when energy is transferred to an object by application of force along a displacement.

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

The Oil and Energy Macro

May 3, 2024

The Oil and Energy Macro

U.S. oil reserves reached a new record in 2022. Crude oil and condensate proved reserves exceed 48 billion barrels (Figure 1). Reserves declined from 1969 to 2006 then increased with additions from the deepwater Gulf of Mexico and Tight Oil. Tight oil accounted for 27 billion barrels (56% of total) in 2022.

Figure 1. U.S. proved oil reserves reached a new record in 2022.
Reserves declined from 1969 to 2006 then increased with deepwater Gulf of Mexico and Tight Oil
Source: EIA & Labyrinth Consulting Services

The U.S. does not, however, have world-class oil reserves. It’s a respectable, second-tier reserve holder similar to Libya. U.S. reserves are about half of Russia’s, one-third of Iraq’s, & about one-fifth of Iran’s & Saudi Arabia’s (Figure 2). It holds roughly 3% of the world’s reserves compared to Iraq’s 9%, Iran’s 12% and Saudi Arabia’s 15%.

Figure 2. The United States is a respectable, second-tier world oil reserve holder similar to Libya.
Reserves are about half of Russia's, 1/3 of Iraq's, & about 1/5 of Iran's & Saudi Arabia's.
Source: EIA & Labyrinth Consulting Services, Inc. — Figure 2. The United States is a respectable, second-tier world oil reserve holder similar to Libya.
Reserves are about half of Russia’s, 1/3 of Iraq’s, & about 1/5 of Iran’s & Saudi Arabia’s.
Source: EIA & Labyrinth Consulting Services, Inc.

Countries in the Persian Gulf have almost half of the world’s oil, and 42% of the worlds remaining proved reserves are in just four countries: Saudi Arabia, Iran, Iraq and the United Arab Emirates. Iraq is now a vassal state of Iran—an enemy of the U.S.—and, together, they have more than 20% of the oil that’s left. Add Russia and our principal enemies control a quarter of the world’s oil.

Those are terrible odds. U.S. foreign policy after World War II was founded on oil security from the Middle East. The last four energy-blind U.S. presidents managed to undo that. One of those two will be the next president of the United States.

Most people know that the wars in Ukraine and in the Middle East are serious but think of them in parochial terms—that they developed out of long-standing feuds between people who have always been at each other’s throats.

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

Oil Markets Were Unwise But Right in the Israel-Iran Crisis

April 25, 2024

Oil Markets Were Unwise But Right in the Israel-Iran Crisis

The Middle East seemed to be on the brink of war last week and oil prices fell. Was the market wrong?

Brent futures price closed at $90.45 per barrel on Friday, April 12 before Iran’s missile and drone attack on Israel (Figure 1). When markets opened on Monday, April 15, prices rose less than $1 before ending lower and closing at $90.02 on Tuesday. After Israel’s counter-attack on Friday, April 19, Brent rose from $86.96 to almost $91 only to close at $87.29.

Figure 1. Brent futures price fell -$3.16 (-3%) from $90.45 to $87.29 for the week ending April 19. Source: CME & Labyrinth Consulting Services, Inc.

This seems remarkable considering that oil flows through the Persian Gulf could have been disrupted. About 15.5 mmb/d (million barrels per day) of crude oil pass through the Strait of Hormuz (Figure 2). There’s an additional 5 mmb/d of refined products, and 10 bcf of liquefied natural gas.

Figure 2. Crude oil volumes that passed through the Strait of Hormuz in the first half of 2023. Source: Modified from @Nate Hagens with EIA data & Labyrinth Consulting Services, Inc.

There was a time when military outbreaks in the Middle East would have caused a sharp increase in world oil prices. Figure 3 shows a comparison of Brent price in the one hundred days following the 1990 Iraqi invasion of Kuwait and after the 2023 Hamas attacks on Israel.

Figure 3. Comparison of Brent price in the one hundred days following the 1990 Iraqi invasion of Kuwait and after the 2023 Hamas attacks on Israel. Source: Bloomberg and Labyrinth Consulting Services, Inc. — Figure 3. Comparison of Brent price in the one hundred days following the 1990 Iraqi invasion of Kuwait and after the 2023 Hamas attacks on Israel. Source: @johnauthers (Bloomberg) and Labyrinth Consulting Services, Inc.

It’s worth pointing out that there is no major oil production in Israel or in surrounding countries. The involvement of Iran in the recent conflict, however, makes these two events comparable at least in the last few weeks.

There are a slew of mainstream narratives for oil market’s phlegmatic reaction to recent attacks in the Middle East.

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

Almost Everything is About Oil in the Middle East

April 21, 2024

Almost Everything is About Oil in the Middle East

Perhaps the most extraordinary part of Iran’s April 13 attack on Israel was that it was countered by a coalition that included Jordan, Saudi Arabia and the United Arab Emirates (UAE). It is also noteworthy that this was the first time that the United States engaged militarily in Israel’s defense.

The events of April did not begin with the October 6, 2023 strike on Israel from Gaza but have their origins decades earlier. It is now evident, however, that the catalyst for Hamas’ attack was the impending normalization of diplomatic relations between Saudi Arabia and Israel.

This would have had significant consequences for Israel’s oil supply, an important aspect of the present crisis that is rarely discussed by the press or politicians. Almost everything is about oil in the Middle East.

The Saudis were ready to join the Abraham Accords that in 2020 established ties between the UAE, Bahrain, Sudan, Morocco and Israel on regional security and trade.

As a direct consequence, Israel was officially moved under the U.S. Central Command (CENTCOM) area of responsibility in early 2021, shifting from its decades-long alignment with the U.S. European Command (EUCOM).

The timing of the Gaza incursion into Israel in October was designed to prevent Saudi Arabia from joining the Abraham Accords.

It is hardly a coincidence that Houthi attacks on shipping in the Suez Canal and the Red Sea started in November. Almost 9 million barrels of oil per day (mmb/d) pass through the Canal and the Bab al-Mandab Strait.

It’s worth recalling that the Houthis have been in an armed conflict with Saudi Arabia in Yemen since 2015, and were responsible for attacking the main Saudi refinery complex in 2019. Both Hamas and the Houthis, along with Hezbollah in Lebanon, are funded and largely directed by Iran.

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

Europe’s Metacrisis Just Got Worse

April 17, 2024

Europe’s Metacrisis Just Got Worse

The latest conflict between Iran and Israel just made Europe’s already precarious energy and economic situation a lot worse.

Many analysts and politicians are celebrating Europe’s resilience after losing its natural gas supply from Russia.

“Two years on from Russia’s invasion of Ukraine, trade in energy products between Russia and the European Union has largely disappeared. The EU has adapted remarkably well to a decoupling that many would have considered impossible.”

Bruegel

There is some truth here but it misses the larger picture. In the wake of Russia’s invasion of Ukraine, the world has witnessed a major shift in its geopolitical, economic, and social order. These changes have had a particularly large effect in Europe. Events in the Middle East make things even worse.

The Covid-19 Pandemic in 2020 resulted in a re-arrangement of supply chains and trade dependencies, prompting countries to consider the vulnerabilities inherent in globalized production networks. The era of unipolar dominance by the United States has given way to a more multipolar world. The traditional alliances and partnerships that underpinned the post-World War II order are unraveling.

Just before Russia’s invasion of Ukraine, China and Russia issued a joint statement declaring that their partnership had “no limits” in opposing NATO expansion. They further stated their intention to reshape the global governance system to be more representative of the changing global landscape, challenging the current US-dominated world order.

In early 2024, the BRICS group of emerging-market nations—Brazil, Russia, India, China and South Africa–expanded to include Saudi Arabia, Iran, the United Arab Emirates, Ethiopia and Egypt. These countries now hold a dominant position on more than half of the global oil exports, with major implications for oil prices and energy geopolitics…

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

Telling the Truth About Our Future

March 3, 2024

Telling the Truth About Our Future

Renewable energy is a poor substitute for fossil fuels. That’s because renewables are a diffuse form of energy and produce power only about one-third of the time.

That doesn’t stop renewable energy true-believers from trying to bend the laws of physics to tell a story that’s not true. EROI** (energy returned on energy invested) was used in this way by Murphy et al in 2022 and more recently, by Delannoy et al in late 2023.

Louis Delannoy and twenty-one co-authors proclaimed the good news in November that there is now a consensus that renewable energy is cheaper and more efficient than fossil fuels.

“The EROI of fossil-fueled electricity at point of end use is often found to be lower than those of PV, wind and hydro electricity, even when the latter include the energy inputs for short-term storage technologies.”

Emerging consensus on net energy paves the way for improved integrated assessment modeling

That’s not true. There is great uncertainty about EROI and a range of net energy values for every type of energy source. It’s a blunt instrument at best. It requires knowing an unknowable array of complex inputs and outputs to be anything more than a high-level guess.

First, let’s examine the easy part of their statement—“including storage technologies.” Lazard’s latest data shows that wind and solar are the most expensive forms of electric power once backup storage is included. Cost and EROI are not the same thing but they are related so it’s a red flag that Delannoy et al’s statement may be untrue.

The reference for their claim is a 2020 paper by one of the co-authors about modeling carbon emissions in California that included simulations for future solar PV EROI . California is not the world, forward modeling is not historical data, and solar PV is not the renewable universe.

…click on the above link to read the rest…

Renewables Are Not the Cheapest Form of Power

February 15, 2024

Renewables Are Not the Cheapest Form of Power

The CEO of TotalEnergies believes that the renewable transition will lead to higher—not lower—energy prices. That’s a very different view from the popular belief that renewable energy prices are falling so fast that electric power will become ever-cheaper.

“We think that fundamentally this energy transition will mean a higher price of energy.

“I know that there is a theory which says renewables are cheaper, so it will be a lower price. We don’t think so because a system where you [have] more renewable intermittency is less efficient . . . so we think it’s an interesting field to invest in.

Patrick Pouyanné

Many energy analysts and renewable promoters see things differently.

“Renewables are by far the cheapest form of power today.”

Francesco La Camera, Director-General of IRENA

La Camera’s statement is based on a 2021 report by IRENA (Internation a l Renewable Energy Agency) that evaluated the levelized costs for renewable energy sources. The problem is that IRENA’s study only evaluated generation costs and did not account for electric power backup and storage costs. Since wind and solar are intermittent sources of electricity, the cost of natural gas backup or battery storage must be included in their levelized cost.

Lazard published a report in 2023 that includes backup and storage costs. The data indicates that electric power costs from wind and solar are about 21% more than from combined-cycle natural gas and 44% more than from coal (Figure 1). At first glance, that doesn’t seem like an unreasonable premium to pay for cleaner electric power.

Figure 1. The levelized cost for electric power from wind and solar with backup is 21% more than from combined-cycle natural gas and 44% more than from coal. Source: Lazard & Labyrinth Consulting Services, Inc.

…click on the above link to read the rest…

Draining America First—The Beginning of the End for Shale Gas

January 24, 2024

Draining America First—The Beginning of the End for Shale Gas

The United States is the biggest producer of natural gas in the world and recently became the largest exporter of LNG. The industry is scrambling to build LNG (liquefied natural gas) export terminals as fast as permitting and funding will allow.

This couldn’t come at a worse time. Instead of having an almost infinite amount of natural gas as many believe, we may be witnessing hard limits to that supply.

Figure 1 shows that shale gas plays have reached an apparent peak and may be starting to decline. It’s not a good sign although some of this may be related to seasonal effects or regulatory matters. At the very least, the rate of production growth is slowing.

Shale gas plays have begun to decline as U.S. becomes biggest world LNG exporter. — Figure 1. **Drain America First**. **Shale gas plays have begun to decline as U.S. becomes biggest world LNG exporter**. Source: EIA, Enverus & Labyrinth Consulting Services, Inc.

Any decrease in the growth of shale gas could become an acute problem because it accounts for 82% of U.S. dry gas production (Figure 2).

Shale gas accounts for 82% of U.S. dry gas production. — Figure 2. **Shale gas accounts for 82% of U.S. dry gas production**. Source: EIA, Enverus & Labyrinth Consulting Services, Inc.

I am frankly less concerned about whether or not shale gas production is currently in decline as I am about what will happen to supply in five or ten years.

That concern is based on plans for increased LNG and pipeline exports. Net LNG exports are expected to increase +6.4 bcf/d by 2030 & another +7.1 bcf/d by 2035 (Figure 3). Total net exports are projected to increase +15 bcf/d by 2035 from 13 to 29 bcf/d.

Total net exports to increase +15 bcf/d by 2035 from 13 to 29 bcf/d. — Figure 3. **Net LNG exports expected to increase +6.4 bcf/d by 2030 & another +7.1 bcf/d by 2035**. **Total net exports to increase +15 bcf/d by 2035 from 13 to 29 bcf/d**. Source: EIA & Labyrinth Consulting Services, Inc.

Let’s take a quick look at production from the three biggest pure shale gas plays (Figure 4).

…click on the above link to read the rest…

A Renewable Energy Future Will Collapse the Financial System

January 22, 2024

A Renewable Energy Future Will Collapse the Financial System

Energy is the economy. That’s a radical concept because most people think that the economy runs on money. It doesn’t.

What is energy? It is the potential or capacity to do work. The economy runs on work. That’s why energy is the economy. That’s simple.

What is money? That’s a little more complex.

“Money is not the value for which goods are exchanged, but the value by which they are exchanged.”

John Law

In other words, money has no inherent value. Economists often attempt to change the subject by pointing out that money is at least a medium of exchange, a store of value or a unit of account. The same, however, could be said for cigarettes that were used as money in Communist Romania in the 1980s.

“Society runs on energy and materials, but most people think it runs on money…[Money] is created as debt subject to mathematical laws of compound interest…Money eventually gets spent on a good or service which will contain embodied energy. Money is a claim on energy yet its creation is not tethered to energy availability or cost.”

N. J. Hagens

In the end, money–as paper, coins, gold or cigarettes–is just a financial claim on energy, a marker, a unit of account. For example, I may contract someone to do work for me—to build a fence or to move some heavy equipment—and we agree on a payment amount. I pay him dollars for his physical work (joules). He may then use those dollars to buy food (joules), gasoline for his car (joules) or contract someone else’s labor to do some work for him (joules). Money is the medium of exchange but the value exchanged is energy.

…click on the above link to read the rest…

Eagle Ford Shale–A Preview of Permian Decline

January 18, 2024

Eagle Ford Shale–A Preview of Permian Decline

The Eagle Ford Shale was the hottest play in the United States a little more than a decade ago. In mid-2012, there were twice as many rigs drilling horizontal wells in the Eagle Ford as there were in the Permian basin.

U.S. Shale Plays — Figure 1. Map showing U.S. shale plays. Source: EIA.

Now its decline is probably a preview of what to expect from the Permian basin a few years from now.

The Eagle Ford still produces more than a million barrels of oil (mmb/d) and 5 billion cubic feet of gas per day so that’s the first thing to expect about the future Permian. Plays don’t crash and burn but follow an undulating path downward over years or decades.

Eagle Ford production climbed steeply after 2010 and peaked at 1.6 mmb/d in September 2015 (Figure 2). Much of its decline over the years that followed were because of low oil prices. Although output increased again in 2018 and 2019, it never reached its 2015 level. The Pandemic in early 2020 resulted in a second period of decline and recovery. Production has fallen about 6% since August 2020.

Many people think that advances in technology and ingenuity will somehow reverse the inevitable decline of shale plays like the Eagle Ford. Indeed, those factors have made some difference. The estimated ultimate recovery (EUR) for the average well increased through 2021 despite falling field production levels (Figure 3). That was mostly because operators drilled longer laterals and used more effective fracking methods. The advances were impressive but the technology wasn’t free and well costs increased.

Since then, however, well performance has fallen below levels before 2021. Wells that began production in 2022 will produce about 26% less than 2021 wells and the most recently drilled wells will probably produce more than one-third less oil.

…click on the above link to read the rest…

Climate change is a Narrow View of the Human Predicament

January 16, 2024

Climate change is a Narrow View of the Human Predicament

A transition away from fossil fuels seems like a sensible approach to climate change but what are the correct ingredients? Wind, solar, hydrogen, electric vehicles, carbon capture, nuclear, geothermal, heat pumps, hydropower?

It’s like a doctor treating a patient without examining the source of his symptoms.

“If many remedies are prescribed for an illness, you may be certain that the illness has no cure.”

—Anton Chekhov, The Cherry Orchard (1904)

Climate change is a serious threat to civilization, but it is a symptom of the larger problem of overshoot. Overshoot means that humans are using natural resources and polluting at rates beyond the planet’s capacity to recover.

The main cause of overshoot is the extraordinary growth of the human enterprise made possible by fossil energy. As that enterprise grew, more and more energy was needed to support its complexity and continued growth. The carbon emissions that underlie climate change are merely a byproduct of using all of that energy.

Humanity has been having quite a party with fossil fuels for the last century of so. Now it’s time to survey the mess we’ve made. Everyone wants solutions but first we must understand the present state of things and how we got here. Without a map of the territory, we are lost. Choosing a destination without a route will probably get us more lost. Yet, that is society’s current approach.

Ecology and economics come from the same Greek word oikos which means home or household. Ecology means what we know and say about our home. Economics means how we measure and manage our household. It seems strange to me that economics largely excludes ecology and the natural world that we consider to be our home.

…click on the above link to read the rest…

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