{"id":23358,"date":"2017-03-29T12:58:17","date_gmt":"2017-03-29T17:58:17","guid":{"rendered":"http:\/\/olduvai.ca\/?p=23358"},"modified":"2017-03-29T19:56:18","modified_gmt":"2017-03-30T00:56:18","slug":"23358","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=23358","title":{"rendered":"Why Energy-Economy Models Produce Overly Optimistic Indications"},"content":{"rendered":"

Why Energy-Economy Models Produce Overly Optimistic\u00a0Indications<\/a><\/h3>\n
I was asked to give a talk to a committee of actuaries who are concerned about modeling the financial future of programs, such as pension plans, given the energy problems that are often discussed. They (and the consultants that they hire) have been using an approach that puts problems far off into the future. I was trying to explain why the approach that they were using didn\u2019t really make sense.<\/div>\n
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Below are the slides I used, and a little explanation. A PDF of my presentation can be downloaded at this link:\u00a0The Mirror Image Problem<\/a>.<\/p>\n

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Slide 1<\/p>\n<\/div>\n

FCAS stands for \u201cFellow of the Casualty Actuarial Society\u201d; MAAA stands for \u201cMember of the American Academy of Actuaries.\u201d Actuaries tend not to be interested in academic degrees.<\/p>\n

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Slide 2<\/p>\n<\/div>\n

I try to explain how a more complex situation can be hidden in plain sight.<\/p>\n

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Slide 3<\/p>\n<\/div>\n

<\/span>It is not obvious that both the needs of energy producers and energy consumers should be considered.<\/p>\n

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Slide 4<\/p>\n<\/div>\n

If we look back at what the discussions of the time were, we can see when remarks were that prices were too high for consumers, and when they were too low for producers. See for example my article, Oil Supply Limits and the Continuing Financial Crisis<\/a> and my post, Beginning of the End? Oil Companies Cut Back on Spending<\/a>. This latter article shows that companies were already cutting back on spending in 2013, when prices appeared to be high, because even at a $100+ per barrel level, they still were not high enough for producers.<\/p>\n

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Slide 5<\/p>\n<\/div>\n

Oil companies tend to extract the cheapest and easiest to extract oil first. Eventually, they find that they need to move on to more expensive to extract fields\u2013even with technology enhancements, costs are rising.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Why Energy-Economy Models Produce Overly Optimistic\u00a0Indications I was asked to give a talk to a committee of actuaries who are concerned about modeling the financial future of programs, such as pension plans, given the energy problems that are often discussed. They (and the consultants that they hire) have been using an approach that puts problems […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2,3],"tags":[15039,4517,1233,1232,1816],"class_list":["post-23358","post","type-post","status-publish","format-standard","hentry","category-economics","category-energy-2","tag-actuarial-science","tag-economic-models","tag-gail-tverberg","tag-our-finite-world","tag-pensions"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/23358","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=23358"}],"version-history":[{"count":2,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/23358\/revisions"}],"predecessor-version":[{"id":23369,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/23358\/revisions\/23369"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=23358"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=23358"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=23358"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}