tag:blogger.com,1999:blog-8861605.post7226842426428884990..comments2024-03-24T11:01:27.668-04:00Comments on Resource Insights: 10 years after the oil price spike: Is peak oil a process rather than a moment?Kurt Cobbhttp://www.blogger.com/profile/05330759091950742285noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-8861605.post-23214735481713727452018-08-10T07:08:47.035-04:002018-08-10T07:08:47.035-04:00@Shown B: it looks like tight oil still has a prof...@Shown B: it looks like tight oil still has a profitable EROI, although the discussion on which EROI is needed to make an energy extraction worthwhile is not closed. Dr. Hall proposes something around 1,3:1 if I remember right.<br /><br />On the other hand, you can energy-subsidize any extraction, as you correctly point out: for example, tar sans are largely subsidized by using natural gas, and I have heard about developments in northern Africa to install PV systems to power oil wells.<br /><br />Nevertheless, I made a rough estimate around the question whether the oil production increase is delivering more net energy, and my conclusion is that it is not (if we only consider oil production and consumption; without considering the energy that could be brought in from other sources). The analysis is, obviously, strongly dependent on the EROI values adopted for each type of liquid, but I considered a sensitivity analysis, with EROIs of up to 10:1 for tight oil (which is considered a too high value) and the conclusion was the same: all the new oil supposedly added to the production is actually consumed just to increase the overall output!<br /><br />Surprising, isn't it.Ruy Nuneznoreply@blogger.comtag:blogger.com,1999:blog-8861605.post-55073274327890614332018-07-17T14:24:10.891-04:002018-07-17T14:24:10.891-04:00Quite correct Sheila, the economic theories ventur...Quite correct Sheila, the economic theories venture that infinite substitutability is possible through technology but the fuel based economy also uses fuel to create substitutes through technology. Readings on EROEI and ecological economics provides scientifica proof of the folly.<br />Unfortunately the folly is making the rich richer and the competition motive of capitalism only cares for short term personal gains. Our society is broken and those that run it have no desire to fix it. Peter Dewhttps://www.blogger.com/profile/08482036119682371431noreply@blogger.comtag:blogger.com,1999:blog-8861605.post-61050760266403876042018-07-14T18:19:11.907-04:002018-07-14T18:19:11.907-04:00An economist would argue that significant commodit...An economist would argue that significant commodity price fluctuations result from one of 4 basic scenarios:<br />• positive supply shock or negative demand shock supresses market clearing prices<br />• negative supply shock or positive demand shock enhances prices contrariwise<br />One example would be the penetration of electric vehicles at sufficient rapidity to constitute a negative demand shock.<br />Another would be your discussion here about 2014 constituting an economically unsustainable positive supply shock.<br /><br />Within this formulation, I would offer an editorial supplement to your paragraph third from the end:<br />'When it does stop, one of three [6 actually] things will emerge: <br />• new extraction technologies will have lowered the cost of tight oil production sufficiently to bring those costs into alignment with what consumers can afford on a long-term basis <br />• demand for oil will have declined sufficiently because of efficiency or migration to other energy sources, say, electricity for transport, and so the decline of investment flows into oil exploration won't matter <br />• world will be headed toward, if not already in, its next oil crisis as prices rise to a level that makes tight oil production genuinely profitable'<br />• unanticipated mammoth new discoveries or more precisely accelerated rate of discovery <br />• global political mobilization to deal with climate change<br />• generalized financial collapse as business cycle has not been eliminated, population growth not halted + other factors<br /><br />Probablistic projections:<br />• 'first result seems unlikely as innovation cycles are very long in the oil industry, sometimes taking 30 years to reach maturity <br />• second is possible only in the longer term and only if countries worldwide put themselves on the equivalent of a war footing to speed up their transformation <br />• third result seems the most probable outcome as the lack of investment in oil exploration is likely to show up in two to three years'<br />• fourth geologically highly unlikely<br />• fifth would really require massive action against climate change<br />• sixth, sadly, ultimately greater chance financial collapse generally shrinking crude + gas demand<br /><br />Nonetheless, I remain resolutely optimistic that solutions exist for these environmental problems.<br />S. W. Lawrencehttps://www.blogger.com/profile/01654864579983316386noreply@blogger.comtag:blogger.com,1999:blog-8861605.post-24970603506933026052018-07-10T20:21:53.421-04:002018-07-10T20:21:53.421-04:00Just what new energy source are we expected to &qu...Just what new energy source are we expected to "transition" to?<br /><br />ALL of our technology would we useless without access to affordable OIL but OIL is a finite, fossil resource & will become too expensive & difficult to extract in the vast amounts now needed.<br />We now have 7.6 BILLION HUMANS totally dependent upon OIL staying plentiful & affordable but clearly, this will not last & as prices rise as they must, fewer people, especially poor farmers & fishermen will not be able to buy the fuel they need for their irrigation pumps or the engines that power their fishing boats.<br /><br />I see NOTHING on the horizon that can replace OIL & our high tech "renewables" are also tightly tied to OIL & they cannot exist without it.<br /><br />Those who have been led to believe that "renewables" can replace oil are in for a shocking reality, they can't!<br />As oil declines, so will 7 billion of us decline the hard way, wars, starvation, disease, thirst & an increasingly hostile environment.<br />We have entered the end of the "good ol' days," party up, the "hangovers" will be a doozy!Sheilahttps://www.blogger.com/profile/00016705065672424603noreply@blogger.comtag:blogger.com,1999:blog-8861605.post-21469088861917640662018-07-09T15:06:52.565-04:002018-07-09T15:06:52.565-04:00Hello Kurt
Thanks for the insights as always.
I ...Hello Kurt<br /><br />Thanks for the insights as always.<br /><br />I have always wondered, if tight (shale) oil production is generally unprofitable, how does it persist? We know where the money comes from – it is “printed” – but where does the energy come from to do the work of shale oil extraction? (With this question, I am making the assumption that energy, not money, is the ultimate driver of economic activity, and that shale oil extraction is not itself energetically profitable. ) <br /><br />There must still be enough energy in the global energy extraction/production and economic/trading system to sustain current levels of economic activity in the U.S. and globally. And that would include indirectly subsidizing and sustaining unprofitable tight oil extraction and other unconventional oil production. <br /><br />It has been suggested by some that a very large percentage of that energy is still coming out of conventional easy-to-extract oil reserves, in particular the super major oil fields. Boatloads of this fossilized sunlight is moved around the world via the global trading and financial system. My understanding had been that stick-a-hole-in-the- ground-up-comes-a-bubbl’n-crude Conventional oil production has been declining annually by ~1.5 Billion barrels? Is that correct? Is it a non-issue, or THE issue? <br /><br />The majority of those oil fields are now principally in the Middle East now, and to some extent Russia. Interesting how our geopolitics are so oriented around those regions. <br /><br />I would speculate that at some point the "cheap" conventional oil production declines result in the loss of sufficient energy to power the existing global economic and trading system. Then that system breaks and we move to another political and economic/trading regime based on declining conventional reserves, and unconventional oil production and renewables, whatever that might look like. Unfortunately, at that point, the U.S. will have burned through much conventional and even a great deal of its relatively easily extractable unconventional oil supplies. <br /><br />Fanciful speculation perhaps.Shawn Bhttps://www.blogger.com/profile/11133575785476157598noreply@blogger.comtag:blogger.com,1999:blog-8861605.post-41400000891223376022018-07-08T19:26:45.846-04:002018-07-08T19:26:45.846-04:00Kurt, excellent work, as usual. To answer the ques...Kurt, excellent work, as usual. To answer the question of how tight oil investment is defying gravity, it is the same as the bank bailout, they are investing in the whole system. I think you will find that these investors are backed by secret bailout guarantees.<br /><br />Demand will drop dramatically when China makes a hard landing. A few years to go though.fpteditorshttps://www.blogger.com/profile/04620275872850435922noreply@blogger.com