The End.

Garyvdh said:
Speak to a long term financial broker. Don't listen to scare-mongers.
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I don’t know much about economics but I have been giving myself a crash course and I think you’re wrong. PANIC!
 
To some posters. Have you heard of head under the blanket? Head in the sand? Fingers in ears, eyes shut and la la la? Fiddling while Rome burns? ANC government?
 
Palimino said:
I don’t know much about economics but I have been giving myself a crash course and I think you’re wrong. PANIC!
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LOL! Panic has never achieved anything constructive. Instead, focus your energies on things that you DO have control over. Get rid of debt. Teach yourself basic "blue collar" skills. Learn how to grow stuff. Learn how to repair stuff. Get out of the consumer culture.

Sure, one has to be delusional not to see that our debt-powered, fiat-currencied, US consumer-driven economic bubble was by definition unsustainable. The needle that finally pricked the bubble was of course resource depletion, especially oil production, which has remained, at best, flat since 2005.

The current depression did buy us some time in terms of postponing our eventual descent down the back slope of the world's production of cheap oil. However, all of the TARP bailouts have merely been an attempt to reinflate the bubble. Unless the US consumer takes on even more debt, then this is not going to happen. Heck, even if he did then it would merely compound the inevitable catastrophe.

In short, there's no escaping the day of reckoning for the world's economy. In short, unless we can come up with an alternative to cheap crude oil, then further economic growth becomes impossible. In fact, sustainable economic growth is an oxymoron. We'll have to adopt a radically different economic model in decades to come.
 
That's what you said about a year ago ST.

Hasn't happened yet.

When do you expect the blue collar skills to become necessary?
 
Arbiter said:
That's what you said about a year ago ST.

Hasn't happened yet.

When do you expect the blue collar skills to become necessary?
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I never claimed the ability to predict the future with any degree of certainty. The world's socio-political and economic systems are simply too complex to accurately model with any degree of accuracy in terms of dates and times.

What I can do, though, is to draw very obvious conclusions from facts presented to me. The world economy is indeed a dead man walking. How much longer the central banks can maintain a facade of normality is anyone's guess. Whether we've got another week or another decade I can't tell you. Nobody can. But anybody with a measure of common sense can see that an exponentially growing population and a dwindling resource base are incompatible and that the status quo can as a result not be maintained much longer.

I would also encourage you to read up on the events of September 2008 before claiming business as usual. The system did indeed come within mere hours of total systemic collapse, was it not for swift intervention by the Fed.
 
Humanity will one day destroy itself completely or simply become test tubes who are stimulated with electric impulses to replace any real world experiences.

That doesn't mean we should all build shelters or start losing weight to fit in the tubes.
 
Halliburton to coax more oil out of largely depleted Ghawar

Largely depleted?! Wow! How's that for a shocker? Let me explain:

The Ghawar oil field in Saudi Arabia is by far the biggest oil field in the world, producing around 6 million barrels of oil a day, if I recall correctly. The health of this oil field is of the utmost importance to the world as a whole and, should it become evident that this field has gone into decline, then it will probably become impossible to hide the fact that the world has already reached the point of maximum oil production for much longer.

Unfortunately the Saudis (and OPEC) have always been very secretive about the actual production of their fields which makes it very difficult for an outsider to gauge the health of this reservoir. Despite the very high water content that Ghawar oil currently contains (due to seawater injection) and despite the recent need for horisontal drilling in an effort to maintain flow rates, the Saudis have always maintained that Ghawar was in excellent health.

Even members of the peak oil community like myself have taken comfort knowing that Ghawar will probably not peak for another decade of two, offsetting the rapid and terminal decline in other supergiant fields like Cantarell in Mexico. In other words, we all believed that Ghawar might give us some breathing space. However, I've just stumbled upon an article by Michael Lynch (a notorious peak oil denier) boasting about a contract that the Saudis just awarded to Halliburton, the large American oil services company and how this would boost production from Ghawar.

To the uninformed that all sounds fine and dandy but to someone with more than a casual interest in oil production, this article has exactly the opposite effect.

Why? Well, if the Saudis now need to go to such extremes to maintain production from Ghawar then it means that this reservoir is in very bad shape indeed. In fact, this article is the most candid admission that I have seen that Ghawar is in big trouble. Peak oil icon Matthew Simmons, who predicted that Ghawar should already have gone into decline might yet be vindicated much sooner than I had hoped for.

Here's a surprisingly candid excerpt from that article by Michael Lynch where he openly mentions decline rates and of course that sobering heading "largely depleted". It's hard to believe that Lynch is a foremost peak oil denier judging by this. Heck, if this is the sort of stuff that deniers write these days then we need to be worried. Very worried.

Ghawar field, the world's largest, is a long asymmetric structure that is 230 kilometers long and approximately 30 miles wide however the width diminishes going south.The The announcement makes no mention of Ain Dar, the most mature part of Ghawar in the extreme northwestern region of the field. Ain Dar has been under pressure maintenance by peripheral water injection for over 40 years. Ain Dar (and other parts of the field) began producing salt water in the late 1970s and by 2005, the cut was 42%. All of Ain Dar was wet since 1984. Once water became a major problem, many existing vertical wells were converted to short lateral horizontals running along the top 10 feet of the Arab D zone, the main pay. New wells were drilled horizontally to the same layer. Today, the redevelopment process has gone on so long that future oil production from Ain Dar is speculative.

Shedgum, adjacent to Ain Dar on the east, is not much better off. Both regions began oil production in 1951. Uthmaniyah was developed after Ain Dar and Shedgum were fully developed with vertical wells on 1 square kilometer spacing. It is somewhat narrower and the thickness of the Arab D is less.Reservoir quality is diminished. Hawiyah, narrower than Uthmaniyah and to the south of it, was then developed. Reservoir quality is further diminished. In Haradh, developed in the 1970s, reservoir quality is so poor that vertical wells have less than one fourth the productivity of the northern regions. In 1983 with reservoir pressure falling rapidly, the region was shut in. Following increased demand as the result of the invasion of Kuwait, in 1990, these shut in wells were returned to production. Redevelopment began in 1996 with horizontal and multilateral wells. The southernmost section of Haradh, known as Haradh III came on stream in February of 2006.

Today, the entire field still contains a great deal of crude oil but it is much harder to get and the production rates continue to fall off. Halliburton's mandate will be to deal with higher and higher water cuts, utilize all known new technology to hold rates as high as possible and stimulate wells as required. The total number of wells drilled in Ghawar exceeds one thousand including hundreds of vertical wells that have either been abandoned or converted to horizontals. Now Halliburton will drill even more trying to improve rate and lessen decline. It is a good, long-term contract and a tall order for the company.
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Turtle said:
.............. there's never been so much economic activity, so many educated people, so much trade, so much technology and modernity, so much construction, so much infrastructure .. ever, ever on this planet..
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Yep I Agree, I even have a PS3, damn!

I am with TURD, The colapse is emminent ...watch out for 2012!
 
Why 2012, exactly? Do you buy into that Mayan calendar trash or is there another significance to 2012?
 
StrongTurd said:
In short, there's no escaping the day of reckoning for the world's economy. In short, unless we can come up with an alternative to cheap crude oil, then further economic growth becomes impossible. In fact, sustainable economic growth is an oxymoron. We'll have to adopt a radically different economic model in decades to come.
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Who needs oil? The alternative is in full swing...

StrongTurd said:
I would also encourage you to read up on the events of September 2008 before claiming business as usual. The system did indeed come within mere hours of total systemic collapse, was it not for swift intervention by the Fed.
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House of Cards by CNBC.
 
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Lightscribe said:
Who needs oil? The alternative is in full swing...

House of Cards by CNBC.
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Ah, not that junk again. You obviously missed the word CHEAP in my post. So again, please would you point out to me an energy source that is portable, contains the same energy density as oil, is universally abundant, contains the same EROEI and most importantly costs the same per energy unit to supply to the market as light sweet crude oil. Merely linking me to a list of alternative energy sources will not do the trick.

If you consider the fact that renewables consist of far less than 10 percent of the world's total energy production (and that includes hydro power) and that none of the alternatives conform to the characteristics of oil that I listed in the previous paragraph, then you've got to ask yourself this: Do you honestly think that we as a society will be able to ramp up production of alternatives rapidly enough to compensate for the decline in production from currently producing oil fields given that we'll need to come up with the equivalent of another 40 million barrels per day by 2030 just to compensate for current decline rates?

Yes, that's right, we need the equivalent of FOUR TIMES the total oil output of Saudi Arabia to be added to the world's oil production by 2030 just in order to maintain production at current levels when we assume zero economic growth. If you factor in projected economic growth from the newly emerging superpowers in the East, then this figure becomes SIX TIMES the production of Saudi Arabia. Kindly would you point out how alternative energy sources is going to compensate for this given the 20 year time frame?
 
StrongTurd, what you fail to take into account is Human Nature. If we are faced with a choice between two products, both offer the same thing, we choose the cheapest one.

As long as oil based power generation is the cheapest, it is going to be the most adopted. When we reach a point where it is cheaper to by an Electric car/bus/truck/ship/airplane rather than a fossil fuel based one, only then will electric really break into the market.

Yes, it will be painful. Yes, lots of people driving cheap 10th hand cars will not be able to afford them any more. Yes, life as we know it will change.

But no, the world will not suddenly implode in on itself. Things will become more expensive. Luxuries will once again be out of the reach of the poor people. But what we are trying to point out to you is that there ARE alternate technologies to take the place of oil. Yes, they are not as cheap: YET.

Imagine for a moment if all the industries in the world stopped producing fossil fuel based products, but switched over to electric based. Electric will be come cheaper. Simple economics of scale. But at the moment they make larger profit with fossil fuel based products as there are a larger consumer base and they have the infrastructure and R&D in place. They are milking that cow for as long as they can before they switch over.
 
StrongTurd said:
Ah, not that junk again. You obviously missed the word CHEAP in my post. Kindly would you point out how alternative energy sources is going to compensate for this given the 20 year time frame?
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As Pilgrim, said, the prices of alternate energy sources will become cheaper as oil becomes more expensive.

The industries involved, are so varied, that the "common" fuel, will be easily replaced by a myriad of other sources.

From a newsletter I subscribe to:
How To Navigate Energy's New Paradigm
By Chris Nelder | Friday, November 6th, 2009

One of the more interesting themes that emerged from this year's ASPO peak oil conference was the problems of maintaining complex systems, and the role that energy plays in them.

Dr. Jason Bradford, the biology brains behind Farmland LP (more on that here), ticked off a few of the key vulnerabilities of the U.S. food system in his presentation on sustainable agriculture:
Commercial agriculture consumes 10.3 quads (quadrillion BTUs) of primary energy in order to produce 1.4 quads of food energy. The inputs are mainly fossil fuels used in running tractors, producing artificial fertilizers, producing seeds, trucking, and refrigeration, processing, freezing, refrigerating, and cooking.
Commercial agriculture not only depletes non-renewable resources and degrades soil, air, and water, but it also releases 5 billion pounds of harmful chemicals and massive amounts of greenhouse gas emissions into the environment per year.
Animal waste provides critically important fertilizer to small distributed farms, but in the modern massive feedlots of concentrated animal populations it becomes an environmental hazard. All the feed transported to the feedlots uses petroleum fuels, and the hay is grown using ancient "fossil water" pumped from deep, essentially non-renewable aquifers.
Over the last four decades or so, runoff from commercial agriculture has resulted in massive "dead zones" near our shorelines caused by algae blooms that suck the oxygen out of the water and create anoxic environments where nothing can live. (The dead zone in the Gulf of Mexico has grown to an estimated 8,500 square miles.)
Just three crops comprise 71% of U.S. crop acres: corn, soybean, and wheat.
Monsanto, Pioneer, and Syngenta —all basically chemical companies — dominate the seed industry with patented GMO seeds. Those seeds are finely tuned to the temperature, rainfall, and so on of the recent past, making climate change a major threat to the whole food regime (more on that here).
Likewise, a handful of giant companies now control the vast majority of the food supply system — a stark contrast to the millions of small family farmers who dominated it prior to the 1960s.
Nearly all of the food delivery system uses just-in-time inventory methods, so there is only one to three days' supply at any point in the distribution chain.

In short, Bradford explained, we have built a complex food supply system with very low diversity and strong connectivity. Yet in nature, those characteristics lead to instability. Stable systems are highly diverse with weak connectivity. The very complexity and interconnectedness of our food web is, in itself, a dangerous vulnerability.

Bradford aptly compared our blithe faith in the food supply system to "the hubris of Wile E. Coyote" just before he realizes he's about to plunge into the canyon.

The Energy-Water Nexus

A presentation by Michael Webber of the University of Texas at Austin emphasized another important interrelationship: We use water for energy, and energy for water.

Nearly all power plants are thermoelectric heat engines — they use heat to produce electricity (the notable exceptions to this are hydro power and solar photovoltaics). Although there are many variations of the process, here's a simple explanation: A source of heat is applied to one side of the engine, which causes the expansion of a gas. The expansion of the gas makes a turbine spin, generating electrical power. The heat is then dumped by the cold side of the engine, which causes the gas to condense again.

Water is typically used to remove the heat on the cold side. Air-cooled plants are also possible, but they are less efficient because they're less cold, and so water-cooled plants are far more common.

It should come as no surprise, then, that the largest user of water in the U.S. is the thermoelectric power sector, accounting for 48% of the total water withdrawal and 39% of freshwater withdrawals.

The first vulnerability of the energy-water relationship is what happens when insufficient (or insufficiently cold) water is available: It forces power plants to scale back, or shut down altogether, which has happened at numerous coal- and nuclear-fired plants around the world over the last few years.

Webber believes that droughts could even close nuclear power plants in the Southeast permanently due to limited water.

On the flip side, Webber noted that roughly 10% of electricity in the U.S. is used for waste and wastewater, including end uses. But in denser, larger states the energy load can be much higher. According to a 2005 study by the California Energy Commission, fully 19% of the state's energy use is related to pumping, treating, transporting, heating, cooling, and recycling water.

The energy-water nexus includes liquid fuels as well as electricity. Net energy researcher David Murphy noted at the conference that the EROWI (energy returned on water invested) is 228 for petroleum diesel, but only 0.024 for corn ethanol, because making it requires massive amounts of water.
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Producing liquid fuels from low-grade resources like tar sands and oil shale also requires enormous amounts of water to produce steam and fracture shale. Vince Matthews, the director of the Colorado Geological Survey, expressed his doubts at the conference that his state's shale resources would be developed because of the water dependency. The "head" of the state's water supply is dropping by about 30 feet per year, he said, and has been falling for 20 years. He expects it to hit the aquifer around 2011.

Finally, we must not forget that most of the Middle East is investing heavily in the desalination of seawater to provide adequate fresh water for its burgeoning population (and of course, its indoor ski slopes). Desalination requires over 9,800 kWh per million gallons, according to Webber. I can easily imagine desalination becoming a major factor in the declining oil exports from the Middle East.

On the energy-water nexus, Webber made two important conclusions: first, we need to rethink transportation; and second, water conservation and energy conservation are synonymous.
Peak Credit = Peak Oil

Gail Tverberg, energy analyst and editor of The Oil Drum, discussed the financial side of complexity in her presentation, describing the economy as a highly-networked system of great interdependence: manufacturing depends on international trade; businesses depend on credit, manufactured goods, and electricity; electric utilities depend on credit and on replacements parts, and so on.

There is a systemic risk in highly-networked, interdependent systems she said, like a computer crash: one thing stops working, and everything else stops working. International trade and finance and credit, for example, are closely linked with oil extraction. It's not coincidental that consumer credit peaked in July 2008, just as oil production peaked. . .

Credit enables oil production, and also enables demand for oil, by allowing consumers to buy things made with and from oil. Conversely, shrinking oil supplies limit economic growth, leading to the kind of defaults we saw this past year. When banks cut back on lending, it leads to less supply and less demand.

The net impact of credit on oil is that it provides positive reinforcement for oil extraction when it's growing, and negative reinforcement on the way down. Peak oil equals peak credit, and peak credit equals peak oil.

Therefore, Tverberg concluded, our complex systems' vulnerabilities to peak oil extend far beyond mere fuel supply. Our current model of food production may cease to work. Our current model of transportation may cease to work. Globalization will fail without ample cheap liquid fuels, making re-localization a necessity. And ultimately, without all complex systems we take for granted today, we will likely be forced to accept a much lower standard of living.
Simplify, Simplify

Simon Ratcliffe, an energy advisor for the UK government and an expert on energy and security in Africa and South Africa, offered this graphical depiction of some of the interconnected risks he has studied in those nations:

http://www.aspo-usa.com/2009presentations/Simon_Ratcliffe_Oct_13_2009.pdf

Just reading a chart like that makes you want to turn away and latch onto a simpler view, doesn't it? Well, keep that in mind and we'll return to it in a moment.

The problem with complex systems of course is that they're. . . well, complex.

No one can model demand accurately, and no one predicted that oil would hit $147 and $33 in a span of six months last year.

No one has a good model for the feedback loop from GDP to oil demand, oil demand to price, price to supply, and supply to GDP — let alone the influence of new Frankenstein financial instruments and monetary policy.

No one has a good model for how much fossil fuel we'll need to build the renewably-powered infrastructure of the future, let alone how we'll procure it in a scenario of shrinking global supply. (In fact, hardly any models even contemplate the reality of depletion.)

No one seems to recognize that although the population growth curve led the energy curve on the way up, energy will lead population on the way down.

Even the historical data is all from an era of constantly growing energy supply, making it a poor guide to the future.

A quick aside: In a presentation to the World Future Society annual conference this year, David Pearce Snyder, an editor of The Futurist magazine, argued that schools are not equipping students with the necessary skills to deal with complexity, and that new curricula are essential to surviving the modern world. I agree completely.

So how can retail investors navigate this increasingly complex and chaotic world?

My guiding lights here include the likes of E. F. Schumacher, Paul Erlich, Paul Hawken, and Thomas Malthus — they were right, if a little (or a lot) early. And of course Henry David Thoreau, who exhorted us to simplify.

They would tell us to focus on simplicity in our investing strategies: Think locally, not globally. Small and distributed is more resilient (and more beautiful) than big and centralized. Using less energy to accomplish the same thing will succeed over trying to produce more energy. Imitating nature's low-energy, low-impact, non-toxic methods in our industrial activities — a study now known as biomimicry — will succeed over inventing wacky new chemicals that nature has never seen before.

From now on, we should let the K.I.S.S. principle be our guide: Keep It Simple, Stupid.

Until next time,
Chris
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Now, Google: Trucks on methane

Then Google: Cars on methane

Now look at page 26 of the pdf mentioned in the newsletter above. Then, read that link I gave you again and notice what a huge part of the energy requirements, methane is already playing and will still play...Oil won't be missed...
 
Lightscribe, I'm a bit confused by the extracts that you've quoted to support your argument. If anything, it proves MY point, not yours. As you are obviously aware, I firmly believe that we've already reached the midpoint of global hydrocarbons production (peak oil) and as such I fully agree with and have read a sizable portion of the papers presented at the recent ASPO conference in the USA. If anything, yours is typical of the kind of posts that I regularly make on this thread in order to prove that peak oil is no longer a theory but rather a historical event that occurred between 2005 and 2008.

I've elaborated on this before but your comments warrant a reply: You (and Pilgrim) both say that the widespread adoption of alternative energy sources is a simple question of economics. As soon as conventional energy sources become too expensive, alternatives will simply ramp up in volumes, come down in price and replace oil and coal as our primary energy sources. Well, I'm sorry to say but it just doesn't work that way.

Firstly, when oil reached $147 in mid-2008, it precipitated the largest economic crash in 60 years. Our modern economy simply couldn't function at that sort of energy price levels. If your argument was correct, then one would assume that such a state of affairs would at the very least identify a suitable replacement for cheap light sweet crude oil. Alas, nothing of the sort happened and renewables continued to supply only a tiny, tiny percentage of our energy requirements.

The reason for this phenomenon is very simple but its significance is profound: No suitable alternative energy source has yet been identified to provide a level of economic activity AT THE SAME PRICE LEVEL as crude oil. In essence, unless you can come up with an alternative to LSC that is equally abundantly available, contains the same energy density, the same portability and the same extremely low cost of LSC, then you cannot maintain the same level of economic activity. Period.

You cannot continue to feed 7 billion people. You cannot maintain the same level of personal mobility. You cannot maintain the same standard of living as what you're used to. In short, life as we know it no longer remains possible for the vast majority of people.

By stating all these facts I'm not implying that I'm against the development of alternative energy sources. On the contrary, I'm a big fan of those energy sources and I've adopted many of them for personal use. I'm merely saying that our current levels of energy consumption are unsustainable due to peak oil and unless someone can come up with an alternative with the same characteristics as LSC, then we'll have to adopt a new paradigm that is not based on perpetual economic growth or face the possible collapse of modern civilization within the next 50 years. There's just no getting past this fact.
 
I understand your viewpoint.

I see the price of methane as almost free.

If many people created biogas generators, at home, for companies/industry, or just for profit, to sell to utility companies like eskom and others, the price argument falls away.

I feel that we won't really notice the effect of the change much, since there is a definite move to wean everyone off oil, worldwide. Everyone has the same concerns about the oil running out.

Each "crash" as the one you mention, simply means that everyone becomes even more aware, of the need to shift away from oil.

So, I do not see a crisis with oil. The paradigm will change only in the sense, that we now will have cheap biogas playing a major role.
 
At one stage I was also a big supporter of biofuels but the more I learned about it, the more disillusioned I got. I now hold the view that the production of food-sourced biofuels is criminally insane and that other biofuels will never be able to ramp up to the required production levels in the time available to us in order to make a meaningful impact as peak oil mitigator.

Sure, on an individual scale methane might be feasible and might even make good economic sense. The figures that we're talking about here are large almost beyond comprehension, though. Even the most ardent proponents of biofuels admit that they will not ramp up to more than 40% of total fuels production by 2030. Even if they did, the environmental impact will be disastrous as is currently happening in Brazil.
 
Why worry about oil?
Price mechanism will push forward demand for hybrids and alternative fuels and suppliers will supply these...
 
I agree that biofuels from food sources is not the way to go.

Many industries and products will suffer with the loss of fossil fuel.

But we humans are clever enough not to just collapse and die.

The more people off the grid, the more on methane, the less pronounced each oil crisis becomes. That's why I bolded that part of the newsletter I quoted.

My guiding lights here include the likes of E. F. Schumacher, Paul Erlich, Paul Hawken, and Thomas Malthus — they were right, if a little (or a lot) early. And of course Henry David Thoreau, who exhorted us to simplify.

They would tell us to focus on simplicity in our investing strategies: Think locally, not globally. Small and distributed is more resilient (and more beautiful) than big and centralized. Using less energy to accomplish the same thing will succeed over trying to produce more energy. Imitating nature's low-energy, low-impact, non-toxic methods in our industrial activities — a study now known as biomimicry — will succeed over inventing wacky new chemicals that nature has never seen before.
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The entire world simply needs to split energy requirements into micro parts, where the entire population is connected to the grid, but feeding it, with their excess, whether gas or electricity.

The individuals/companies/industries need to be educated/informed on all the ways, to be not just able to use the minimum possible, in energy requirements, but also be able to be part of and earn money from the contribution to the country's energy needs.

Unfortunately, many governments, like ours, cling desperately to any form of control and think only in terms of centralization.

Although there has been some progress there lately.
 
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