No peak oil

Inflation adjusted price of oil shows no obvious trend, suggesting that limits on oil production reflect social decay and technological slowdown, rather than physical exhaustion of resources.

Oil prices rose, and rose, to 2008, and in 2008, it looked like the peak oilers were, like a stopped clock, finally correct.  And then prices fell, a lot.  They have risen since, but not to their 2008 peaks.  From 2010 to the present oil prices have been high and steady in nominal dollars, while Chinese and Indian consumption soars.  But steady in nominal dollars means falling about six percent a year in real prices, (or three percent a year if you believe the official cpi)  So, more oil produced and consumed at lower prices, indicating that oil extraction technology continues to advance fast enough to keep up with increased demand.

If real prices start rising again, more likely social decay than limits to growth.

13 Responses to “No peak oil”

  1. Handle says:

    See purchasing power The average American household’s ability to afford oil is near historical lows.

  2. RS says:

    > From 2010 to the present oil prices have been high and steady in nominal dollars, while Chinese and Indian consumption soars.

    Really, how bout 2003-2013.

    Chink consumption is about to soar some more, like right now, hang on to your hat. They are still mighty poor /capita even in the east.

    With India, who knows when she will hit her limits. Maybe today. Pretty weak country fundamentally.

    > So, more oil produced

    Well now. As I showed you, liquid fuels consumption is growing 4-5x slower than it routinely and steadily was, say, a decade ago.

    (I agree with you though that we don’t know for sure that those numbers are true. But we don’t know that the public price is absolutely true, either. It’s definitely /a/ price, that a lot of people, presumably a large majority, pay.)

    Most of the new liquid fuels do not come from conventional crude under pressure or coming up under nominal suction. It comes from a bunch of weird stuff, whether its fracking shale or pumping millions of barrels of sea into al-Ghawar field. Bully for them (not ironic), but they are likely to run out of these advanced tactics someday. Or will they sport a new one every year?

    I share many of your skepticisms about politics, up to and including more-or-less explicit conspiracies. But I greatly doubt that son of a guns worldwide, in every firm and nation, have gone after the hard-to-get crude first. And this is a fractal truth. The tight crude we see hit the market today will come relatively easy. What comes later will at best come, probably, no cheaper, and more likely more expensive.

    As for the period you (IMO) overemphasize, the last four-odd years, they haven’t been great for Western economies + Japan. The price of Brent crude has actually been in very gentle decline, but this may partly reflect demand destruction. –Both conservation, and ‘real’ demand destruction. (It seems pretty obvious from the charts that the 70s shocks induced conservation in the USA. Consumption resumed relentless growth, but not at the same slope.)

    You see what I mean . . . if electricity triples, I will turn off the lights a lot more — but rather than a real change in demand I’m just paying some attention to the matter instead of blowing it off almost completely.

    • jim says:

      From 2010 to the present oil prices have been high and steady in nominal dollars, while Chinese and Indian consumption soars.

      Really, how bout 2003-2013.

      From 2003 to 2008, it looked as if the peakers were right, as stopped clock is right twice a day. From 2008 to 2013, does not look as if the peakers are right.

      Well now. As I showed you, liquid fuels consumption is growing 4-5x slower than it routinely and steadily was, say, a decade ago.

      Perhaps. But that it is caused by us running out of oil is what I dispute.

      fracking shale or pumping millions of barrels of sea into al-Ghawar field

      Well yes, if technology remained constant, we would have run out of oil in 1830 or so. For oil to keep on coming, progress has to keep on going, and that is the big problem.

  3. RS says:

    Joule heads like to think of energy flows and EROEI as more fundamental than mere money. This has its uses, but at the end of the day Handle has the right idea in his post. Are we gonna end up paying more for energy as a fraction of GDP. (Though I think we are probably all a little skeptical of this ‘GDP’.)

    –And are we possibly gonna end up paying waaay more, and/or seeing demand destruction.

    As I learned from you, I’m gonna keep my eye on meat consumption /head, car ownership, moped ownership, home natgas+electricity use /head, and so on, more than on GDP.

  4. […] If real prices start rising again, more likely social decay than limits to growth. […]

  5. Alice Finkel says:

    Peak oil and climate doom. People have to have something to believe in. Why do you have to try to spoil all the fun?

    • Peter Blood says:

      We still have the zombie apocalypse yet.

    • jim says:

      If one picks any trend and extrapolates, doom usually follows in theory, but not in practice.

      So, the trick to reliably predicting doom, is to look for past trends where doom has followed, hence the theory of the leftist singularity.

      For this to fit, have to interpret the Czars from Alexander the Liberator onwards as left wing moonbats, rather than unyielding reactionaries, and the Victorian Society for Suppression of vice has to be feminism undermining the family.

      It was reasonable to free to the serfs by turning them into agricultural laborers, tenant farmers, or sharecroppers. However Czar Alexander’s program was to turn them into collective farmers, which was left wing moonbattery. The collective decision making never worked, which resulted in endless government interventions, creating endless jobs for left wing intellectuals, who, having jobs created by leftism, naturally wanted more leftism.

      Similarly, the Society for Suppression of Vice proposed that men are responsible for vice, but women are not, opposing the double standard that it is a woman’s job to keep her legs closed, and also proposing that women, unlike men, are naturally virtuous, and only do bad things because men make them do bad things.

  6. RS says:

    There has never been a resource quite like fossil fuel, but there have been possible resource-based collapses in the past. Topsoil depletion, mostly, and possibly progressive soil salination from irrigation. I don’t know if any of those ideas are true, I know nothing of them, beyond the clear fact that the Incas collapsed, Egypt collapsed two or three times (happily there were not all that many forces around to come and run roughshod over them). The bronze-iron collapse appears most likely mostly climatological.

    I am not saying a peak oil disaster will happen, but it looks bad. Look at the projections for 2030, practically 15 years from now, regarding the fraction of liquid fuel that is supposed to come from conventional crude. Some 40% if I recall. To derive the rest from shale, from tar sands, at a reasonable cost is a very imposing technological project, especially as the EROI of even the conventional crude declines over the same period (because the really accessible sweet stuff was tapped in 1952).

    And you, Jim, are the one who argues we have an ever-harder time doing hard things or generally getting our ass together since 1972, in most fields and overall. I don’t really disagree.

    EROI –> pocketbook is an ‘exponential’ thing, as I have explained. Going from 60 EROI to 25 ain’t nothin.

    Like Handle said, this stuff is mostly just a matter of (arguably fairly strong) headwinds vs tailwinds . . . so far.

    But when you start to look at true EROIs like 6.0 for the mean of all liquid fuels, that’s when the cosmic taxman is gonna sock you to the tune of 20% GDP or something.

    If that ever happens.

    I say true EROI because you must account for absolutely everything. Need to get niggardly. I think there was some history back in the 00s of people doing overly narrow EROI accounting for corn ethanol. Like I don’t think they had stuff like tractor and harvester manufacture in the ledger, as if ten-ton farm machines just lasted forever, or came from on high as manna with no money or joule inputs. In a true accounting, the tractor starts off as a big section of ore rock that’s stuck like hell to the rest of the earth. Get that on off of there, smelt it at a zillion degrees, and then we can start talking about making a tractor.

    • jim says:

      Environmental and resource exhaustion collapses are politically correct. I checked out the Easter Island collapse. Looks like they cut the forests and orchards down after social collapse, presumably as a result of the end of property rights and rising time preference.

      Soil salination affects the lowest area in an irrigated region, thus for example the Salton sea. It does not affect the whole irrigated region. If your irrigated region is a delta, which it usually is, the lowest area is the shore marshes, which are salty anyway. Your capital is apt to be located near the end of the river, thus salination is apt to be misleadingly salient.

      The nature of Egypt, that it lived on the annual deposition of Nile mud, makes ecological collapse unlikely. The next flood always resets the ecology.

      I am not saying a peak oil disaster will happen, but it looks bad. Look at the projections for 2030, practically 15 years from now, regarding the fraction of liquid fuel that is supposed to come from conventional crude. Some 40% if I recall. To derive the rest from shale, from tar sands, at a reasonable cost is a very imposing technological project, especially as the EROI of even the conventional crude declines over the same period (because the really accessible sweet stuff was tapped in 1952).

      It has always been the case that keeping up supplies of oil required ever improving technology. The rising price of oil, however, needs to be understood as technological slowdown or decay, not as there is some fixed amount and we are running out. The amount continues to increase, the price is falling, hence not “peak”

      And you, Jim, are the one who argues we have an ever-harder time doing hard things or generally getting our ass together since 1972, in most fields and overall.

      Fortunately the Chinese are stepping up to the plate. Increasingly, new fields around the world are being pumped by the Chinese, without whom it is probable that they never would have been pumped at all.

      At present, Chinese oil extraction technology lags American, but they are rapidly catching up. Of course, for the oil to continue to flow, eventually they will have to advance beyond American technology, and the notorious Chinese lack of creativity may well be problem, a problem they will probably deal with by importing large numbers of US oil expatriates.

  7. RS says:

    > From 2010 to the present oil prices have been high and steady in nominal dollars,

    From 2003 to present oil prices have blasted off in real dollars, while world liquid fuels production has grown ~4x more slowly than in decades prior.

    > while Chinese and Indian consumption soars. But steady in nominal dollars means falling about six percent a year in real prices, (or three percent a year if you believe the official cpi) So, more oil produced and consumed at lower prices, indicating that oil extraction technology continues to advance fast enough to keep up with increased demand.

    I’ll take the shadowstats. But shadowstats shows the US in recession for over 12 years! Whereas EU is even weaker than US in recent years, being in and out of Official recession.

    Could that have something to do with OECD liquid fuels consumption peaking in 2005?

    This chart shows how weakening US (and presumably EU) demand is partly offsetting Chinese and other demand:
    https://oilprice.com/images/tinymce/James%203/AE2796.png

    EU probably imports about as much as we do: they use far less, but we are still a very major producer and they aren’t.

    Then too, there is the rise in supply — however modest by historical standards.

    > If real prices start rising again, more likely social decay than limits to growth.

    IMHO, no. A serious real-price rise would be hell on the economy. Everyone in Washington knows their one immediate-term job is to not let the standard of living sink hard, and oil is a major input into almost everything consumed. They may be a funny farm but there are a few things even they can coordinate on.

    • jim says:

      From 2003 to present oil prices have blasted off in real dollars, while world liquid fuels production has grown ~4x more slowly than in decades prior.

      No, from 2003 to 2008. In 2008, yes, looked like peak oil, like a stopped clock, was finally correct. But prices are below their 2008 peak, and falling.

      But shadowstats shows the US in recession for over 12 years! Whereas EU is even weaker than US in recent years, being in and out of Official recession.

      Could that have something to do with OECD liquid fuels consumption peaking in 2005?

      I would put it the other way around. Technological and social decay is causing economic decline and high oil prices.

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