free html hit counter Peak Oil Debunked: 381. EXPORT LAND MODEL: DUE DILIGENCE AUDIT (PT. 1)

Tuesday, November 04, 2008

381. EXPORT LAND MODEL: DUE DILIGENCE AUDIT (PT. 1)

The Export Land Model (ELM) is a concept widely promoted by Jeffrey Brown of the Oil Drum. It describes how rising consumption by oil producing nations, combined with peak production in those nations, accelerates the decline in net exports. I won't rehash the basics here, so if you need to get up to speed, please see Brown's article here or Wikipedia etc.

To begin, let me be clear that the ELM is a genuine effect which merits serious attention. On the other hand, Mr. Brown has a well-documented history of bluster and exaggeration, so this post will be the first in a series of posts which audit the ELM. The purpose will be to separate the facts from the hype.

First, let's look at the standard chart which Brown uses to illustrate the effects of the export land model:

Fig. 1: The illustrative model

For greater clarity, let's also look at the table of figures this graph is derived from (click to enlarge):


Table 1: Table for the graph in Fig. 1

Now let's make a couple of observations:

1. The danger of the ELM is that it accelerates the decline in net exports. How large is that accelerating effect? Not that large. In the illustrative case shown in Fig. 1 and Table 1, the ELM causes net exports to drop to zero in 9 years. If we eliminate the ELM by stabilizing consumption at 1mbd, net exports drop to zero in 13 years. The accelerating effect of consumption is quite moderate.

2. In his remarks on the model in Fig. 1, Brown writes: "the net export decline rate in a given year accelerates with time, from an initial year over year change in net exports of -12.5% to a final year over year change in net exports of -47.6% (last year of net exports)"Source. This is technically true (despite the error in Brown's math). However, it is extremely misleading and an abuse of statistics. Yes, the year-on-year decline rate rapidly increases, as shown by the far right column of Table 1, which indicates the year-on-year % decline in the "Net Exports" column. Note, however, the column labeled "Decrement" in Table 1. This shows the actual amount of exports lost in each year due to the ELM effect. As you can see, the lost amounts actually *decrease* in size as the years go by. Far from being a decline at an "accelerating rate", the decline is actually less steep than an ordinary linear decline (where a fixed amount is lost each year).

Brown is basically making a mountain out of a molehill. Any linear decline can be painted as an "accelerating decline rate" using Brown's gimmick. Suppose, for example, you have a gas tank filled with 10 gallons, and you use one gallon per hour. Then the hour-on-hour decline rates are: 1/10, 1/9, 1/8, 1/7, 1/6, 1/5, 1/4, 1/3, 1/2, 1 (= 10%, 11%, 13%,14%, 17%, 20%, 25%, 33%, 50%, 100%). Voila: an ordinary linear decline can now be fraudulently painted as "decline at an accelerating decline rate".

Brown uses this statistical chicanery to produce the following diagram:

Fig. 2: The horror of "accelerating decline rates"

As noted above, the same sort of diagram can be produced for an ordinary fuel tank running down at the mundane linear rate of 1 gallon/hour. In the last two hours the decline rates are a horrifying 50% and 100%, respectively, and the "exponential decline rate" for the entire 9 hour draw-down is a hair-raising 22% per hour!

The bottom line is that all this talk/graphing of "accelerating decline rates" is misleading nonsense. As I've shown, the ELM results in a net export decline which is sub-linear (i.e. less steep than a linear decline).

3. Now, look again at Fig. 2. In the accompanying article, Brown points to this graph as evidence that things are even more dire in the real world because the "accelerating decline rate" of export land UK is far worse than the illustrative ELM in Fig. 1. There's one problem, though. The UK is not an example of the Export Land Model. Here's the ELM figures (in kbd) from the BP Stat. Rev. 2008 for all years subsequent to the UK's production peak in 1999:

As you can see, UK consumption was essentially flat during the period. This is also clear in the graph:

Brown himself acknowledges this in Fig. 2 where he gives a consumption increase rate for the UK of +0.2%/year!! Clearly the UK does not follow the ELM, and it's rapid decline to zero exports over 6 years was not due to the ELM. So why did Brown choose the UK to illustrate the horrors of the ELM? Personally, I would call it a lack of integrity. Brown is always looking to goose the doom level with scary advocacy numbers, so he cherry picked the UK as an example -- undoubtedly because it's a country with an alarming decline rate, and he hoped to fraudulently associate that rate with the ELM model.

4. Brown's theory was heartily adopted by the oil bulls (encouraged by a generous helping of the usual exponential bluster from Brown himself, i.e.: "From this point out I think we'll see a geometric progression in prices… you know, $50, $100, $200, $400, whatever. The only question now is how short the periods will be between prices doubling again”. -- Jeffrey Brown, June 5, 2008 Source). This, predictably, resulted in further cascades of bogus ELM hype:
Underscoring Brown's concerns;

* On April 15, 2008 the Russians, the world's second largest oil exporter announced that their oil production appears to have peaked, with production in the first quarter of this year declining for the first time in a decade. If they have indeed peaked then, based on the ELM, the world could lose Russia’s current ~7 million barrels a day in exports within 6 to 9 years.Source
Compare this with the facts. According to the BP Stat. Rev. 2008, oil production in Russia in 2007 was 9978kbd, and consumption was 2699kbd. Consumption growth in Russia was -0.9% in 2007 (over 2006), and has been very sluggish for the last 10 years, as you can see from this Table:

Even assuming that Russian production declines at a rate of 5% per year (which is highly unlikely considering the country's size and diversity, see 317. STRONG ARGUMENT FOR A SLOW DECLINE and Hubbert Theory Says Peak Oil is a Slow Squeeze), consumption would need to rise at 10-18% per year for exports to decline to zero in 6-9 years, which is completely preposterous given Russia's recent consumption growth.

Using more realistic figures for Russian production decline (-3% per year) and consumption increase (+1%, which is probably on the high side given Russia's rapidly declining population), Russian consumption doesn't exceed production until the year 2039.

As you can see from the above, a clear of understanding of the Export Land effect is going to involve a comprehensive analysis of the complete export situation worldwide -- not gimmicky analysis of cherry-picked examples. I will describe my results on that front in Part 2.

(Part 2: 409. THE IMPORT LAND MODEL)
by JD

70 Comments:

At Thursday, November 6, 2008 at 6:22:00 AM PST, Blogger JD said...

As always, please use the Name/URL option (you don't have to register, just enter a screen-name) or sign your anonymous post at the bottom. The conversation is better without multiple anons.
Thank you!
JD

 
At Thursday, November 6, 2008 at 9:13:00 AM PST, Blogger Sean Daugherty said...

Nice work, JD. I think I still need some time to digest all of this, but I always appreciate solid, empirical work.

 
At Thursday, November 6, 2008 at 9:22:00 AM PST, Anonymous benny "peak demand" cole said...

JD: Thanks for some fresh meat! You gotta post weekly at least.
The oddly named ELM does make rough sense, and I think it is true that the oil thug states will be exporting less in the future. You can look through the BP Statistical Report of the World, and see Mideast exporters using more and more of their goo.
It is a worthy concern. Not a disaster, not something to become hysterical about, but a worthy concern.
The answer is higher mpg cars, and happily the PHEV seems a viable technology already, and one that will get better in time. It is not s science-fiction answer.
We have the ability to generate electricity from nukes, hydro, coal, natural gas, wind, solar, geothermal, and the ability to conserve, such as by installing the terrific new LED lights -- a happy surfeit of proven options. Again, no science-fiction answers needed. The technology is there now. (Venture Capitalist Draper, by the way, is high on mini-nuke plants, and even that seesm feasible, though unproven).
Already, a nation such as France, which derives 80 percent of its electricity from nukes (and which is building two huge nuke plants)is breathtakingly close to being a post-fossil economy. If they migrate to PHEVs in the next 10-15 years, what do they care about oil prices?
We should follow the France model, although with a mix of power sources, such as geothermal, solar, wind, mini-nukes, and clean coal, and higher gasoline taxes, and subsidized PHEVs.
Or, we can cry and whimper that the end is coming.

 
At Thursday, November 6, 2008 at 11:05:00 AM PST, Anonymous jddebunked said...

well i came back now that i have a bit of time on my hands again, but see that jd didn't have the chutzpah to respond to my questions a few entries down. i kind of figured that once you ripped him out of the realm of statistics the flimsy pretexts for his beliefs would be too easily apparent to be defensible, but ah well.

never fear jd, i've found some precious statistics which... wait for it... because i'm a farmer i wasn't full of shit about as you likely are in the host of topics which you claim to hold forth on as if you were an expert!

here is my source: http://www.thecuttingedgenews.com/index.php?article=838&pageid=28&pagename=Sci-Tech

Historically, a ton of ammonia equaled the cost of about eighty bushels of wheat, that is, $2.25 for a wheat bushel against $200 for a ton of ammonia. This ratio held for forty years. Two years ago that long standing relationship broke down. Today wheat is $4.50 and ammonia is $1,000 – over two hundred bushels of wheat are required to purchase a ton of ammonia.

The first effect of this has been a reduction in fertilization on wheat planted. Instead of 14% protein acreage, farmers will see crops with protein closer to the 8% range. Instead of the seventy bushels per acre achieved with full fertilization, farmer will see yields sliding off towards the twenty five bushels per acre unfertilized wheat yielded.

Bryan Lutter of Nebraska based Producer's Hybrids puts it bluntly: "Farmers can't afford a thousand dollars a ton, so they've cut back on ammonia. Wheat protein percentages will drop from 14% to 8%. People are going to starve."

so i ask again a simple question which only requires you rub a few brain cells together and not hide behind numbers- who will be paying for the extra cost of this food and what impact will this have on our society and our overall energy picture?

 
At Thursday, November 6, 2008 at 12:45:00 PM PST, Anonymous jd was right again said...

the problem with any model like ELM is that it's all correlated. we've just had a real world lesson that the whole world is insync. if we have a crisis in the US because of oil production we have a bad economy and that hits the ELM countries as much and probably MORE than the US. the crisis is self-correcting.

 
At Thursday, November 6, 2008 at 12:47:00 PM PST, Anonymous jd was right again said...

"If they migrate to PHEVs in the next 10-15 years, what do they care about oil prices?"

because higher oil costs usually mean higher electricity costs and etc.

 
At Thursday, November 6, 2008 at 1:05:00 PM PST, Anonymous Anonymous said...

why ELM is so important to you?

its not important eny more. Peak is already here. Noone dais that to you??

hmmm

http://www.ft.com/cms/s/0/0830883c-a55b-11dd-b4f5-000077b07658.html?nclck_check=1i&nclick_check=1

 
At Thursday, November 6, 2008 at 1:13:00 PM PST, Blogger Ari said...

anon,

Where in that article does it say that "peak is here?"

Tell me.

 
At Thursday, November 6, 2008 at 1:31:00 PM PST, Blogger Ari said...

jd was right again,

"
because higher oil costs usually mean higher electricity costs and etc."

Well hell, when you have energy policies as absurd as ours... sure. I doubt the French energy costs are really affected much by oil prices.

jddebunked,

First off, since when has JD claimed to be an expert? Putting words in mouths is, at best, fallacious.

Secondly, you never answered me what portion of the price rise was due simply to supply, and how much is the "terrorism premium."

http://southwestfarmpress.com/news/05-17-06-ammonium-hot-potato/

Also, are you talking about the price of ammonium nitrate, urea, or broiler litter? Urea is, as far as I know, cheaper than ammonium nitrate. It has disadvantages, but that article you linked to doesn't mention which form of ammonia has shot up in price

 
At Thursday, November 6, 2008 at 3:44:00 PM PST, Anonymous Anonymous said...

"Well hell, when you have energy policies as absurd as ours... sure."

no, commodities prices were moving up almost everywhere in the world regardless of how good or bad your energy policies are.

"I doubt the French energy costs are really affected much by oil prices."

France to limit energy price rise
http://news.bbc.co.uk/2/hi/business/7545989.stm

Everything is correlated as someone previously said.

 
At Thursday, November 6, 2008 at 5:00:00 PM PST, Blogger Ari said...

anon,

Please use a name, it makes it much easier to see who is who.

Anyway, you are right, and I was too inexact.

What I should have said is that the French are MUST BETTER INSULATED from energy price rises thanks to their high reliance on nuclear power. Note this line in the article:

"In a study released in June, the British government estimated that typical French consumers paid the second cheapest gas bills out of selection of 15 EU nations. "

Is this any surprise? The French use far less gas, per capita, than any other EU nation.

Also note that the correlation in commodity prices doesn't necessarily have to do with absolute or relative scarcity of any particular commodity, but with a lot of factors, including the way that hedging in commodities is done.

 
At Thursday, November 6, 2008 at 6:44:00 PM PST, Anonymous Soylent said...

"Is this any surprise? The French use far less gas, per capita, than any other EU nation."

Bullshit.

France uses 39.2 MToe/year of gas. Sweden uses 0.9 MToe/year of gas.

Dividing through by the populations of the respective countries(9 million swedes, 62 million french) you get 0.078 Toe/(capita*year) in Sweden and 0.540 Toe/(capita*year) in France. Oil is closer to parity with 1.7 Toe/(capita*year) in Sweden and 1.5 Toe/(capita*year) France.

Greece uses just 0.21 Toe/(capita*year), Poland 0.31 Toe/(capita*year)(but this is not very surprising and you probably find a similar result if you check other less wealthy eastern European countries); Spain uses almost as little gas as France with 0.62 Toe/(capita*year).

The biggest gas consumer I could find was the UK with 1.4 Toe/(capita*year).

Ref:

http://ec.europa.eu/energy/energy_policy/doc/factsheets/mix/mix_se_en.pdf

http://ec.europa.eu/energy/energy_policy/doc/factsheets/mix/mix_fr_en.pdf

etc.

 
At Thursday, November 6, 2008 at 6:57:00 PM PST, Anonymous jddebunked said...

while people in the third world are starving ari is going to be asking us, 'well how do we know for sure this fossil fuel ag thing is a bad idea?'

my answer to you is i don't know the answer to your question. care to answer my question on jd's behalf?

 
At Thursday, November 6, 2008 at 7:07:00 PM PST, Blogger Ari said...

soylent,

I used a different method to derive my conclusion. I figured out what percent of energy consumption in each country was natural gas, and then I took that as a fraction of total energy consumption. I see how that might give me a flawed figure, as I'm not controlling for thermal efficiency.

My honest apologies. I'll not repeat my mistakes. I hope my "bullshit" didn't offend you, oh greatness. Next time, you can even be polite. :-)

 
At Thursday, November 6, 2008 at 7:09:00 PM PST, Blogger Ari said...

jddebunked,

Care to answer any of my questions first?

I don't claim that fossil fuel agriculture is ideal-- far from it. I just want to know what the facts are. You throw arguments out, and when I ask for clarification, you simply dodge. Pot, meet kettle, no?

 
At Thursday, November 6, 2008 at 7:20:00 PM PST, Anonymous jddebunked said...

ari,

i answered your second question, i don't know i simply had a few moments this evening to look up this topic on google and found the article i linked. i have a life and am not an 'internet researcher.'

the answer to your first question is that it is a straw man, i never claimed jd was an expert, which was the bloody point! i claimed he runs off at the mouth at topics at which he may be an educated layman but his lack of personal experience in makes him an educated fool. much like james howard kunstler who is so often reviled here. something about jung and attacking the shadow self comes to mind with jd and his little website.

 
At Thursday, November 6, 2008 at 7:33:00 PM PST, Blogger Ari said...

jddebunked,

i answered your second question, i don't know i simply had a few moments this evening to look up this topic on google and found the article i linked. i have a life and am not an 'internet researcher.'

First off, this is a bit of a cop out. If you're going to bother making a claim, then be prepared to back it up-- if not, then why bother? If you don't know the exact cause of the price rise, then I don't get how you can claim we're all headed for the crunchy rapture.

Never mind that you linked to ONE article with ONE "expert."

JD makes claims, yes, and then he sources them or backs them up with whatever logic he can offer. That's more than Kunstler ever offers. Logic, that is.

 
At Thursday, November 6, 2008 at 7:48:00 PM PST, Anonymous jddebunked said...

ari, i never claimed that we are headed for the crunchy rapture. the truth is generally somewhere in between whatever demagogues on either side have to say.

i just came here a few weeks ago with a simple question about the impact of rising prices on poor people which jd seems unable to muster a response to. i then provided additional statistics which answer my question for me, since i guess i don't know what i'm talking about when it comes to an industry i've been involved in my entire life and an outside authority is necessary. although since my point is proven by the stats (that higher prices mean people will starve) i don't expect him to be very eager.

 
At Thursday, November 6, 2008 at 7:59:00 PM PST, Blogger Ari said...

jddebunked,

You provided some numbers on costs and ONE person saying that people will starve.

That's it.

That's not "statistics." That's an extrapolation based on essentially three data: cost of fertilizer (though whether it's ammonium nitrate or urea, it didn't say), and the supposed drop in yields.

Then a whole lot of assumptions (China doesn't export, no increased spending on food aid, etc.)

I know you know more about farming than I do. But farming and food policy are very different, correct?

 
At Thursday, November 6, 2008 at 11:41:00 PM PST, Blogger JD said...

jdd,
The statistics from your source are totally out of date.

At the moment, wheat prices are $5.23/bushelSource, and Tampa ammonia prices have dramatically declined by $356/tonne to $575/tonne since October. Ammonia was priced at around $1000/tonne for a few months during the speculative bubble, but prices are now in a full-scale rout, crashing toward the $300 level (see P. 4 of this report):

"Ammonia prices have dropped over the past week on weak market fundamentals. Demand remains slow and producers are still holding volumes of unsold ammonia for November shipment.

The Tampa settlement late last week at $575/tonne CFR was expected to trigger a round of November buying in Yuzhny, but apart from reports of one deal, activity has been minimal. Claims of business at $260/tonne FOB Yuzhny have not been verified, but have certainly added to the downward sentiment. There is now speculation that there will be a split Tampa settlement for November following the sharp decrease in global values.

A number of shutdowns have been announced in the former Soviet Union in a bid to stabilise the market. Additionally, Yara has announced the closure of its Ferrara ammonia and urea units from 1 November. Trinidad producers are also reportedly planning shutdowns. [...]

In Asia, spot business has now been confirmed at $350/tonne CFR India and contract business has also been agreed at this level, giving Middle East netbacks around $310-315/tonne FOB. Producers there have stocks and may be forced to sell at lower prices. In the Far East, a sharp correction in prices is expected despite reduced supply from the Indonesian and Australian plants."


As you can see, we're very much not in a situation of high ammonia prices driven by lack of supply.

Furthermore, wheat prices continue to drop because there's been a massive, record-breaking harvest:

"Although the financial crunch was the driving factor in falling wheat prices, a huge world wheat crop is now a contributing factor in their decline, Woolverton said.

"This is the all-time, largest wheat crop the world has ever seen -- 680 million metric tons of wheat," he said.

The Agriculture Department estimated world wheat production to be up more than 10 percent, with U.S. wheat production up about 17 percent."
Source

I haven't seen any evidence that wheat protein levels are in fact decreasing, or that a decrease in wheat protein levels from 14% to 8% will actually cause starvation. I think we'd need a nutritionist or doctor to settle that question. In any case, it's interesting that the author of your article (a computer programmer named Neal Rauhauser), and the jethro who makes the "people will starve" claim (Bryan Lutter) are both advocates of using ammonia to fuel vehicles Source1,Source2. They're probably just fishing for government subsidies.

As for poor starving people: we've always had them and undoubtedly always will have them. What are we going to do about it? Most likely what we've always done about it: do our best to help them. One thing's for sure though. Nobody is starving due to a lack of food, or the inability to produce sufficient fertilizer. People may be starving for various reasons, but resource limitations of the planet aren't one of them.

I read your long comment a few articles back, but I found it to be a rambling, confused lament about everything that's wrong with world today, in your opinion. Of course you're welcome to gripe to your heart's content, but I try to focus on objective issues relating directly to peak oil, not in-depth psychological counseling for disgruntled individuals like yourself.

I'm also bored by your debating tactic of declaring victory on all points, regardless of the evidence, because you're "Joe the Farmer". Hate to break this to you, but that kind of anti-intellectualism went down the toilet with the Bush administration.

 
At Friday, November 7, 2008 at 8:01:00 AM PST, Anonymous Sam said...

I feel this doesn't take into account the world economy crashing. http://www.upstreamonline.com/live/article165773.ece if the economy keeps going down, prices will have to stay down, and the companies won't be making enough money. the 60 barrel could cause serious damage, and being at 75 now I don't see why the assumed decline is so far fetched. Looking forward to a response :]

 
At Friday, November 7, 2008 at 8:09:00 AM PST, Blogger Ari said...

Sam,

What does your argument have to do with the ELM? Elaborate, please.

 
At Friday, November 7, 2008 at 9:55:00 AM PST, Anonymous Sam said...

It has to do with the third to last paragraph, and how he skews the relation of ELM to russia's oil output. And reference:

""Artyom Konchin, an analyst with Aton Capital, put Russia's oil supply lull down to high taxes and insufficient reinvestment into infrastructure that could increase production from existing fields.

"It's not that we don't have enough oil," he said. "We just don't have enough capital going into developing the fields."

Konchin said the fact that Russian oil accounted for roughly 12 percent of world supply makes this year's production drop "not particularly significant."""

I'm just pointing out that he forgot to mention a very crucial detail to prove a point about the ELM. Not that what he said was wrong, but that it's being used to promote what I see as a misleading conclusion about russia and it's oil exports. Please forgive niavities, I am new to the world of energy and economics.

http://www.iht.com/articles/ap/2008/04/15/business/EU-GEN-Russia-Oil-Slump.php

 
At Friday, November 7, 2008 at 11:18:00 AM PST, Blogger Ari said...

sam,

Lack of development of existing and potentially available fields is certainly an issue. I think what JD is trying to point out, however, is that the Export-Land Model doesn't really work out in practice as it does in theory.

Good catch, though. The underdevelopment of fields is a serious issue that doesn't seem to get a lot of play.

 
At Friday, November 7, 2008 at 11:37:00 AM PST, Anonymous Sam said...

Ari,

There's this cornucopian representation of what's been going on beneath his explanation of ELM. That's where my problem lies. I'm tired of getting a side of b.s. with my info (no matter where I go). I'm not a doomer, but I'm sure as hell not an optimist.
:]

/glad I found this place. I look at it as a chance to have my beleifs tested.

 
At Friday, November 7, 2008 at 11:41:00 AM PST, Blogger Ari said...

sam,

There's a difference, I think, between being optimistic about the future and being a Pollyanna. I'm always optimistic about the long-run future in the vein of Dubos or Dyson. I just don't believe in being Pollyannaish in light of clear challenges.

I don't think JD has a cornucopian explanation of ELM. I think he's just showing whether or not it plays out in reality the way the model predicts. Ultimately, the test of a model is whether or not it bears any relation to reality. In the case of Russia, it does not.

 
At Friday, November 7, 2008 at 12:02:00 PM PST, Anonymous Sam said...

Ari,

Your right. I just felt he made very light of the situation in russia.

 
At Saturday, November 8, 2008 at 11:04:00 AM PST, Anonymous wchfilms said...

It's so nutty to me how so many assumptions are made that then predict doom. Particularly the "economy has to grow" to survive or that the financial services are dependent on that. What does that really mean? What does 'grow' really mean, outside of inflation related to increased population (the rate of which is declining). The economy can "grow" by creating entirely new energy sectors, which creates new jobs, new opportunities.

The US economy can and does react extremely quickly to changes, like the financial shock. But the companies and systems that emerge (after probably another year or two of recession) will be much stronger, and all geared up for the next expansion.

It just seems like to me the most extreme Doomers build up all these house of card assumptions without realizing it, and think the economy can't flex around them without a devastating crash. Seriously, if you guys are so good at predicting the future economy, you would be extremely wealthy already. It's impossible, but it's easy to engage in fantasies based on theories because something that happens many years in the future is impossible to test until it happens. I personally am very doubtful of any economic model that is more than 5 years out, and even those are very suspicious. The economy is an extremely complex beast even for the best investors. The only models the economy matches are the ones in the past where an economist found a theory to explain it. No simple theory ever accurately predicts the future.

Oil is getting cheaper and cheaper despite OPEC's threatened cuts. Of course they are going to cut production, because nobody's buying it anyway, so it's a fantasy of theirs that they are actually controlling the prices.

 
At Saturday, November 8, 2008 at 11:13:00 AM PST, Anonymous wchfilms said...

Also "population has to fall a lot to maintain standard of living". What standard of living, buying a new car every three years? Is it such a decline in standard of living to have a new car every 5 or 6 years?

Also, why would someone save in a bank if they earned no interest? To save money for their future, duh. If there is no interest, than there is no inflation, but you still want to save for your old age.

But this is all really pointless. I read on another comment that someone had a "gut feeling" that we'd surpassed earth's carrying capacity. How the heck can you have a gut feeling about something so incredibly complex?

Arguing with Doomers is like trying to argue with a friend who has clinical depression. It's tempting to think you can talk them out of it, but you can't, no matter how distorted their views are.

Of course a Doomer could say the same thing about non doomers being a pollyanna, but I rarely see that, this blog included. Most non-doomers I see say "yeah there are some challenges but it will probably work out ok" not "IT'S ALL PUPPIES AND FLOWERS!"

Of course that's ignoring all the folks out there that are simply trying to get you to invest in oil by scaring it up. (Although I do think it's a pretty good investment). It's the same as the "buy-gold" sites that have predicted the complete collapse of the dollar for decades. Although this financial crisis did get quite severe, it ended up in everyone flocking to the dollar to hell with gold, oil and all the rest. (Except for the true diehards that are buying actual coins.)

 
At Saturday, November 8, 2008 at 12:36:00 PM PST, Blogger bc said...

Good post, good debunking. Jeffrey Brown loves his misleading charts and statistics. Based on these, he has managed to fool a lot of people into thinking he is some sort of guru with special insight.

 
At Saturday, November 8, 2008 at 1:22:00 PM PST, Blogger DB said...

Benny,

Good comment about following the France model and being close to post peak.

I had the good fortune to be working in Oslo this summer (ironically for one of the super-majors) and I think Oslo is an example of a rich, technological city which is completely immune to peak oil. Their electricity is hydro based and they have a huge installed base of electrified mass transit both local and long distance. Peak oil comes they won't even notice.

In fact, I suspect they will get even richer. If the rest of us collapse and can't produce manufactured goods then manufacturing will simply relocate to Norway and other places like it.

The other factor you alluded to is PHEVs. I keep hearing from the naysayers that it's now too late: the credit crunch will put paid to the electric car revolution and with the lowered oil prices investment won't be forthcoming and thus factories won't be built and peak oil will come and we won't be ready, gnashing of teeth etc.

I beg to differ. Warren Buffet's investment of $250 mil in BYD is the gamechanger. China cannot grow it's transportation infrastructure based on oil because there quite simply isn't enough to go around if it tries to base it's infrastructure on oil based transport paradigms. So they will go electric because they MUST. All the while bypassing us.
We will pay higher and higher and higher prices for gas at the pump because we stubbornly claim that we can't drive no steenkin electric two seaters because all the semis and SUVS will crush them!!
Well hello! When gas prices get high enough the only thing on the road will be EVs and friggen rickshaws!

 
At Saturday, November 8, 2008 at 11:19:00 PM PST, Blogger Ari said...

db,

The funny thing is that Toyota and Honda already have hybrids ramping up to meet what they project as the future demand for autos (50+ MPG), and look at CA passing prop 1a to start building a high-speed train. How many gallons of gas will something like that save every year? Millions? Billions?

 
At Sunday, November 9, 2008 at 12:35:00 AM PST, Blogger craftycorner said...

Consumers are price sensitive. People bought scooters and changed travel habits when gas hit $4 and $5 a gallon.

Admittedly, price has gone down, but those scooters bought during the spike are probably still in the possession of consumers. At any time price goes up you will get a backlash from some consumers, and the Peak Oil folks aren't taking them into consideration. The higher the price the bigger the backlash.

 
At Monday, November 10, 2008 at 2:57:00 PM PST, Anonymous benny "peak demand" cole said...

db-

Thanks for noticing my post. Interesting about Oslo.
Over on R Squared, Rapier recently posted that France gets 90 percent of its electricity from nuclear power, up from the 80 percent fig I have been using. And, France has announced two big new nuke plants, so I guess they are going for an even higher percentage.
By the way. Tim Draper, the famous venture capitalist, is backing "muni-nukes" or small nukee plants. They are scalable. Many suspect we could pop these baby nuke plants down quickly, especially if a standardized design is approved.
Really, even in a bad scenario, if we "run out" of oil over a 15-year period, I see no problem in migrating to PHEVs.

 
At Tuesday, November 11, 2008 at 1:37:00 PM PST, Anonymous benny "peak demand" cole said...

Dudes:
Dated Brent Spot down to $54 today, and I sense the huge commodity and hedge funds throwing in the towel. The Mother Of All Gluts MOAG) will arrive by late 2009, if we have a global recession, and it is begining to look like we will. In that case, ee will have oil coming out of our ears. Who knows how many hundreds of billions of dollars are being lost by hedgies going long on oil on the NYMEX.
$10 a barrel oil? Crazy? Tell me 1998 was craxy. We saw $10 a barrel back then too.

 
At Wednesday, November 12, 2008 at 5:34:00 AM PST, Anonymous Anonymous said...

In the second to last paragraph you say...
"Russian production doesn't exceed consumption until the year 2039."

Does this mean that Russia is a net importer of oil at the moment?

 
At Wednesday, November 12, 2008 at 6:57:00 AM PST, Blogger JD said...

anon,
That's a mistake, and I've corrected it. Thanks for pointing it out.
JD

 
At Wednesday, November 12, 2008 at 7:21:00 AM PST, Anonymous AndrewRyan said...

Hi all,

This isn't related to ELM but I just wanted to point out that the 'official' IEA report was released today (you know, the one that the doomers found a 'leaked' version of and freaked out). It's got a very good
Fact Sheet
that has a ton of information. I hope JD posts about it soon. I can tell you right now, it definitely doesn't predict a Mad Max scenario :) (sorry Savinar!). I refuse to go to the doomer forums right now to see how they will spin this, attempt to discredit it, quote the report out of context, etc.

The report gives some great forecasting up to 2030 (over 20 years from now). I also think about how technology was in 1989, and how it is today. It's amazing how far we've come in the last 20 years, and how far we will go in the next 20 years. I'm really looking forward to it.

Money quote:
"The world’s endowment of oil is large enough to support the projected rise in output,
but rising oilfield decline rates will push up investment needs. Proven reserves of close
to 1.3 trillion barrels equal more than 40 years of output at current rates; remaining
recoverable resources of conventional oil alone are almost twice as big."

 
At Wednesday, November 12, 2008 at 8:10:00 AM PST, Blogger Heyzeus7 said...

Benny,
Prices are going down but for the wrong reasons. It is not because there is a supply glut, but because we are in a terrible recession and demand is being curtailed/destroyed. This means, as the IEA report points out, underinvestment in oil fields. If oil does drop to 10 bucks/barrel, that would be a disaster for world oil supply. No one would have any incentive to ramp up production, and we have very little spare capacity as it is.

 
At Wednesday, November 12, 2008 at 8:32:00 AM PST, Blogger OptimisticDoomer said...

Well, the report for me, was more doomish than I thought it would be. From the article..

Some 64 million barrels of oil equivalent a day of additional gross capacity, the equivalent of six times the amount Saudi Arabia produces today, must be brought on stream from 2007 to 2030, with about half needed by 2015

Seriously, where is this oil going to come from? They also expect SA's output to rise to 15mb per day. They also state that we have enough oil for 40 years at current consumption, so that doesn't even factor in any additional demand. Not trying to spin anything. This is what they say in their report.

Then there is the story of Mexico possibly halting oil exports. Very depressing day :(

Yes, we might have 9 trillion barrels of oil equivalent once you count in everything we have to burn, but it will never flow at the rates we will need it too.

I'm going to hug my kids extra tight today, as I wonder what their future holds.

 
At Wednesday, November 12, 2008 at 8:33:00 AM PST, Anonymous AndrewRyan said...

Heyzeus7: You can't have it both ways. Oil is low, you say it's bad. Oil is high, you say it's bad and we're running out. Lose/lose in your eyes. Oil supply doesn't need to be 'glut' if there's no demand for 'glut'.

"If oil does drop to 10 bucks/barrel, that would be a disaster for world oil supply. No one would have any incentive to ramp up production, and we have very little spare capacity as it is.

How would it be a disaster? If it ever got that low, it would be because there is no current demand for the current supply. Are you suggesting that we pump more oil than we need? Oil was very low for decades, what's your point. BTW, their 'incentive' would come back when the economy turns around and demand goes back up, just like the incentive was there when oil was $147 a barrel.

 
At Wednesday, November 12, 2008 at 8:43:00 AM PST, Anonymous AndrewRyan said...

OptimisticDoomer: Did you cherry-pick only the negative data?

From the article concerning increased demand and declining oil fields outpacing new oil fields:

The bulk of the net increase in total oil production comes from
NGLs (driven by the relatively rapid expansion in gas supply) and from non-conventional
resources and technologies, notably Canadian oil sands.

 
At Wednesday, November 12, 2008 at 8:57:00 AM PST, Blogger OptimisticDoomer said...

So they are expecting NGL's & tar sands to save the day? Sorry if I don't share your optimism there.

My "negative" data must happen if any of their optimistic scenarios are going to become reality.

The decline rate in existing fields is staggering. Much higher than I thought, even in my most doomsday scenario.

 
At Wednesday, November 12, 2008 at 9:00:00 AM PST, Blogger Ari said...

optimisticdoomer,

Did we read a different report? What I saw in there basically said, "there are challenges and associated costs, but oil supply is by no means in danger of going bust any time soon."

Also, you honestly believe that your children's future is entirely dependent on oil production staying at a high level? C'mon, have more faith in their future ingenuity than that.

On the other hand, I must say that one thing does bother me: national oil companies being part of the mix will do little to help the situation. I doubt, very much, that they will develop fields at the expected rate that the IEA suggests. It won't end us all DOOMDOOM style, but it will be a problem. They simply lack the incentive to be proactive like Exxon or Shell.

 
At Wednesday, November 12, 2008 at 9:09:00 AM PST, Anonymous AndrewRyan said...

"So they are expecting NGL's & tar sands to save the day? Sorry if I don't share your optimism there."

Ok, so basically you are being pessimistic and dismissing any positive information the report has to offer (e.g.the trillion+ barrels of oil in Canada alone offsetting declining oil fields and increased demand), and you are believing 100% all of the negative information the report has to offer. It's good to know of your bias. Please change your name to PessimisticDoomer, thanks.

 
At Wednesday, November 12, 2008 at 9:37:00 AM PST, Blogger OptimisticDoomer said...

Ari -

It's just hard to gloss over some of the things they are saying. Another example, they pretty much state to just stand still we will need the equivalent of 4 Saudi Arabia's.

As for my children, the society our government decided to create is in fact heavily dependent on oil. Since we are part of this society, their futures are dependent on the oil. At least for the foreseeable future. It's depressing as hell, but it is what it is.

Andrewryan -

I remain an optimist because I do not believe a die off must happen and I do not want one! I hope to be proven wrong and NGL & renewables can replace our oil dependence. I hope I live to see it. I still believe man can rise to this challenge, but a very very hard challenge it will be.

This report was a huge kick to the stomach. It will take some time to digest.

 
At Wednesday, November 12, 2008 at 9:45:00 AM PST, Anonymous benny "moag" cole said...

Heyzeus7:

For a while $10 a barrel will feel good. May help re-charge the global economy.
I do worry that PHEVs will be set back a few years, and they are the game-changer, the innovation that leads to permanent crude umimportance. Imagine a world in which crude demand falls every year, and the air gets cleaner. That is the post-PHEV world.
But for now, and the forseeable future, there is this tug-and-pull. Higher prices lead to conservation and alternate fuels, and that leads to crude gluts. That leads to oil dependence again.
We are about to start the cycle again.
The Mother Of All Gluts (MOAG) is ahead.
Don't get MOAGed.

 
At Wednesday, November 12, 2008 at 2:54:00 PM PST, Blogger JD said...

It's much easier than it appears to "find new Saudi Arabias". See:

298. RESERVE GROWTH

297. HOW ABOUT THOSE ANOMALOUS INCREASES IN OPEC RESERVES?

Of course, that isn't the main reason why peak oil is a manageable problem. Peak oil is manageable first and foremost because most oil is wasted on luxury applications, not necessities, and that part can be conserved. The essential part is much smaller, and can be switched to substitutes.

 
At Wednesday, November 12, 2008 at 4:39:00 PM PST, Blogger JD said...

To further reinforce the same point: P. 3 of the IEA fact sheet notes that 23mbd of new capacity (i.e. 2 Saudi Arabias) is already in progress.

 
At Thursday, November 13, 2008 at 3:17:00 AM PST, Anonymous Akrotiri21 said...

A couple of additional comments on the IEA report. I think it raises all sorts of questions and issues, but I don't see it as quite the punch in the stomach that some were anticipating and some felt it to be.

Just two reasons why:

(1) The 9.1% number is not much higher than it was previously -- for already declining fields. That designation currently applies to less that 40% of all fields (the others are ramping up or in plateau). When the percent change is applied, its makes little difference. In short, the text someone else not long ago posted from Hutter's Trendlines remains valid:

"Within each petroleum province, roughly a third of fields and wells are relatively recent and annually ramping up their production rate. Another third are in plateau. And there are the mature and near-retired wells and fields where aggressive depletion is causing their yearly production to decline. The IEA calculates that mature Regular Conventional Crude fields average 9.1% annual decline, while mature deep sea fields decline 15% per year. These subsets, oft identified by the lunatic fringe, are a mere 30% of total production."

(2) What matters, I think, (in addition to accelerating demand destruction, not all of which will be recession induced - the IEA reports notes lowering OECD demand) is not peak but plateau -- as in, will there be one or is the Energy Watch Group correct? If those dudes are right, then yes, we are in for a hell of a ride; but that assessment remains an outlier (no matter how much folks like Wirth and others at TOD embrace it for validation). More likely is slow decline...JD has posted evidence supporting that and I continue to find Hutter's version -- which is actually consistent with Shell's these days -- as the considerably more plausible scenario. Note in his scenarios over time how the peak shifts considerably: sometimes it is predicted to be around 2030, at others (like now) in the 2011-13 timeframe. Why the vacillation? Because small changes in investment move the date around. But the larger takeaway is that the background is a longish plateau lasting 20+ years. If that scenario is borne out, then we have plenty of time to make the energy transition.

I'm not saying there are no problems, or that the transition will be painless, or even that I am confident that this scenario will happen -- I'm only suggesting that there is a lot of conflicting evidence and claims out there, and there are grounds for encouragement, if not outright optimism.

 
At Thursday, November 13, 2008 at 8:52:00 AM PST, Blogger Heyzeus7 said...

I've come across Freddy Hutter's "Trendlines" site recently. Does anyone know if he actually knows what he's talking about? His scenarios seem much more fleshed out and sophisticated than most peak-oilers.

 
At Thursday, November 13, 2008 at 9:05:00 AM PST, Blogger Ari said...

Heyzeus,

My impression is that while he's reviled in the "expert circles" (expert meaning the best at poo flinging), he has been asked to provide work for some pretty high-level stuff.

I am by no means a modeling expert, but I know a thing or two about it. Hutter's work is interesting because it provides a comparative analysis. Unlike the guys at TOD or ASPO, who typically only provide one chart at a time, Hutter lets you see all of the charts in a readable, very clear way.

I like to think of him more as a broker of information than a modeler, per se.

Ultimately, I think most of the models, including Hutter's, have demonstrated very little model skill. However, we can be sure of one thing: his models have so far followed reality better than the Cassandras who have told us, 20 years in a row, that "THIS YEAR IS THE PEAK."

So even if his model isn't good, at least he's showing what the data has said.

 
At Thursday, November 13, 2008 at 10:00:00 AM PST, Anonymous benny "moag" cole said...

The biggest, biggest weakness in the models is that they do not anticipate the positive influence of the price mechanism.
Higher prices suppress, and even reverse demand. Crude oil included. It takes time, but it does happen.
Meanwhile, higher prices boost alternative fuel production, and alternative technologies.
It is remarkable: Just 10 years after oil prices bottomed (1998), GM almost has to market a car (GM Volt), that will barely neeed gasoline. And the first five of those 10 years, oil was still cheap.
So, really, just five years after price signals changed, old flat-footed GM is ready, and most other carmakers are too nearly (current unrelated financial difficulties aside).
Anyway, "Peak Oil Debunked" may turn out to be more true than even its author hoped: We could see $10 a barrel again before this recession is over.
I sense the Mother Of All Gluts is brewing.

 
At Thursday, November 13, 2008 at 11:49:00 AM PST, Anonymous Akrotiri21 said...

The Trendlines site has a wealth of information and I have yet to identify anything patently inaccurate. I cannot evaluate the Trendlines scenario any more than anyone else can; but it is especially interesting to me how similar it is to the recent Shell scenario, both in its outlook and (roughly) its method -- the latter having to do with trying to factor in the varying production profiles of nonconventionals and their respective impacts on PO.

That said, Hutter has been regularly in contact with the major players in the debate and participated in presentations with them (I mean Campbell, Laherre, etc., not the folks who populate TOD), so I regard him as more than a "broker", though he does perform that very useful service, not only putting up a lot of scenarios together at once, but tracking their changes over time.

Here is an example of a presentation Hutter / Trendlines was involved in, posted at Trendlines:

http://www.trendlines.ca/npc.htm

 
At Thursday, November 13, 2008 at 12:10:00 PM PST, Blogger Ari said...

akrotiri21,

Yes, you're right. Don't think, however, that I meant to denigrate him by calling him a "broker." If anything, I find giving information to be a very venerable thing. That he does it without asking for donations or for us to buy shitty books makes him even more impressive to me.

 
At Thursday, November 13, 2008 at 6:47:00 PM PST, Anonymous DoctorJJ said...

The biggest issue I have with the latest IEA report is their assessment of future demand.

primary demand for oil (excluding biofuels)
rises by 1% per year on average, from 85 million barrels per day in 2007 to 106 mb/d in
2030


and

Some 64 million barrels of oil equivalent a day of additional gross capacity, the equivalent of six times the amount Saudi Arabia produces today, must be brought on stream from 2007 to 2030, with about half needed by 2015

I will shit my pants if worldwide demand is ~96 mbd by 2015. With the recent economic downturn coupled with the price-spike/bubble-induced switch to higher mpg vehicles, I would be absolutely shocked to see demand even reach 2007 levels for a few years. Ive been wrong before and maybe I'll be wrong about this. We'll see, I guess.

DoctorJJ

 
At Thursday, November 13, 2008 at 9:21:00 PM PST, Blogger OptimisticDoomer said...

Thanks for the comments JD. I hadn't seen the part about the additional 23mbpd being added. That is good news.

Since Hutter participates with the likes of Simmons & Campbell, I would think PO.com, TOD, etc would welcome him with open arms & not ban him? Something doesn't make sense there. Maybe they wouldn't be able to spend 10 hours a day making graphs.

Akrotiri21 -

Do you happen to have any links that state the 9% decline is for less than 40% of fields? I have not been able to find that info, unless I am just blind. Thanks!

 
At Friday, November 14, 2008 at 12:00:00 AM PST, Anonymous Akrotiri21 said...

OptimisticDoomer -

This quote:

"Within each petroleum province, roughly a third of fields and wells are relatively recent and annually ramping up their production rate. Another third are in plateau. And there are the mature and near-retired wells and fields where aggressive depletion is causing their yearly production to decline. The IEA calculates that mature Regular Conventional Crude fields average 9.1% annual decline, while mature deep sea fields decline 15% per year. These subsets, oft identified by the lunatic fringe, are a mere 30% of total production."

was lifted from Trendlines at
http://trendlines.ca/energy.htm.

I had also emailed Mr. Hutter about the quote because it appeared prior to the release of the report on Nov. 12 and was being bandied by Heinberg and others as cause for alarm, or a code red, or whatever. In response to my email query, Mr. Hutter emphasized that this was for only 30% of all fields. Naturally it would be nice to have some collateral support for that number; I googled around and didn't see anything directly on point, but will keep it in mind and poke around some more. (Anyone else have a source?)

A different angle on the IEA assessment that occurs to me since you emailed is the following. In the past, I have heard the following argument: there are lots of fields out there, but only a few supergiants (e.g. Ghawar), and what really matters is when these go. I believe Simmons has taken this tact and essential said that Ghawar will deplete rapidly and when Ghawar goes so goes the peak (and the world with it). But this is mistaken, it seems. Even if we do discover and produce the largest oil fields first (JD has posted against this premise previously), and even if those fields do go into decline soon, the decline rate for these is the SMALLEST ("Decline rates are lowest for the biggest fields: they average 3.4% for super-giant fields, 6.5% for giant fields and 10.4% for large fields." IEA Exec. Summ. at 43). It's the other, smaller fields (along with more offshore fields), as they mature, that push decline rates up. My hunch is that it is this set of facts that make for a "rounding" of the curve and a slower decline than we might otherwise expect - this, coupled with expanded upstream development and nonconventionals make for an extended plateau.

Regarding this quote:

"Some 64 million barrels of oil equivalent a day of additional gross capacity, the equivalent of six times the amount Saudi Arabia produces today, must be brought on stream from 2007 to 2030, with about half needed by 2015"

I also have a hard time believing we will need that much by 2015. But my understanding is that over the last 8 years the industry has added an average of 4mbd each year, so adding that much over that entire time-frame isn't out of the question. It just sounds dizzying when you start counting Saudi Arabia's.

Finally, Hutter has been banned by both PO.com and TOD, and he apparently is not the only one. Others who post on this site can probably chime in with more intel than I have. All I can say is that to date I have not found anything to quarrel with on the Trendlines site. Also, I think it is disingenuous for these sites to censor their comments and /or manage posters (I noticed recently at TOD that CJWirth, whom a lot of readers here are familiar with, lamented that if he posted references to his own website, then his comments would be deleted. I disagree with Wirth and have been to his site, read his materials and was not persuaded, but I don't think his posts should be "managed" in this way). The fact that this (at least apparently) happens on these sites ensures uniform content and unfortunately tends to validate new visitors' worst fears. One of the reasons I continue to read and post here is that our host does not engage in this sort of censorship.

 
At Friday, November 14, 2008 at 10:24:00 AM PST, Anonymous benny "moag" cole said...

Yeah, I was banned at TOD too. It is not a forum. The source of funding for TOD is mysterious, and some of its editors claok their identity. What is one to make of it?
They do not follow the rules of real journalists, which include transparency and full disclosure of conflicts of interest.
For all we know, TOD is nothing but a shill for oil futures traders on the NYMEX, or oil thug states, or their financial quislings at hedge funds, or all three.
Worse, they engage in fear-mongering and even hate-peddling.
Meanwhile, we may see crude demand from China flatline, or go down, soon. Electricity demand is falling in China, they are buying much less used cardboard box and paper from California, while imported containers through Los Angeles harbors are down 15 percent.
The doomster argument has placed a lot of eggs in the "Chinese demand will skyrocket oil prices" basket.
What if China's demand falls, while demand is already falling in the Western world, and Japan?
I agree with Doctor JJ: I will lose my bowels if demand hits 96 mbd by 2015. Maybe 86 mbd.

 
At Friday, November 14, 2008 at 8:03:00 PM PST, Anonymous Anonymous said...

So what do you actually do here in Osaka anyway... are you one of those English "teachers"?

 
At Friday, November 14, 2008 at 10:21:00 PM PST, Blogger JD Walters said...

I wouldn't so far as to say that TOD is funded by oil futures traders. I think they are who they say they are (and I should mention we know the real names of most of the major contributors: Gail the Actuary is Gail Tverberg, westexas is of course Jeffrey Brown and then we've got Nate Hagens, Euan Mearns and others): thoughtful people from various technical backgrounds who are worried about our future energy security and try to the best of their ability to put together plausible scenarios for energy production and consumption. Whether they succeed or not is a different matter. I don't know why some people were banned from the forum, but I don't think TOD is sinister.

 
At Sunday, November 16, 2008 at 12:43:00 PM PST, Blogger Barba Rija said...

Just wanted to say congrats to the excelent post, and hallelluiah somebody audited the ELM, it always sounded ridiculous to me how such simpleton theories could get as mainstream as this one got. Worse than this one, only Olduvai.

 
At Monday, November 17, 2008 at 5:49:00 AM PST, Anonymous Westexas Debunked said...

Westexas is also the king of bad predictions.......

8$ gas by 8/8/08.....oil will keep "doubling"...blah blah blah..

what a douche...

 
At Monday, November 17, 2008 at 9:57:00 AM PST, Anonymous benny "moag" cole said...

JD Walters-
Well, it is hard for TOD to be sinister when its credibility is shot to doll ribbons. We could see oil at $20 a barrel in two years, not $200.
Still, I come back to it: Why such TOD sensationalism during certain events, such as the famous "Hurricane Gonu," a tropical storm last year that dissipated as soon as it hit dry desert air north of the Persian Gulf? TOD had figured Gonu to destroy Mideast capability to export oil. Even after the Gonu storm dissipated, they were fondly trading horror stories on TOD. It looked like an attempt to juice NYMEX contracts.
Why do I say that? What does a singular event have to do with our long-term oil outlook, the putative mission of TOD? If anything, short-term disruptions push off the day of reckoning (if that day ever comes) by encouraging alternatives.
The source of funding for TOD remains mysterious, and we do not know conflicts of interest its editors and contributors may have. Money can be laundered easily, through public relations firms and the like. The use of pseudonyms is either amateurish or dubious.
In short, TOD has no credibility, either institutionally, or in practice. I don't read TOD every day, but I sense not a single TOD'er predicted oil at $50 a barrel for November, 2008. Perhaps if they conducted a true open forum, and were open to other points of view, they might have sensed an oil glut is also a possibility.
TOD is, in fact, a valuable lesson for all of us: Stay open to other points of view, respect and encourage dissent, and encourage debate, not censorship.
These simple truisms might allow TOD'ers a more accurate view of the world ahead, which may include the Mother Of All Gluts (MOAG).

 
At Monday, November 17, 2008 at 10:33:00 AM PST, Anonymous benny "MOAG" cole said...

Dudes:
Do the words, "Honking Giant Floods of Oil Everywhere" mean anything to you?

See this:

CNPC says China oil demand falls sharply, stockpiles risingBy AFX | 17 Nov 2008 | 02:41 AM ET Text Size BEIJING (XFN-ASIA) - China's demand for oil is falling sharply and stockpiles of crude and oil products stockpiles are rising as a result of the economic slowdown, China National Petroleum Corp (CNPC) said."

Gee, do you think that higher oil prices lead to conservation and alternatives, and now a global recession will exacerbate trends set in motion by $100+ oil?

Yes, and it was all predicted at TOD. Yessiree, they called it.

 
At Tuesday, November 18, 2008 at 2:48:00 PM PST, Blogger wchfilms said...

The article was interesting because I could see how a Peak Oil utter doom scenario would be more plausible in a planned economy like the USSR, assuming they didn't plan for it, because that type of economy doesn't respond to price signals. Oil/gas usage doesn't appear to be very price elastic, but it is clearly price shock elastic, as is obvious looking at American demand over the last 40 years.

 
At Tuesday, November 18, 2008 at 2:52:00 PM PST, Blogger wchfilms said...

Akrotiri21: "The fact that this (at least apparently) happens on these sites ensures uniform content and unfortunately tends to validate new visitors' worst fears."

Yeah that's the reason I remain interested in this too, was I was "tricked" into a fortunately brief episode of Peak Doom and am concerned about others getting hooked in. When 99% of the information out there is written by a small Doom group, that's basically a self-fulfilling link fest, it can be quite a hard thing for a newb to escape from.

 
At Tuesday, November 25, 2008 at 10:03:00 PM PST, Anonymous Drive-by commenter said...

ELM is helpful and at least partially true. But the problem with it is that it is too simplistic.

Most major oil exporting countries depend heavily on their oil exports for their economy. The reason they can afford to use up an increasing amount of oil domestically is because they make money exporting the rest. When their internal rate of use "kills the goose that lays the golden egg" (exports) then their economy will tank, their consumption decrease, and that will free up more for export.

This effect still probably leaves a lesser amount for export than if we assume their internal consumption stays static. But it leaves more for export than the straight-forward ELM predicts.

 
At Thursday, November 27, 2008 at 10:08:00 AM PST, Anonymous Anonymous said...

This

The purpose will be to separate the facts from the hype.

preceded by this

On the other hand, Mr. Brown has a well-documented history of bluster and exaggeration

is a fine example of the crap logic and hypocrisy that causes me to wonder why any thinking person would visit this... whatever the hell you call venom, lies, hypocrisy and just plain BS.

 
At Thursday, November 27, 2008 at 8:30:00 PM PST, Blogger Ari said...

Anon,

Perhaps because even if JD might not be perfect, he still provides interesting alternative arguments to a lot of what's taken as "PURE FACT" on the PO/TOD side of the world. You seem to be dismissing his entire argument offhand simply because of one line you disagree with. That's a bit hasty, no?

JD is very very right to criticize the ELM: it's potentially very flawed, and he hits just one of the major flaws. He could have spent more time pointing out how it may not hold up if oil producers simply substitute, or if they ration and sell for profit, etc. Instead, he focuses on the "how nasty is it in real life?" side of things, and does a good job of showing that at least one of the major oil producers "ELM effect" is fairly negligible thus far.

And this isn't worth reading?

Also, signature please.

 

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