405. SUPPLY CRUNCH RECEDES

For the last few months the peak oilers have been terrorizing the newbies with the "looming supply crunch" due to lack of investment. Much of this was based on comments earlier this year by the IEA:

"Currently the demand is very low due to the very bad economic situation," [Nobuo Tanaka, the IEA's executive director] said. "But when the economy starts growing and recovery comes again in 2010 and onward, we may have another serious supply crunch if capital investment is not coming."

However, this one has now bitten the bag like so many other peak oil scares over the years:

IEA sees global oil supply crunch risk recede
Jun 29 2009

The world may escape an oil supply crisis for the next five years because a slow recovery from the economic downturn would hold down growth of demand, the International Energy Agency (IEA) said on Monday.

Yet another case where the peak oilers relentlessly hype an anticipated threat, and provide no reporting at all when the threat evaporates.

And in related news, the IEA just cut 3 million barrels per day for demand for the next four years: So Much for Chinese Demand (hat tip to Eric J. Fox)

by JD

404. 100 YEARS OF NATURAL GAS

Rigzone reports some very important news:

The amount of natural gas available for production in the United States has soared 58% in the past four years, driven by a drilling boom and the discovery of huge new gas fields in Texas, Louisiana and Pennsylvania, a new study says.

The report, due to be released Thursday by the nonprofit Potential Gas Committee, concludes the U.S. has more than 2,000 trillion cubic feet of natural gas still in the ground, or nearly a century's worth of production at current rates. That's a 35.4% jump over the committee's last estimate, in 2007, of 1,532 trillion cubic feet, the biggest increase in the committee's 44-year history.

Boone Pickens puts that volume in perspective:

The 2,074 trillion cubic feet of domestic natural gas reserves cited in the study is the equivalent of nearly 350 billion barrels of oil, about the same as Saudi Arabia’s oil reserves.

For those who aren't up on the history: this is a case where the "peak oil community" has egg on its face about an inch thick. In Aug. 2003, Matt Simmons stated that natural gas armageddon for the US was a certainty within 2 years. Now, here we are 4 years later, swimming in veritable seas of the shit. Read the history, folks. The man is a stooge.

While we're at it, let's also recall that the entire "peak oil community" bought into the "natural gas crisis" hook line and sinker:

Matt Simmons, Dale Allen Pfeiffer, mobjectivist, Julian Darley, Culture Change, dieoff.org, LATOC, Post Carbon Institute, Energy Bulletin, The Oil Drum etc. etc.

And the crisis never came. In fact, the result was exactly the opposite of that predicted.

This huge surge in NG supplies is very important, and very good news. As Robert Rapier says: "It also appears that we have enough natural gas available that civilization isn't going to end any time soon due to lack of energy supplies."

by JD

403. DMITRY ORLOV CONCEDES HE'S AN IDIOT

Still on vacation, but I couldn't resist this one. A couple of days ago, Dmitry Orlov posted a new presentation on his website, well-larded with his usual asinine assertions about the imminent end of industrial civilization etc. etc.

The funny part is that much of it is based on this concept:

François Cellier has recently published an analysis in which he shows that at roughly $600/bbl the entire world's GDP would be required to pay for oil, leaving no money for putting it to any sort of interesting use. At that price level, we can't even afford to take delivery of it. In fact, at that price level, we can't even afford to pump it out of the ground, because the tool pushers, roughnecks and roustabouts that make oil rigs work don't drink the oil, and there would no longer be room in the budget for beer.

And so, the actual limiting price, beyond which no economic activity is possible, is certainly a lot lower, and last summer we seem to have experimentally established that to be around $150/bbl. which is something like 25% of global GDP.

Scary stuff, except the figures are totally bogus.

$150 oil would not constitute 25% of the world's GDP.

The world consumed 84 million barrels/day in 2008 (from the BP statistical review 2009). At $150 per barrel, that comes to $12.6 billion a day, or $4.6 trillion per year.

The CIA Factbook 2009 gives world GDP for 2008 as $69.49 trillion.

Therefore sustained $150 oil would only account for 4.6/69.49 = 6.6% of world GDP, not 25% as Orlov fraudulently states.

Similary, if oil rose to $600 a barrel, that would cost roughly $50 billion/day, or $18.25 trillion per year.

Clearly $600 oil cannot consume the entire world's GDP because

$18.25 trillion < $69.49 trillion

It would take something a little closer to $2240 per barrel to consume the world's GDP.

*****

You can see where Orlov screwed up if you compare his comment with the original analysis by Cellier. Here's the quote from Orlov:

François Cellier has recently published an analysis in which he shows that at roughly $600/bbl the entire world's GDP would be required to pay for oil, leaving no money for putting it to any sort of interesting use.

Here's the source quote from Cellier:

This means that, if ever the price of energy should rise to a level of $0.37/kWh, we would spend our entire GDP just on the procurement of energy. This corresponds to an oil price of $590/barrel.

Notice the little switcheroo there boys and girls?

The really funny part is that he delivered this presentation at some cheesy doomer jamboree called The New Emergency Conference and NOT ONE PERSON bothered to check his figures. Then he posted the presentation on his blog, and it was commented on by more than 40 fawning idiots, and NO ONE bothered to check his figures. No critical thought was anywhere to be seen. Nothing but wall-to-wall brown-nosing: "Fabulous, Dmitry." "What an absolutely amazing and thoughtful essay." "Marvelous" "Brilliant!"...

I submitted a comment pointing out Orlov's mistake on his blog. However, Orlov heavily moderates the blog, and buried the comment by not posting it. Apparently the facts are not welcome at ClubOrlov.

This incident really speaks volumes about sycophancy and gullibility in the peak oil community.

2009/6/20 update:
Orlov has now formally conceded that yours truly gutted him like a fish, and his figures are complete bullshit (Read down in the comments. Orlov calls himself "kollapsnik". Hat tip to LoneSnark for smoking him out.):

Orlov:

Some people have pointed out that I misquoted François Cellier:

"François Cellier has recently published an analysis in which he shows that at roughly $600/bbl the entire world's GDP would be required to pay for oil..."

Here's the analysis: http://europe.theoildrum.com/node/5388#more

Please substitute "energy" for "oil" and $590 for $600.

Orlov:

I said "oil" whereas I should have said "energy". [...] I don't care about arithmetic very much at all.

2009/7/2 update:
Another (more formal) apology from Kamrade Orlov.
Reading the comments to the blog article, I was amused to see that Dmitry had a presentation (tickets: $20-30) scheduled in NYC for July 11, 2009, but it was cancelled due to lack of interest. Apparently only 18 people in the entire 5-borough area expressed any interest. LOL

by JD