Peak Oil Nonsense

There is no shortage or peaking of energy due to natural causes:

http://financialsense.com/editorials/casey/2009/0722.html

Oil may be peaking, primarily because there is a govt monopoly on oil worldwide.

Some people will erroneously blame Peak Oil for the coming Greater Depression, which is actually caused by govt capital misallocation theft machine:

http://goldwetrust.up-with.com/economics-f4/inflation-or-deflation-t9-180.htm#1650

The root cause (enabler) of all the monopolies and misallocation is the public's trust in debt money, instead of real God made money. This has transferred the power to controllers of the levers of debt based money. Of course these elite deceive themselves, because in the end they must fight each other for the last slices of the shrinking pie they engineer. The Fed is the borrower (http://silverstockreport.com/2009/deflation.html) only when people think fiat is not money-- an abrupt change (hyperinflation) that can come at any time that people decide not to be debt slaves. Until then, the Fed the the lender and the citizens are enslaved.

Peak ________ is all caused by peak debt:

http://goldwetrust.up-with.com/economics-f4/inflation-or-deflation-t9-210.htm#1711

SRSrocco has a good post about peaking of oil production:

http://jasonhommelforum.com/forums/showthread.php?p=52133#post52133

Which has not yet started declining:

http://financialsense.com/editorials/powers/2009/0731.html

Oil production (and food production and metals production, etc) is peaking because the "notional values of everything in world are all out of wack", due to the misallocations of debt. Cheap oil enabled this debt bubble to run much farther than it should have. Debt/Oil are like Egg/Chicken, which caused which? No one will ever know, they are mutually coupled. See also:

http://goldwetrust.up-with.com/economics-f4/inflation-or-deflation-t9-195.htm#1701

Money will have to return to gold/silver, which will eventually (probably not in short-term) run up to astronomical values as compared to fiat, but as will oil and food run up compared to fiat. People who have gold and silver will feel fine (except that everyone else will want to steal it). Everyone else will lowered into a massive depression.

The question is will the depression be inflationary or deflationary? Eventually it will be inflationary, as stated above. But in the interim time, about 2 - 5 years, it will first run as a Hyper-Deflation, because the people do not want to crash the debt:

http://goldwetrust.up-with.com/precious-metals-f6/silver-as-an-investment-t33-120.htm#1704

Even during this Hyper-Deflation, basic needs stuff (things people MUST buy, and can not reduce) will be persistantly refusing to fall in price. I mean basic foods. I agree with Steve about that, but these are such a small portion of the american debt ATM machine, that this basic inflation will not be driving the trend (not driving them to riot) until populations net worth (their notion of their net worth, as it is all just a notion now) comes down considerably first. First the bankers have to bleed their net worth, then the inflation in basic goods will be a big factor causing riots (probably about 2012 as Celente predicts). It is a question of relative size and thus relative effect. Food and basic needs inflation is not yet the driving force. The driving force is the vaporizing of notional value, with the bankers able to funnel it to themselves, where they will convert it to real power and real assets, thus eventually causing the revolution and hyperinflation as people catapult from fiat.


SRSrocco asks what will happen to all the billions that live in cities? Many will die. In prior 4th Turnings, revolutionary war like 50,000 died, civil war 600,000, WW2 73 million, so likely a billion or more will die during this 4th Turning. Those that survive will bond together to create lifestyles that use energy much more efficiently (e.g. live like rats in small cubicles and use mass transportation). Come over here to Asia and see how they use energy more efficiently. Put 10 people in one small house, pack people into buses standing position and other mass transport like sardines, etc. one problem is the American population is too sparse for mass transport, so there will be a migration to higher density cities, or a resurgence of small farms. I think the former will be the predominant trend.


============
Speaking about nonsense mass misconceptions such as Peak Energy or Global Warming, founder of Weather Channel and 30,000 scientists want to sue Al Gore:

http://www.youtube.com/watch?v=z6l1Cp3MYCQ&feature=related

P.S. We do have Peak Cheap Oil. We do not have Peak Energy as some geological limitation, rather it is a misallocation limitation on investment (we grew faster than natural, and now we have to revert to the mean and below, before growing again).

http://www.youtube.com/watch?v=SMwBbl6RoIs (Obama believes in Global Warming, he wants to bankrupt coal)
http://www.youtube.com/watch?v=HlTxGHn4sH4 (he admits he will cause skyrocketing electricity rates on purpose)

I see SRSrocco is up to his usual habit of misstating what he thinks I wrote (and providing no reference to my context for readers to see what I really wrote):

http://jasonhommelforum.com/forums/showpost.php?p=52158&postcount=67

Any way, what I have said is that Peak Debt (and the Peak of Stupidity that debt enables, i.e misallocation of capital), is the driver of Peak Oil. I thought Steve would be smart enough to understand that I was not saying that oil production was not declining, but rather that we overused our oil because of stupidity (and also due to cheap prices, didn't develop other oil):

http://www.motherearthnews.com/Sustainable-Farming/Joel-Salatin-Interview.aspx?page=5

...America has traded 73 million bison requiring no petroleum, machinery or fertilizer for 45 million beef cattle, and we think we’re efficient...

Steve one day you may understand that the issue is not how much oil is in the ground or what is the EROEI to extract it at any given time in history, but rather the issue is having centralized money systems that encourage people to waste energy. Just imagine all the good science (the free roaming bison is an example of a positive science) that did not get implemented because people didn't need to-- everything was free...until now. What I wrote in 2006 in the Hommel forum thread Peak Oil, is that we have Peak CHEAP Oil, meaning that oil was too cheap (high EROEI) and this enabled the debt bubble to run as far as did. I have NEVER DENIED Peak CHEAP Oil. My point consistently since 2006, is that debt enables people to use resources unwisely. So the did Peak Cheap Oil cause the debt, or did the debt cause us to overuse the Cheap (high EROEI) oil? Well it is a philosophical distinction, since obviously they are symbiotic. The distinction for me is that people had a choice, and had they chosen non-debt money systems, then energy would have been allocated in more sustainable manner. And much other knowledge would have not have been ignored, as people would have had to actually produce something of value before they consumed something. This knowledge could have renewed the supply of high EROEI systems (maybe not oil, but quicker advances in nuclear, or in energy de-intensive production, e.g. free grazing bison, finishing pigs on acorns in Oak forests, etc).

Bottom line is that the world resources aren't finite (they are not! they renew! hydrogen+carbon is fuel and it is never destroyed!), rather our stupidity was infinite. Had we used sustainable capital/financial systems (with their non-distorted feedback loops on resource allocation), then our knowledge would have been much greater.

As I said, rising prices and scarcity is a positive thing. It means people need to return to sanity. Then energy use can return to sanity. The path back to sanity is going to be chaotic, because we overshot sustainability by a long way. And the masses now will try to maintain the status quo-- thus thrusting themselves into a deeper hole.

But don't worry, the planet will take care of the problem. The masses can insure their death, that is about all insurance does, is insure the center of the bell curve fails:

http://goldwetrust.up-with.com/biblical-f3/new-vs-old-testament-is-christianity-a-lie-t94-15.htm#1747


Steve asks why big oil companies invest to produce in the North Sea at high costs. Well Steve have you ever noticed that the USA govt and the environmentalists are blocking the production of all resources in the USA? Did you ever wonder if that contributed to USA decline in production? Did you ever notice that the peak in USA production coincided with the end of the dollar-gold connection in 1971??

Well why don't we look at what happened in USSR:

http://cluborlov.blogspot.com/2009/06/slope-of-dysfunction.html



We see that production fell 43% when the USSR collapsed, but that the peak was reversed when new foreign investment came in later.

So many alternatives to Cheap (high EROEI) Oil, but they are not the stupid alternatives being promoted by the govt.

The point of the prior post was the world has so many alternatives to Cheap (high EROEI) Oil that were not pursued due to the impatience (mis-allocated priorities) of the society which has been in a debt bubble.

I mentioned in the prior "Peak Supidity" post ( http://goldwetrust.up-with.com/economics-f4/peak-oil-nonsense-t102.htm#1749 ) that our production of beef and pork using oil is much less efficient (lower EROEI) than producing them from the natural, renewable hydrogen-carbon FUEL cycle of the earth, where the sun grows grasses (bison) and acorns (pigs), plants which eat CO2.

The new volt will get 230 MPG relative to oil use, because it will use electricity for most of the city driving (and this could improve as people get more crammed into cities by this current debt deflation):

http://finance.yahoo.com/news/GM-says-new-Volt-could-get-apf-2785315765.html?x=0&sec=topStories&pos=3&asset=&ccode=

As I told SRSrocco many times in Peak Oil thread of the Hommel forum back in 2007, that nuclear has a very high EROEI and the people will be crammed into cities, where many of the things we do with Oil can be replaced with electricity. Farming will change also from oil based to either natural methods (like above) or to electric machinery (made easier as farms are consolidated into even bigger farms during the crisis). SRSrocco and others argue that the conversion will take too long and cost too much in terms of oil that is remaining. But consider the huge implosion (deflation plus possible killing of billions) coming-- this will enable a supply of Oil to move to the next higher EROEI paradigm. Brings to mind that the forced 25% reduction in consumption caused by WW2 (thus higher savings and investment), is what ended the 1930 Great Depression. This could have been done long ago by the free market, if we had not been on a debt money system. But instead, we have give the control to PTB, which will organize it for us. I can now see how PTB feel they are the managers of the world progress.

Note I heard (think from CaseyResearch.com) that there are now small nuclear reactors that can power a small city and these can be put into action much faster than the former designs and put in more places.

Peak Oil is a myopia. Those focused on it, are going to miss some incredible opportunities.

P.S. As a side note, notice in my prior post that Russia was able to reverse the decline from their peak in oil production, once they returned to a slightly more free market economy. Notice that almost all oil now is produced by non-free market economies. It is not central to my thesis above, but I do suspect that there is a lot of high EROEI oil still out there waiting for the oil monopolies and govt beauracracy/environmentalists to get out of the way. Now watch SRSrocco will focus on attacking this point, even though it is not central to my thesis. Any way, there should be no problem mustering the oil needed to make the transistion to the electric economy for this reason and moreover for the reasons I started earlier in this post. It is common sense that since oil is being produced by monopolies and intense govt control, that oil production is peaking. The govt kills everything it gets involved in. And why does the govt have this control? Because society chose debt money system (govts can't spend and grow on a gold money standard).

Read 3rd paragraph:

http://goldwetrust.up-with.com/economics-f4/inflation-or-deflation-t9-225.htm#1795



===================
In the late 1800s, there were people like you talking about peak whale oil. Well I see it turned out ok. We "discovered" oil, even though it had been discovered back in the time of the Egyptians. Seems we already discovered nuclear energy.


100-150MPG do-it-yourself cars by putting a 20HP diesel in a small car:

http://www.free-energy.ws/Update_4-2007
http://www.autoblog.com/2006/02/27/loremo-debuts-150-mpg-concept-car-in-geneva/


Also Lee Raymond CEO of Exxon stated in 2007:

An unlikely Paul Revere. When Lee Raymond retired in early
2006 after leading ExxonMobil to record profits, he was the
quintessential Texas oilman. If the notion of developing alternative
fuels and putting pressure on Detroit to build more fuel-efficient
cars ever crossed his mind, it didn’t cross his lips. But as architect
of a new study by the National Petroleum Council, a federal
advisory group, Raymond has become a sort of Paul Revere of
energy, warning of coming shortages by 2030 if America does not
act now. "The problems that the world faces are not related to what
I call geologic risk. They’re related to above-ground risk. They’re
related to political issues, access issues, financing issues, scale
issues, technology issues. Major projects in this industry take a long
time. So even in the most optimistic case, I suspect that the industry
would have trouble keeping up with the growth in demand. All
sources of energy that meet the competitive standard set by the
market should be encouraged. That’s coal, clean coal, nuclear,
conventional oil and gas, nonconventional oil and gas, biofuels,
solar." Q: When you were CEO of ExxonMobil, you said many
times that there are few alternatives to oil when it comes to
transportation. Do you still feel that way? Does it concern you that
the Chinese are trying to lock up oil assets all around the globe? A:
"The Chinese can’t be energy independent. The US can’t be energy
independent. All the major users of energy are going to have to
learn how to work together to make sure that there are adequate
energy supplies." Maria Bartiromo, Business Week, 24 Sep 07

========

I would lean towards skeptism of any new energy technology.

I would also have extreme skeptism to trust that the govts of the world and the large oil companies are not colluding to make oil scarce. It is called Fascism and seems to be the prevelant economic mode these days.

It is all too convenient the timing of 9/11, invasion of Iraq, and sudden run up in oil prices. Massive war spending to hold up the world's dollar debt bubble. Study history and this pattern repeats near the end of credit bubbles.

============

re: experts think (do they really?)

>
> "You can't know with certainty that exploration has peaked geologically."
>
> From what I've read, geophysicists/geologists firmly believe that the land
> mapping and exploration has been done so extensively and with such refined
> technology that there can be no doubt about production declines. Iraq is

They thought that too until they had massive discovery in the North Sea.

We know almost nothing with confidence about Russia and Siberia for example.

Don't pretend you know, what you can't know, it is not science. Also I don't mean that to be a snub.

Also remember the fact:

All oil is nationalized. When have you ever seen govts run things well or with good transparency of data?

The truth is, the "experts" are extrapolating.

And never in the history of the earth is the "it is different this time" been true, when it comes to economics or natural resources.


====================
New Deal caused Greater Depression; Peak "___" caused by cartelization

Must read for anyone who thinks that the New Deal (and our current version of it in subprime plans) got us out of the Great Depression, and everyone who thinks Peak Oil or Peak Whatever, is caused by earth's limits:

http://www.gold-eagle.com/editorials_08/baltin041608.html

...New Deal (1933–34) was one giant cartel scheme to raise prices; completely confusing cause and effect, whereby the government attempted to enforce cartel price fixing through output reductions in hundreds of industries as well as in agriculture (B[b]urning crops and pouring milk into the streets) [shelby notes: sounds like making ethanol from food, hedging mines, shorting commodity futures prices, nationalizing oil, increasing consumer debt to overconsume oil & commodities, etc], drastically reducing employment. Falling prices are an effect, not a cause of a Depression...[/b]



==========================
Peak Resource Fallacy

Have you considered the correlation between debt, nationalization, price manipulation, and the divestment of the resource sector?

Most resources, oil especially, is highly regulated, politicized, nationalized, and so heavily taxed that the (especially oil) producers only receive a small fraction of the end price, and thus it doesn't pay to invest in the sector.

Price fixing causes shortages or causes overconsumption. That is the central point of my article above. I personally know of many high grade mines that can not be profitable at the current resource prices (from my work on Miningpedia.com).

For example, in the silver market, we have 2 big banks (JP Morgan suspected) with 80% share of selling short unlimited quantities of paper silver on the futures markets to depress the silver paper price, simultaneous with well-documented severe shortages of silver in the retail dealers worldwide. We have 900 Moz annual demand and only 550 Moz annual mine production-- deficit met by recycling (most 90% coin from 1960s de-monetization of silver worldwide). Silver translated means "money" in 14 languages. Silver throughout history of world was 1/15 to 1/10 price of gold, but lately has been 1/100 - 1/50 the price of gold.

So the Peak Resources is fundamentally a Peak Fraud caused by Peak Debt. The root cause of Peak Resources is the fractional reserve banking model.

When the Peak Debt implodes, so will the manipulation of prices and investment, thus the free market will fix the resource gap throught a mix of conservation, efficiency, renewed investment, and new paradigms.

It seems you are also implying that there is some natural limit of resources. We simply have no reliable way to measure such a theory, because investment in resources has not been climbing in exponential parity with debt. Measurements based on a rubber band money system, are inherently ambiguous.

The very highest grade near surface mines are indeed mostly gone, and certainly probably all of the massive ones, except for perhaps burried deep in Amazon and other unexplored places.

However, technology has increased greatly since those low hanging fruit were picked. We won't know the equilibrium price, investment, and thus supply/demand, until we remove the false pricing effect of fiat and the politics that fiats induces.

http://www.elliottwave.com/club/protected/pdf/free-theorist-july-2009.pdf
(free signup to read entire: http://www.elliottwave.com/r.asp?acn=finsense&rcn=aa38c&dy=aa082009c&url=/club/free-theorist/default.aspx?code=34719)



He goes on to explain that these are buried in ground, have no moving parts, need to refueled only every 7 - 10 years, they are only a few meters in diameter and get delivered to your location on a truck. They have already 100 firm orders to start delivery in 2013. See also this Wikipedia link:

http://en.wikipedia.org/w/index.php?title=Toshiba_4S&oldid=300866783

Originally written November 2007:

http://goldwetrust.up-with.com/economics-f4/global-warming-nonsense-t108.htm#1816 (scroll down a bit)

If there is a Peak Oil problem, Brazil won't be have a problem:

http://finance.yahoo.com/news/Alternative-energy-powerhouse-apf-3449508334.html?x=0&sec=topStories&pos=2&asset=&ccode=

BP drills deepest-ever oil well in Gulf of Mexico, taps vast pool of crude

By Chris Kahn, The Associated Press

NEW YORK - More than 10 kilometres below the Gulf of Mexico, oil company BP has tapped into a vast pool of crude after digging the deepest oil well in the world.

The Tiber Prospect is expected to rank among the largest petroleum discoveries in the United States, potentially producing half as much crude in a day as Alaska's famous North Slope oil field.

The company's chief of exploration on Wednesday estimated that the Tiber deposit holds between four billion and six billion barrels of oil equivalent, which includes natural gas. That would be enough to satisfy U.S. demand for crude for nearly one year. But BP does not yet know how much it can extract.

"The Gulf of Mexico is proving to be a growing oil province, and a profitable one if you can find the reserves," said Tyler Priest, professor and director of Global Studies at the Bauer College of Business at the University of Houston.

The Tiber well is about 400 kilometres southeast of Houston in U.S. waters. At 10,685 metres, it is as deep as Mount Everest is tall, not including more than 1,200 metres of water above it.

Drilling at those depths shows how far major oil producers will go to find new supplies as global reserves dwindle, and how technology has advanced, allowing them to reach once-unimaginable depths.

Deep-water operations are considered to be the last frontier for pristine oil deposits, and the entire petroleum industry is sweeping the ocean floor in search of more crude.

BP needs to invest years of work and millions of dollars before it draws the first drop of oil from Tiber. Such long waits are not uncommon. Three years after announcing a discovery at a site in the Gulf called Kaskida, BP has yet to begin producing oil there.

Projects like the Tiber well will not reduce U.S. dependency on foreign oil, which continues to grow. But new technology does permit access to major oil finds closer to U.S. shores.

BP expects Tiber to be among the company's richest finds in the Gulf on par with its crown jewel, the Thunder Horse development. Thunder Horse produces about 300,000 barrels of oil equivalent per day, as much crude as half of Alaska's famous North Slope.

Even if Tiber produces that much, it would still be a trickle compared with the largest oil producers in the world - the Ghawar field in Saudi Arabia, which produces 5 million barrels per day.

But because it's close to home, Tiber would be especially attractive to refiners in America, where the government wants to cut down on oil imports from the Middle East.

"Early indications are that it's a significant positive discovery," said Matt Snyder, lead analyst with Wood MacKinzie's Gulf of Mexico research team.

Exploration companies recently have been pushing drilling operations farther from shore because of technological improvements that allow them to handle extreme depths and pressure, Snyder said.

It's an expensive process. A production platform costs more than US$1 billion to build. Drilling a deep-water well can add another $100 million, and if crude is located, it could cost another $50 million to bring the oil to the surface.

"And when they finally get down there, it's very hot," said Leta Smith, a director with Cambridge Energy Research Associates' Global Oil Supply Group.

"It could be upwards of 250 degrees Fahrenheit. The pressures can be the most challenging aspect of it. These rocks are over-pressured, which means you need to have a lot of special equipment."

For an ambitious project like Tiber to pay off, experts say crude must cost at least $70 to $75 per barrel, though lower prices have never slowed the industry. When crude prices fell below $20 per barrel in the late 1990s, exploration and Thunder Horse never slowed.

"They're not swayed by daily price swings when it comes to planning deep-water exploration," Priest said.

BP's discovery is the latest in what's called the "lower tertiary" region, an ancient section of rock in the Gulf that is roughly 300 square miles and formed between 24 million and 65 million years ago.

Chevron Corp. drilled one of the first wells in the region in 2001, followed by more than a dozen others from companies such as Royal Dutch Shell, Australian oil company BHP Billiton, BP and Total SA, according to the U.S. Department of Interior's Minerals Management Service.

In 2006, Chevron estimated that the lower tertiary holds between three billion and 15 billion barrels. But it has taken years to develop wells for commercial use.

Smith said that the first drops of crude from the lower tertiary will arrive in 2010 with Shell's Perdido operation and Petrobras's Cascade and Chinook developments.

BP has a 62 per cent working interest in the Tiber well. Petrobras owns 20 per cent while ConocoPhillips owns 18 per cent.

Compare this chart, the one on the page of this link:

"OIL PRODUCTION HAS ALREADY PEAKED" (oh really, where is proof?)
http://financialsense.com/fsu/editorials/bms/2009/images/1029_clip_image008.jpg



What is the difference? Yeah I know half the chart is chopped off, but what half?

(Hint: my chart tells what has happened, the chart in the link above purports to predict the future)

Be careful how charts can trick you into confusing fact from "predictions". Look at my chart and see what happened in 1980. Was that the peak? No!!!

Here is statement of facts on Peak Oil that I mostly agree with (I do not agree with all of her positions on all matters):

http://esr.ibiblio.org/?p=1337#comment-241751

http://goldwetrust.up-with.com/technology-f8/energy-t119.htm#2360

(before you click link above, also scroll up this page and see the prior post on this page)

















.

And there is a process to covert natural gas to oil, if that became necessary, although I think that won't be the most efficient use of the natural gas (most efficient for heating):

http://financialsense.com/editorials/casey/2009/1204.html
http://www.financialsense.com/editorials/casey/2009/0722.html

Peak energy is nonsense. Peak "too cheap" oil is the only reality we are faced with. Oil can go to $200+ while the salaries of Asians go up 20 - 30% per year and the westerners will fade away into poverty.