Hoarding is exactly what the government is doing right now by filling the SPR, and frankly it's the best thing that could happen. It drives prices up. High prices encourage demand destruction. They also finance new well development. The hoarded oil gives us a buffer to fall back on once shortages become more prevalent. High prices are what we need in order to adapt to what's coming, and the sooner they happen, the better.
Posted: Wed Oct 18, 2006 4:12 am Post subject: Reversing the feedback
A question.
We know in theory that Hubbert Peak predicts a roughly bell shaped production curve - taking the central limit theorum to individual field production curves.
We also know that in the real world a complex feedback loop changes that.
• High prices mean high discovery and exploitation spend
• High discovery and exploitation spend means higher production (although delayed)
• High production means oversupply (or it has until now)
• Oversupply means lower prices unless production is artificially constrained
• Wars, disasters and political snits can artificially influence supply, prices, etc.
• US economic health affects the dollar, which affects how much oil appears to cost for the rest of us
• Production not made today is available later, with relative ease and speed
• Physical and manpower resources influence maximum discovery/exploitation rates
• Economic cycles tend to be longer than oil exploitation times, but short term effects can change drivers faster than oil can react
Given all this, has anyone ever tried to reverse out the influence that known historical events and their feedback have had on the oil production curve? You can do a degree of it by cut and paste, taking the historic production curve and moving/scaling elements after key events (eg oil conservation following OPEC) to arrive at a smoother curve by eye.
Two reasons:
1) simplifying the curve by removing the feedback effects might/should lead to a nice bell curve - which in turn may give clues as to where we are relative to the physical geological/engineering peak.
2) The relative contributions of the feedback loops to distorting the original 'full bore' oil production shape you find by the work can be played forward to determine how the market will continue to react in future (eg you use history to create/validate your understanding of the market influences).
Any pointers, thoughts, references ? _________________ Arcane Domain
Posted: Thu Oct 19, 2006 6:13 pm Post subject: Re: Reversing the feedback
I believe webhubbletelescope has done work along these lines, with what he called the "oil shock model". If he is checking in, we will let him explain it, but it is a lot like you are describing.
I think if you do a search, you will find the thread where he first posted it, and I think he has a website where it is explained in detail.
Joined: May 15, 2005 Posts: 4144 Location: THE MATRIX
Posted: Thu Oct 19, 2006 6:23 pm Post subject: Re: Reversing the feedback
psychohistory! cool _________________ It is easier to enslave a people that wish to remain free then it is to free a people who wish to remain enslaved.
Posted: Sat Oct 21, 2006 9:09 pm Post subject: Re: Reversing the feedback
Adding the sociological component will drive you crazy (way to pass the buck, pup). All attempts to predict behavior at that level gets subverted by psychology, revese-psychology, and reverse-reverse-psychology.
What I can contribute is perturbations on a convolution-based model that keeps slowly varying rates constant but allows one to adjust the extraction rate. These extraction rate "oil shocks" as I call them models the effects of things such as the oil embargo of the 70's and perhaps the plateauing of the current peak.
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