I think this is the beginnings of an economy based on perpetual growth and fossil fuel energy running headlong into geological energy constraints. Basically I see an undulatory downward path for the rest of my life. From here out, I think any rallies in our economic condition are going to be met with spiking commodity prices that knock us right back down.
Posted: Sun Jul 10, 2005 8:15 pm Post subject: Is the EIA an institution for lunatics? (just a detail)
(Just a detail).
A problem most of us probably have, whether or not you're a PO believer, is the reliability of sources.
I was just checking the EIA's price projections, and found they're totally devoid of any reality. The "high price scenario" keeps projecting prices of US$ 30pb for the years 2004, 2005, 2006, 2007, 2008, 2009, 2010; after which it sees a steady decline in prices to around US$20 per barrel in 2020.
This is the American Energy Information Agency. Now any lunatic in any asylum could make better predictions.
I don't understand. How can anyone take anything coming out of such an overtly crazy institution serious? It's really beyond shocking.
The average blogger knows more of the international petroleum market than a group of highly paid US officials with big titles on their business cards. Mind-boggling really. It's clear the EIA is an ideological state apparatus, the likes of which couldn't even be found in Mao's China, or in Stalin's USSR.
So what do we do now? Who can we trust? Not the EIA, that's for sure.
At the time those forecasts were created, the oil futures markets were making much the same predictions. These markets are composed of thousands of traders digesting every scrap of information for clues about the future direction of prices. They do their very best to come up with the most accurate estimates possible about what will happen in the markets. It is not an unreasonable source to use as a basis for making estimates. If the EIA was wrong, everyone who was betting on the outcome was wrong, too.
Today, the markets are again predicting that prices will stabilize at around $50-60 / bbl over the next 5-6 years. What do you think of that? Is it "crazy"?
These people aren't part of a cartel. They are gambling their own personal assets on their bets about the future of oil. Are you so sure of yourself that you are convinced that all these people are wrong?
If so, what about in other fields of life. Are you also convinced that you know more medicine than the AMA? Are you certain that you could go to Las Vegas and clean up in the World Series of Poker? Do you think you would be a better candidate for the Supreme Court than all of the justices now sitting?
If you are not so arrogant as to think that you are better than everyone in the world at everything, why would you think that you are a better predictor of oil prices than the professionals who are making bets on that outcome right now? They spend more time at it than you do, they study more sources of information on it than you do, and they have more to lose if they are wrong than you do.
Maybe you should learn some humility, and consider the possibility that the experts in a field might actually know more about what they are doing than an amateur like you. Yes, they have been wrong before; this is a human failing, and you might even find it happening to you some day. But that doesn't change the fact that the consensus by the experts in a field is generally a better guide to the truth than the self-serving opinions of an arrogant amateur.
As priests have for centuries become 'theological' experts and convinced men that god is more than mere hope, ego and a tool of state, so the economists have been the priests of consumerism. By convincing us that exponential growth is essential, that interest on capital is more than theft by government and bankers of our wealth, by convincing us that it is safe to go into tens of thousands of debt, we have walked into a trap laid accidentaly by 'experts', who still believe that the price of oil will reduce demand by millions of barrels and everything will be fine. Perhaps so for those few who can afford to pay the high price.
The problem is not their 'expertise' but the axioms underlying their belief system. If economics is to continue as the capitalist's global religion, then it will soon have to consider much longer term trends than the next couple of financial quarters.
I think the purpose of the EIA is to convince people that 'business as usual' can continue indefinitely. The USGS is famous for ignoring Hubbert's work and making sky-high predictions for US oil production during the 1960s (before the US peak). It seems nothing has been learned, or the lessons of the past have been deliberately ignored by the EIA. Considering the ridiculous nature of their claims, providing disinformation seems to be the only obvious reason for their existence.
Do you think you would be a better candidate for the Supreme Court than all of the justices now sitting?
Yes! _________________ "The world is changed... I feel it in the water... I feel it in the earth... I smell it in the air... Much that once was, is lost..." - Galadriel
As we now know, the U.S. government is not part of the "reality-based community." Politics infests everything they do (and has for long before the current administration). The FAA tweaks their safety analyses so that the cost of making safety improvements is greater than the cost of fatalities (conveniently for the airlines). Both parties try to "adjust" the census so that more people are counted in districts that lean their way, and fewer in districts that don't. Congressional budget estimates assume growth rates we'll never see, in order to reduce the deficit. Etc.
The USGS and EIA estimates are especially egregious. As someone pointed out last week, they not only overestimate discovery and reserves, they underestimate demand. China is using as much oil this year as they were supposed by 2010, according to the official government estimates. And as Deffeyes likes to say, we're already one Kuwait behind the estimates of new U.S. oil discovery, and one Middle East behind the estimate of world oil discovery.
A very important thing to remember when dealing with government information sources is that they are several years old. Go look at the most recent government figures for just about anything...you're lucky to see figures from 2003. Most likely they're from 2001 or 2002. This is a long time ago in the rapidly changing peak oil world. _________________ Civilization is a personal choice.
Joined: May 23, 2004 Posts: 201 Location: Charlottesville, Virginia
Posted: Sun Jul 10, 2005 11:01 pm Post subject:
These forecasts coming out of government agencies and other entities are literally unbelievable. I'm forced to conclude that extremely intelligent men and women who have devoted their lives and their personal financial resources to what appears to be an absurd oil paradigm are completely and utterly attached to an obsolete model that uses only supply/demand to predict raw material availability. The idea that the availability of oil can be limited by geological constraints is just anathema to them. They will not even consider it.
Here is another example from the EnergyBulletin:
Quote:
Oil to Play for As North Sea's Future Looks Bright
Staff, Rigzone
At first glance, the latest Royal Bank of Scotland oil and gas index makes for pretty grim reading. The monthly snapshot of the industry shows UK oil production fell by 11 per cent in April, while gas production was down by 16 per cent on the year.
"The continuing decline is surprising because of the high oil price," notes Tony Wood, senior economist at RBS, as the cost of a barrel of crude hovers around the sensitive dollars 60 mark. And with some experts expecting to see a high of dollars 70 a barrel or more by the end of the year, the level of Mr Wood's surprise could increase. ...
(7 July 2005)
Tony Wood certainly knows that NS oil peaked in 1999. He just doesn't think in terms of geological reality. These respectable, intelligent people are apparently dancing down the yellow brick road: If we need more oil, it will magically appear.
This is the most amazing thing that has happened in my lifetime. Either I'm nuts (definitely possible), or most of the world has gone to Carolina in their mind.
At the time those forecasts were created, the oil futures markets were making much the same predictions. These markets are composed of thousands of traders digesting every scrap of information for clues about the future direction of prices. They do their very best to come up with the most accurate estimates possible about what will happen in the markets. It is not an unreasonable source to use as a basis for making estimates. If the EIA was wrong, everyone who was betting on the outcome was wrong, too.
It just goes to show how imperfect the market mechanism is, doesn't it. If these people(EIA) were serious in making long range forecasts they would gather resources and data from more wide ranging sources. Then they could forecast an optimistic and worst case scenario and not just THE scenario as they see it, based on the dominant ideology.
Really they just appear to be a bunch of YES men, goose stepping to the dominant political mantra of economic highpriests and the infallability of so called "free" markets. *snicker*
There are today and were back then people who predicted a more gloomy prognosis not only on oil but other resource consumption. Club of Rome anyone. It's just that sort of talk won't get you a hoist up the next rung of the corporate ladder.
These are smart people (EIA), they are making sure they get the most income they can by following the dominant political dogma, telling the truth is likely to get the messenger shot or labeled as crazy/doomer/radical pick your favorite.
You talk about these traders putting their money on the line, most of them are using other peoples money and it's safer to follow the madness of crowds and be wrong e.g. Internet Bubble or oil currently than take a counter position and end up wrong in the short term (sacked) and possibly right in the long term. Most of them do their best to make money, some of my friends are traders who use exclusively technical analysis to make money e.g. candle stick charts etc... Thats their every scrap of information they need to make money. They could not care less about oil depletion when I mention it *shrugs* whatever.
I don't post much these days because really Im sick of spitting into the wind. _________________ "Once the game is over, the king and the pawn go back in the same box."
-Italian Proverb
Joined: Jun 12, 2005 Posts: 4189 Location: 1st territorial capitol of AZ
Posted: Mon Jul 11, 2005 12:19 am Post subject:
I've long wondered about the sanity of the EIA, take EIA resistor values for instance, 47 ohm? 68k? WTF? but they appear to know what they're doing, modern electronic equipment doesn't appear to emit smoke, too often.
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