[Graeme]

EIA: If this is peak oil, then I’m not sure what the problem is

Steven Kopits claims [in the Econobrowser version] that the new EIA oil supply projections are a “Hard Core Peak Oil Forecast”. His argument is that the EIA has been steadily reducing its oil supply projections for 2020 over its last four annual projections, and that this is a sign that EIA has “placed its fortunes firmly with the peak oil crowd”. I think he’s wrong. In any case, if this is what counts as peak oil, then I’m not sure why anyone is so excited about it.
Here’s the graph that attempts to make the case:

http://energybulletin.net/node/53067

[Pops]

Boy, sure is a good thing this recession - hope we can keep it going, maybe eliminate a few more jobs, imagine how that will make po so much of a non-event.

Hey, Gram, did you notice that BP stat review has R/P growing too, that's gotta be good news!

[timmac]

Does that chart mean that we will need that much oil per day by 2030 or what the oil market will be producing each day..

[Graeme]

Pops, Sorry to upset you with "good" news. I'm merely the messenger here. The analysis is not mine. It is Michael Levi's, who is Senior Fellow for Energy and the Environment at the Council on Foreign Relations. Please restrict your criticism to what he is saying.

[Plantagenet]

Obviously, while the EIA has dramatically lowered its projections of oil production, none of the EIA projections include a peak in oil production.

Cheers!

[Graeme]

Michael Levi appears to accept what the EIA publishes. If the peak oil community in the USA think otherwise, then they obviously have a problem in communicating their message to politicians.

[Pops]

Pops, Sorry to upset you with "good" news. I'm merely the messenger here. The analysis is not mine. It is Michael Levi's, who is Senior Fellow for Energy and the Environment at the Council on Foreign Relations. Please restrict your criticism to what he is saying.

Actually my first comment was to what he is saying, namely that worldwide recession has lowered demand and my second was supporting his point - BPs stats confirm lowered demand.

Looks to me like I added way more than you, did you actually read anything beyond that juicy headline.

Was that your message - the headline?
Do you have a message aside from snagging provocative snippets simply as a distraction?
Are your posts simply spam = "a large number of poorly executed threads" designed to disrupt the board?

I wonder...

[Graeme]

Didn't you see the graph that I posted? The EIA have production increasing to 2030! Your comments are simply reduced to snide remarks and abuse directed to me. I can now understand why nobody outside this Board will not take any notice of you. I can't post a professional reply.

[dinopello]

The EIA have production increasing to 2030!

What will their projection look like in 2014 ?

[ian807]

Interesting graph. Hope it's true. If so, it is good news.

Of course, the graph says nothing much about either raw price or EREOI or the cost impact of technological failures of extreme wells. It's good to have gas, fertilizer, chemical feedstock, et. al. It's not so great if we have to pay $1000 a barrel for it, and investing one barrel's worth of energy only produces 1.5 barrel's worth of energy at best (compared to today's 12 to 1 ratio and the 100 to 1 ratio we got back in the 60s).

As an aside, I'm guessing that there are some rather optimistic assumptions about our ability to extract unconventional oil supplies as well.

But you're right. Anything that slows powerdown without disastrous consequences is good news. The more time we have to adjust, the better.

[Graeme]

Thank you Ian. A much better reply, something I should have expected from a moderator! If you read the article, you can see that Levi is peak oil aware.

Indeed the interesting puzzle may be why oil supply is so high in the new estimate, rather than why it is so low.
The only way out for someone who wants to blame the lower supply projections on peak oil is to argue that the lower GDP projections are themselves a consequence of peak oil.

Then he comments on their analysis of economic aspects:

It projects oil prices to rise to about $110/bbl in 2020, and to over $180/bbl [PDF] in its “high oil price case”, but in neither case does it project a recession. Indeed the impact of the high oil price case on economic growth is tiny.
Moreover, if $110/bbl oil counts as “peak oil” (since, after all, we’ve agreed to use the EIA forecasts), then I’m not sure what anyone’s so worried about. Are people really claiming that $110/bbl oil will be catastrophic?

I'll ask this community again. How accurate are the EIA forecasts?

[cipi604]

The last graph update!

What problem? Does anyone see any problem?

[SeaGypsy]

Looks like that volcano in Iceland no one can pronounce.

Graeme, Pops actually has substantial down to earth old school credibility on this board and a lot of us take note of what he says.

Some of us might prefer you choose what camp you are in. This post reveals more of your nature perhaps than your regular technofix rants. A lot of these I find entertaining, as I'm sure others do. This place needs an anethema to gloom and doom. Technofix is at least positive thinking. It may not be the panacea we are praying/ hoping for, or it could be a real part of real long term solutions. The issue is incredibly complex, but most here are well aware of the complexity, regardless of which side of the technofix debate in the long run.
Some here might suggest you do 2 things better. Firstly research your topics thoroughly before publishing them. Secondly, attempt to speak to both the well educated and freshmen.

This topic is another matter. Politics, economics and projections. This area also has plenty of specialists in a variety of persuations. To be blunt, pulling one monkey out of a hat and asking us all to listen to what it has to say, just doesn't cut it. It's not a thread, it's a comment piece on one of hundreds of pre existing threads.

[Roy]

The last graph update!

What problem? Does anyone see any problem?

Good one! That actually made me bust out laughing this morning! Nicely done sir.

[Tanada]

Some of us might prefer you choose what camp you are in. This post reveals more of your nature perhaps than your regular technofix rants. A lot of these I find entertaining, as I'm sure others do. This place needs an anethema to gloom and doom. Technofix is at least positive thinking. It may not be the panacea we are praying/ hoping for, or it could be a real part of real long term solutions. The issue is incredibly complex, but most here are well aware of the complexity, regardless of which side of the technofix debate in the long run.

The good news is the Board Owners encourage a diversity of viewpoints. The last thing on earth that PO.com needs is to become a solid chorus of one point of view. Demanding that someone either announce they are for or against YOUR prevailing viewpoint adds absolutely nothing to the conversation.

I disagree with a lot of the the websites that Graeme posts articles from, but I think pointing them out is a valuable contribution to the board. We need the constant reminder that people elsewhere, even well educated and articulate people, do not see the perils of Peak Oil.

How dull would this place be if it only allowed expression of the 'approved' point of view? We have a hard enough time keeping members without deliberately dumbing down the site and driving away many of the lurkers.

[Graeme]

Well, it seems that nobody else wants to answer the question perhaps because most members here have already made up their mind about the consequences of PO. I should have know better. I thank the posters who did contribute in a positive way. My intention was to seek opinions from members regarding an article that was already posted at the EnergyBulletin site. This is now administered by members of the Post-Carbon Institute. Richard Heinberg is a Fellow there. The response from one quarter was quite unexpected.

I will have to answer my own question. Sometime ago, I read a brilliant analysis about the economic consequences of high oil prices. I can't find my post in the search function because the old function has been deleted. I recall that a price of around $80/bbl is the point above which the global economy starts to be adversely affected. If this is true, then prices above $80 cannot be sustained and oil demand will fall. In addition, if production costs approaches $80, then oil exploitation will no longer be viable.

In closing, I would like to add that my views are similar to the views expressed by the Post-Carbon Institute, namely to phase out fossil fuels asap for various reasons. They posted an article by a credible analyst who concluded that PO is not a problem (within the contraints provided by EIA). This analysis was new and I thought should be the subject of a thread.

[Graeme]

The personal search function works very well. I found the article I was referring to. It is by Steven Kopits of Douglas Westwood Energy, the same person mentioned in the original article.

What oil price can America afford?

Steven Kopits of Douglas Westwood Energy research discusses this urgency in a new report, noting that in the last 37 years, the US has suffered six recessions. From the beginning of each, he says, oil played a central role. In every case when oil consumption breached 4 per cent of GDP, he notes, the US has suffered a recession. Indeed, he says, the current US recession began within two months of oil hitting the 4 per cent threshold, when oil reached $80 per barrel.

Kopits also notes that a sustained rise in the oil price of 50 per cent or more has always been associated with recession, and this applies to the current recession as well.

FT

[Plantagenet]

Steven Kopits of Douglas Westwood Energy research discusses this urgency in a new report, noting that in the last 37 years, the US has suffered six recessions. From the beginning of each, he says, oil played a central role. In every case when oil consumption breached 4 per cent of GDP, he notes, the US has suffered a recession. Indeed, he says, the current US recession began within two months of oil hitting the 4 per cent threshold, when oil reached $80 per barrel.

IMHO, there is no reason to think this 4% number is a hard number. All it means is that if oil prices go up and stay up, so US spending on energy doubles to, say, 8% of GDP, then other parts of the economy will have to shrink, i.e. spending on healthcare or government or social security will have to be curtailed enough to allow the necessary 8% of GDP to go to energy.

[Graeme]

According to his analysis, this is not the case:

The US economy has tended to grow well when oil consumption expenditures were less than 2% of GDP.

But he also adds two other factors - volatility and 'shed rate' - both of which cause recession if a threshold is exceeded.

History then provides us three rules by which to avoid recession caused by oil prices, notably:
1. Crude oil expenditures should not exceed 4% of GDP.
2. Oil prices should not increase by more than 50% year-on-year.
3. Oil price increases should not be so great that a potential demand adjustment should have to reach 0.8% of GDP on an annual basis, as shedding demand at this rate has generally been associated with recession.

link

[Plantagenet]

Yes, high oil prices can trigger recessions, and the current recession was likely triggered by the 2008 oil price spike.