rockdoc123 wrote:Futilitist wrote:That is not true. The total immediately available energy is what is responsible for world economic growth. Oil supplies 38% of the total energy. The dollars to buy oil are generated by an economy that uses the energy from oil to maintain economic growth to generate the dollars to buy oil. Thermodynamics ultimately determines the price of oil and the price of oil determines what oil gets produced.
Oh please. This is just the same “thermodynamics runs it all” view you keep harping about but cannot seem to give a concrete example for.
That is just an empty declaration.
1. The total immediately available energy is what is responsible for world economic growth. Do you agree or disagree?
2. The dollars to buy oil are generated by an economy that uses the energy from oil to maintain economic growth to generate the dollars to buy oil. Do you agree or disagree?
3. Thermodynamics ultimately determines the price of oil and the price of oil determines what oil gets produced.
If you agree with #1 and #2, then you must agree with #3.
rockdoc123 wrote:This is esoteric and does not have anything whatsoever to do with what drives decisions in the oil and gas industry.
We are not talking about what drives the decisions of the oil and gas companies. We are talking about the thermodynamic limit to the oil production process.
rockdoc123 wrote:It is those decisions that drive Peak Oil, not economists sitting at their desks figuring it all out after the fact.
You have it completely backwards. The thermodynamic effects of reaching peak oil drives the decisions of the oil producers.
rockdoc123 wrote:EROEI does not govern decisions that control supply and demand, if it did every oil company in the world would be calculating it continuously.
Businesses make their decisions based on money, not the physics of energy.
rockdoc123 wrote:Futilitist wrote:Give me a good example where increased production is driven by falling oil prices.
How about where oil companies who are highly leveraged have to produce more oil at lower prices in order to cover their debt carrying costs, cashflow being king? This has been the case over the past number of months for many companies in the US who had substantial debt and needed a means of keeping the wolves at bay.
The wolves cannot be kept at bay forever. If oil prices do not rise sufficiently, production will ultimately fall.
rockdoc123 wrote:Futilitist wrote:Those two factors do not vary randomly. They are driven by thermodynamics. There must be sufficient available energy to maintain enough economic growth to pay for the continuing production of oil. And the energetic cost of oil production can only rise due to the rising entropy in the oil production system.
That is complete and utter BS.
No it isn't. You are just making another empty declaration.
1. There must be sufficient available energy to maintain enough economic growth to pay for the continuing production of oil. Do you seriously disagree with this?
2. And the energetic cost of oil production can only rise due to the rising entropy in the oil production system. You cannot possibly disagree with this.
rockdoc123 wrote:Thermodynamics is not a part of the equation.
I know thermodynamics is not a part of the equation that oil companies use. But it really is the underlyning driver. It is just that people are not generally aware of it.
rockdoc123 wrote:What I said was that if wells and prospects are not being drilled it is because there is not enough profit…either oil price is too low or the costs are too high.
And I agree. Who are you arguing with?
rockdoc123 wrote:Futilitist wrote:But thermodynamics ultimately runs the show. How could it be otherwise?
Oh please a non-sequitur at best. Statements like this need to be backed up with proof.
Okay, here is some proof:
http://phys.org/news/2009-11-law-thermo ... ution.htmlTerms such as the "invisible hand," laissez-faire policy, and free-market principles suggest that economic growth and decline in capitalist societies seem to be somehow self-regulated. Now, scientists Arto Annila of the University of Helsinki and Stanley Salthe of Binghampton University in New York show that economic activity can be regarded as an evolutionary process governed by the second law of thermodynamics. Their perspective may provide insight into some fundamental economic questions, such as the causes of economic growth and diversification, as well as why it’s so difficult to predict economic growth and decline.
As Annila and Salthe explain in their study published in Entropy, the second law of thermodynamics was originally formulated to describe the flow of heat from hot to cold areas. However, when formulated as an equation of motion, the second law can be used to describe many other processes in energetic terms, such as natural selection for the fittest species, organization of cellular metabolism, or an ecosystem’s food web. In these systems, free energy is consumed; that is, energy is dispersed in a way to promote the maximal increase of entropy, which is the essence of the second law.
While economic activities are traditionally viewed as being motivated by profit, Annila and Salthe argue that the ultimate motivation of economic activities is not to maximize profit or productivity, but rather to disperse energy. From this perspective, a growing economy consists of entities (e.g. products, labor, etc.) that are assigned an energy density resulting from their individual production processes. These density differences are the forces that direct energy flows (e.g. manufacturing processes) to equalize energy density differences within the system and with respect to its surroundings.
The scientists argue that this tendency to disperse the maximum amount of energy (that is, to consume free energy in the least time) is what gives rise to economic laws and regularities.
rockdoc123 wrote:Simply saying well the Laws of Thermodynamics govern the creation of life and hence everything that happens in the universe must conserve matter and energy and be required to move spontaneously to a state of random unavailable energy doesn’t explain decisions that are made by people.
Ultimately, it does. See the article above. While people may make decisions based on money (and lots of other things), thermodynamics is still in charge. Money is just what humans use to direct invisible energy flows. The decisions made by humans cannot supersede the laws of thermodynamics, so it makes no sense to worry about all of those human decisions when discussing thermodynamic limits. It is irrelevant.
rockdoc123 wrote:Again when has anyone in the oil industry (who control what is produced) ever made a decision based on entropy or any other measure of thermodynamics (hey Fred I think we should drill that well in LaForche parish it will help lower our companies Gibbs Free Energy
The fact that you are using the term Gibbs Free Energy suggests that you do understand what I am talking about. So your entire argument is just a disingenuous word game. But perhaps it is an improvement of sorts, since you actually seem to understand some physics. Maybe we could have a useful discussion after all. Hey, here is a question that everyone else is afraid to answer:
Is there a thermodynamic limit to the price of oil?rockdoc123 wrote:That is not how decisions are made.
I know that.
rockdoc123 wrote:And it is the decisions that are made (drill not drill, complete not complete etc) that govern production and price and hence peak oil.
Oil company decisions cannot defy the laws of thermodynamics. Oil companies do not control peak oil.
rockdoc123 wrote:Futilitist wrote:The price of oil is not determined by the refiners. That is silly. The refiners have to sell their finished products to consumers in the general economy. Consumers cannot afford whatever price the refiners might want to ask. They are limited by the economy which runs on the energy from oil.
OK, now I am silly when in fact the current price of oil is actually determined by who is buying it. Are you saying otherwise?
No, clearly I am not. I am saying that the refiners are not the end users of oil. They have to sell their refined product to consumers. Producers sell to refiners, refiners sell to distributors, distributors sell to consumers. Consumers are the ones buying the final product. Their willingness and ability to pay is what sets the price of oil.
rockdoc123 wrote:Are you telling us that if you want to sell a barrel of oil that the price you sell it for is not determined by what a refiner will buy it for and how that matches what another producer is willing to sell it for?
No. I am saying that the refiners cannot charge whatever price they want for oil. The end consumers have to be able to afford the refined product. The level of economic activity determines what consumers can afford. And the level of economic activity is determined by the amount of energy immediately available.
rockdoc123 wrote:Are you suggesting that there is some Thermodynamics god sitting in an office in Geneva that each week calculates up energy balance and tells refiners what they should pay?
No.
rockdoc123 wrote:Or perhaps the refiners each week poll consumers and ask them what they should charge?
No. Refiners try to get the best price they can. Their customers willingness and ability to pay sets the final price.
rockdoc123 wrote:Perhaps oil dropping to $25/bbl had nothing whatsoever to do with the Saudis discounting crude to Asia customers at a previously unheard of level and continued strong production out of the US and Russia?
I did not say that. Are you saying that the Saudis, the US, and the Russians have total control of the price of oil? It has nothing to do with what consumers can afford?
rockdoc123 wrote:No it must have been the Thermodynamic gods that determined those prices. The new invisible hand
It is the same invisible hand it has always been. People are just starting to realize that the invisible hand is thermodynamics.
rockdoc123 wrote:Futilitist wrote:Again, let me save you some time, your entire argument is irrelevant.
I’m sorry, let’s clear this up for everyone then. You are saying that entropy is the driving mechanism behind both oil prices and what we have called peak oil. And it is a given that what drives what production is happening is the behaviors of oil and gas companies. Yet you are telling us that it is irrelevant that oil and gas companies do not take into account entropy or any other measure of thermodynamics but somehow it is still the driving mechanism in their decisions.
Yes.
rockdoc123 wrote:It is a pretty simple question….just show us an example where the oil industry has ever made a decision based on anything other than a monetary value proposition.
Why should I do that? I just answered your silly question with the simplest possible answer.
rockdoc123 wrote:This is hardly irrelevant. If entropy is the governing principle of oil and gas production then why has no oil and gas company actually taken it into account?
Because counting money has always worked in the past.
rockdoc123 wrote:I have known some very brilliant people in the industry why would they not be using this in equations to govern their business decisions?
1. Business decisions have always been based on money.
2. Perhaps the people you know are not brilliant enough to figure it out.
rockdoc123 wrote:If you can’t answer that question it seems everything you are talking about is actually irrelevant.
I did answer your silly question, so what I am saying is not irrelevant.
rockdoc123 wrote:A statement that the laws of thermodynamics governs the universe is at best a cop-out.
It might be a cop out if that was all I did. But I have spent the last 26 or so pages explaining the Etp model and thermodynamic limits in great detail. You are playing word games.
---Futilitist