4 ms·

Very cool. What are your thoughts on peak oil?

dredmorbius 5y ago
It has occurred. Traditional (nonenhanced) extraction of liquid petroleum peaked in the early 2010s, largely as forecast. The peak was delayed a few years possibly due to both economic slowdowns and efficiency measures (the late 1990s Asian financial crisis, the post-9/11 crash, the 2007-12 global financial crisis), though China and India's meteoric growth compensated in the other direction. I'd have to dig into US DOE (EIA) and IEA data and charts, but enhanced and nontraditional recovery (deepwater drilling, which presents its own risks, fracking, heavy crudes as from Venezuela, and tar sands) have held up to demand, but at extreme cost and with huge impacts on prices and volatility. The industry itself is highly sensitive to both demand increases (surging prices and leading to political instability) and decreases (bankrupting extractors and their fianciers, and leading to financial instability). It's a tightrope walk. Swing producers (low-cost with excess capacity) such as KSA remain hugely influential globally, even for markets to which they do not ship directly. A tankerfull of oil can move across the globe for 1% of the realised energy capacity of that cargo. Oil markets remain global due to the commodity's extreme liquidity, in both physical and financial senses.
- nickthemagicman 5y ago
  Interesting. That sounds a little ominous. Are there projections that predict time frames with any precision until we finish the remaining supplies? Are we talking a century or a few decades?
  - dredmorbius 5y ago
    That's a hard question in large part because the specific timeframe depends on responses, reactions, and potential disruptive events. There's been a lot of ink and pixels spilled. Much of it comes from those wanting to deny the problem, those looking to sell you something, and those who poorly understand the problem. I hope I'm in the last camp and not the first two.... Economically, the most significant issue is that the marginal cost of oil under supply constraints varies greatly, and that's what has been seen in price history since 1973. You'll find a price history of oil dating to 1861 in BP's Annual Review of Energy, I'm looking at the 2021 report's graph on page 28. Those swings have increased in amplitude since, resulting from and leading to political, financial, and economic disruptions --- causality seemst to go in both directions. Remaining fossil fuel reserves will be increasingly expensive and difficult to extract. There will be "some" oil in the ground, in the same sense that after you've poured a beverage or eaten a tub of yoghurt, there is "some" food still left in the container, but 1) it's a finite amount and 2) you've got to work harder to get it. At some point it's simply not worth the effort. Total geological deposits, recoverable deposits, and the rate of effective extraction, all differ, though the latter two depend on the first. Those factors are insignificant, if we're lucky, next to the likelihood that further consumption of fossil fuels will be curtailed due to their output effects --- carbon emissions --- rather than supply limitations. Coal, oil, and gas that remain will have to be locked in the ground because we cannot afford the consequences of further use. Unfortunately, trends toward net zero carbon have greatly lagged what's necessary to avoid catastrophic consequences. Which in the absence of either resource exhaustion or effective regulation could possibly end large-scale global technological civilization reliance on fossil fuels.
poetaster 5y ago
Thank you for your labours, above and below the surface.

It has occurred. Traditional (nonenhanced) extraction of liquid petroleum peaked in the early 2010s, largely as forecast. The peak was delayed a few years possibly due to both economic slowdowns and efficiency measures (the late 1990s Asian financial crisis, the post-9/11 crash, the 2007-12 global financial crisis), though China and India's meteoric growth compensated in the other direction. I'd have to dig into US DOE (EIA) and IEA data and charts, but enhanced and nontraditional recovery (deepwater drilling, which presents its own risks, fracking, heavy crudes as from Venezuela, and tar sands) have held up to demand, but at extreme cost and with huge impacts on prices and volatility. The industry itself is highly sensitive to both demand increases (surging prices and leading to political instability) and decreases (bankrupting extractors and their fianciers, and leading to financial instability). It's a tightrope walk. Swing producers (low-cost with excess capacity) such as KSA remain hugely influential globally, even for markets to which they do not ship directly. A tankerfull of oil can move across the globe for 1% of the realised energy capacity of that cargo. Oil markets remain global due to the commodity's extreme liquidity, in both physical and financial senses.

nickthemagicman 5y ago
Interesting. That sounds a little ominous. Are there projections that predict time frames with any precision until we finish the remaining supplies? Are we talking a century or a few decades?
- dredmorbius 5y ago
  That's a hard question in large part because the specific timeframe depends on responses, reactions, and potential disruptive events. There's been a lot of ink and pixels spilled. Much of it comes from those wanting to deny the problem, those looking to sell you something, and those who poorly understand the problem. I hope I'm in the last camp and not the first two.... Economically, the most significant issue is that the marginal cost of oil under supply constraints varies greatly, and that's what has been seen in price history since 1973. You'll find a price history of oil dating to 1861 in BP's Annual Review of Energy, I'm looking at the 2021 report's graph on page 28. Those swings have increased in amplitude since, resulting from and leading to political, financial, and economic disruptions --- causality seemst to go in both directions. Remaining fossil fuel reserves will be increasingly expensive and difficult to extract. There will be "some" oil in the ground, in the same sense that after you've poured a beverage or eaten a tub of yoghurt, there is "some" food still left in the container, but 1) it's a finite amount and 2) you've got to work harder to get it. At some point it's simply not worth the effort. Total geological deposits, recoverable deposits, and the rate of effective extraction, all differ, though the latter two depend on the first. Those factors are insignificant, if we're lucky, next to the likelihood that further consumption of fossil fuels will be curtailed due to their output effects --- carbon emissions --- rather than supply limitations. Coal, oil, and gas that remain will have to be locked in the ground because we cannot afford the consequences of further use. Unfortunately, trends toward net zero carbon have greatly lagged what's necessary to avoid catastrophic consequences. Which in the absence of either resource exhaustion or effective regulation could possibly end large-scale global technological civilization reliance on fossil fuels.

poetaster 5y ago

Thank you for your labours, above and below the surface.