Authored by Chris Martenson via PeakProsperity.com,
… is leading us to destruction.
When it comes to the story we’re being told about America’s rosy oil prospects, we’re being swindled.
At its core, the swindle is this: The shale industry’s oil production forecasts are vastly overstated.
Swindle: Noun – A fraudulent scheme or action.
And the swindle is not just affecting the US. It’s badly distorted everything from current geopolitics to future oil forecasts.
The false conclusions the world is drawing as a result of the self-deception and outright lies we’re being told is putting our future prosperity in major jeopardy. Policy makers and ordinary citizens alike have been misled, and everyone — everyone — is unprepared for the inevitable and massive coming oil price shock.
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An Oil Price Spike Would Burst The ‘Everything Bubble’
Our thesis at Peak Prosperity is that the world’s equity and bond markets are enormous financial bubbles in search of a pin. Sadly, history shows there’s nothing quite as sharp and terminal to these sorts of bubbles as a rapid spike in the price of oil.
And we see a huge price spike on the way.
As a reminder, bubbles exist when asset prices rise beyond what incomes can sustain. Greece is a prime recent example. In 2008 when the price of oil spiked to $147/bbl, Greece could no longer afford imported oil. But oil is a necessity so it was bought anyway, their national balances of payments were stressed to the point that they were exposed as insolvent and then their debt bubble promptly and predictably popped. The rest is history. Greece is now a nation of ruins and their economy might as well be displayed alongside the Acropolis.
What happened to Greece will happen to any and every financially marginal oil-importing nation. As a reminder, the US still remains a net oil importer (more on that below).
Well, if you thought that world debt levels were dizzyingly high back at the beginning of the Great Recession in 2008, then you might want a fainting couch nearby before looking at this next chart:
(Source)
Global debt is a full $68 trillion higher in 2017 than it was in 2007(!). In terms of global GDP that represents a whopping increase of ~50% (from 276% to 327%).
At approximately 96 million barrels per day of oil consumption, each $10 rise in the price of oil per barrel means that oil consumers have to redirect an additional $960 million dollars each day(!) away from such things as profits, discretionary spending, and debt payments. Instead, that money is sent to the oil producers.
So a future price shock that tacks on an addition $50/bbl to the current price (bringing the total price of oil back over $100/bbl) would translate into $4,800 million ($4.8 billion) per day. That’s some $1.7 trillion per year of “redirected spending” that used to go to some other purposes but will now go to oil producers and oil producing nations.
Without belaboring the details, at the margin plenty of economically viable companies, countries and individuals would suddenly become ‘unviable’ and go bankrupt. Their debt and equity holders, employees, and communities that service these companies, will be wiped out.
This is why I love quoting Jim Puplava’s observation that the price of oil is the new Fed Funds rate. It has more ability to determine the future of the economy than interest rates.
For example, if you want to bring credit growth into a screeching halt, just jack up the price of oil. That’s exactly what happened in 2008.
And it can — and very predictably will — happen again.
For reasons I’ll explain shortly (in Part 2), I project the next major upwards-surprise oil price spike to arrive somewhere between the second half of 2018 and 2020.
The Middle East Is Now A Lot More Volatile
Now, if there’s a war in the Middle East that accelerates my timetable. Higher prices would arrive within weeks of the outbreak of hostilities, especially if they impact shipping traffic through the all-critical Strait of Hormuz.
As a quick reminder, roughly one third of all exported oil in the world passes through the Strait of Hormuz:
It’s a critical bottleneck. Even one missile flying towards one oil tanker will halt all oil shipments for quite some time.
Maritime insurers do not cover acts of war (see Rule 58) and the ship owners themselves will quickly stop shipments if it worried about taking massive losses on sunk tankers.
All of which means that the very first missile lobbed towards a vessel there will quickly result in no ships at all transiting the Strait.
(Source)
I raise this risk again here, as I did in my report on the recent concerning developments in Saudi Arabia, to remind everyone that an outbreak of war in the Middle East will prick the world’s global set of financial bubbles (stocks, bonds, real estate, fine art, etc) via a very sharp oil price spike.
Oil Economics
To get to the heart of the swindle being perpetrated, we only need understand a very simply equation describing the oil business. Money is spent drilling a hole in the ground, and then money is earned based on how much oil comes up out of that hole.
Money in, money out.
(Of course, there’s a lot of complexity involved in oil drilling and I don’t mean to diminish the incredible talents of the many gifted people who coax our energy out of the ground. But the high-level financial math isn’t that hard to grasp.)
We can understand the oil industry’s financial math using just three variables: C, P and A.
- C – the cost of drilling the well and then producing the oil.
- P – the price of oil when we sell it
- A – the amount of oil that comes out of the well.
The formula for profits is simply the (price of oil) times (the amount) minus (costs). (P * A) – C = profits
For example, let’s say that we spent $10 million drilling a well when oil commands a market price of $100 a barrel the entire time we’re selling it. The ‘break-even’ for that well — i.e., when the money we spent was finally returned in full — would be when C = (P * A).
So break-even would be 100,000 barrels in this example. 100,000 bbls * $100/bbl = $10 million.
If instead our well ultimately produced 200,000 barrels, we’d have a lot of profits. And of course, if we drilled a well that only produced 50,000 barrels, we’d lose money.
Now here’s where the swindle happens:
The cost to drill and operate the well (C)? That’s known with fine precision.
The amount of oil that will come out of that well, or A? That, too, is calculable and known.
But the price of oil (P) a driller receives for the oil it produces? Well, because that’s an unknown it represents the major risk in the business. There’s just no way to predict the future price of oil. So, what to do about this?
Well, one way to fix the price variable is to ask a different question than “how much will we make?” and instead ask “at what price of oil will our well break-even?” This is a firm, calculable number and it brings us to the heart of the swindle.
How Much Oil Do Shale Wells Really Produce?
If you’ve been following the US shale industry over the past few years, you’re likely quite perplexed.
On one hand, the shale oil producers sport negative free cash flows in every year of operation. They are cash burning machines.
But on the other hand, their reported break-even prices have been falling dramatically, and are often reported to be well below the current retail price of oil. Meaning they should be nicely profitable.
Which is it?
How is it possible to both produce above your break-even price point and be losing money hand over fist?
Well, one way is if the reported break-even prices aren’t correct. Let’s recall our simple formula for the break-even: C = (P * A).
When break-even prices are being reported in the media, what the companies are really doing is answering to this question: At what average price of oil will this well, once fully exhausted, have fully paid itself back?
It works like this. Suppose we knew a well costs $7 million to drill and operate over its lifetime, and we wanted to know what the breakeven price was. Well, that all depends on something called the EUR.
The total amount of oil that’s projected to come out of a well over its lifetime (variable A in our equation) is called the Estimated Ultimate Recovery, or EUR.
The following table shows that the reported break-even might be anywhere from $70 to $9 if the EUR varied from a lifetime output of 100,000 barrels to 800,000 barrels:
So, clearly the EUR is a very important number. And not just for reported break-even costs to investors. Those EUR estimates form the basis for our expectations of how much oil is going to be produced from not only a given well, but from an entire shale basin, because the EUR’s are baked into the production models.
In fact, they are the single most important number so getting them right, or close to right, is not just important, but absolutely critical.
Now let’s use that knowledge to read a recent article I came across in a prominent oil and gas journal. The entire article is centered on the Bakken play in North Dakota. In both tone and conclusions, it’s exactly similar to articles we might read about the other large shale plays like the Eagleford and Permian basins.
The average well cost for drilling and completing a well in 2016 is estimated at around US$6.8 million, with the potential for additional reductions by year-end.
Based on the current well cost estimates, the average wellhead breakeven price is expected to average US$40 per bbl for 2016, about a 20% reduction from the 2015 level.
This is a big achievement for shale companies operating in the Bakken; operators have managed to increase the average well performance while reducing well costs.
(Source)
Before we move onto the supporting charts from the article (below), let’s just note what we’ve read. The average break even is now just $40 per barrel, a whopping 20% reduction from 2016 (which also saw a huge reported reduction from 2015).
If you stopped reading there you’d probably think, “Cool! We’re figuring out better and faster ways to drill and unlock tons more oil. I guess all of those projections of a US shale production bonanza for many decades to come are confirmed by this news.”
The first chart offered in this article supports that contention very nicely. In it, we see that the break-even price has plummeted every year since 2013; going down from $70 to just $40. That’s amazing!
But a sharp eye would also notice that the drilling costs have not fallen nearly so much. They’ve only fallen around 17% per well while the break-even cost has collapsed by 42%.
What accounts for the difference? You already know, don’t you…it’s the EUR, the total amount of oil expected to come out of each well.
Here’s the supporting chart from the article:
Holey smokes! The EUR has climbed from 400,000 barrels to 700,000 barrels. That’s an increase of 75%!!
That one feature alone accounts for nearly all of the reported drop in the break-even case. Again, the casual reader would be forgiving for thinking, Cool! That confirms what I’ve been reading about all the amazing technological breakthroughs in horizontal drilling and fracking. We’ve got this!
Which brings us to…
The Great Oil Swindle
Our commitment at Peak Prosperity is to find the data and let that tell us the story.
Fortunately, huge amounts of publicly available data exist on the production profiles of oil wells, right down to the monthly production values of each well. Gigantic data sets exist containing the results for thousands and thousands of wells, carefully sorted by vintage (year started) and precise location.
Even more fortunately, there are a few analysts out there that carefully download that data and then present it to the world so we can form our own conclusions.
But much of that data is ignored or removed to make shale producers look healthier than they actually are. Here’s a chart from the above article which has rather unhelpfully cherry picked the production data it used to make its point, But even with that attempt of duplicty, the chart still reveals the fraud:
The chart shows cumulative production over time. It paints a story saying that for each vintage year more oil seems to be flowing out of the ground. 2013 is the lowest, 2014 is better, and finally 2016 seems to be on track for the best year ever.
Why is this data unhelpfully presented? Because it stops at 18 months for each vintage even though we have many more years of data. These wells are principally depleted in 36 months, so why not show each vintage for 36 or more months, where possible? Is it because that might undermine the impression being conveyed, possibly?
Before we show that is indeed the case, just use your eyeballs and mentally carry those curves out. You can see them flattening even within the first 18 months. The EUR and the cumulative production become the same number at the end of a well’s life (at ~30 years, or 360 months). Can you mentally project any of those (asymptotic, flattening) curves ever reaching to 400,000 barrels on the y-axis? How about to 500,000? Could you make the case for 700,000?
To my eye, those puppies are flattening out. Even if I give them a generously long time, I can see them getting to maybe 300,000 to 350,000 — tops.
Fortunately, we have more data to definitively address that question.
The first comes to us from Art Berman, who shows that when you allow the data from each vintage to run, you’ll notice something quite obvious and very serious: faster initial rates of production cause faster rates of decline later on:
(Source)
While this chart is showing monthly production rather than cumulative production (stay with me on this…I know it takes some mental effort) it’s not hard to appreciate that a faster initial rate of production will add to the amount of oil coming out of a well while a steeper decline rate later will subtract from that value.
In other words, all of the fancy new technology and drilling techniques seems to only have accelerated the initial rate at which oil comes out of the ground, not the total amount!
Next, let’s again look at the cumulative production values, this time by vintage, or year. This data comes from the excellent website ShaleProfile.com run by Enno Peters who has done all that heavy lifting of the data and then gone the extra mile to make it easily graphed. Kudos Enno!
Shale wells deplete non-linearly. There’s some complexity there but it’s not too inaccurate for the layman to think that they deplete exponentially. Close enough to get you there.
Accordingly, when the daily and cumulative output of those wells are plotted on a log chart, the resulting decline “curves” become straight lines. To figure out how much oil is going to eventually come out of those wells over their lives, or the EUR, it is not too terribly inaccurate to simply extend a straight line through the data and see where it points.
When that’s done for the Bakken wells we get this next chart:
(Source)
Every single oil well is plotted for every year between 2010 and 2015, broken into vintages of a quarter of a year each. That is, every well brought into production within a three-month window is lumped together and given a different color line.
First, the blue dotted line that I’ve extended on the chart suggests that the most stellar vintage is on track to produce an EUR of roughly 300,000 barrels, give or take. The worst vintage might be expected to produce just 120,000 barrels.
To get to even 400,000 barrels (far less than the claimed 700,000 in the above article!) a very pronounced shift in the very best vintage would have to magically take place. No such ‘line shift’ has ever been seen in any of this data by myself and I’ve looked through a lot of it.
Remember, this is what is currently being widely reported for the Bakken right now:
There’s an enormous discrepancy between the above chart and the data we’ve got in hand and I’ve no good explanation for the difference except that they must come from different sources. My preferred data comes from the well head, but other’s take theirs from company presentations.
Why does any of this matter at all?
Because the inputs to a great many energy reports and if the actual data is correct, then every assumption about the future prospects of the US as an oil producer are wildly, dangerously wrong.
For example, if the EURs are half what is being assumed, which seems likely, then every future oriented analysis depending on them will be overstating things by 100%. A 2x error seems pretty significant to me.
For those who like their data, you could also read Art Berman who has done a similar (and far more sophisticated) analysis of the Permian basin and come to precisely the same conclusions (also deriving EURs roughly half of what’s being claimed).
Or this analysis of the Eagleford basin which derived an EUR of 250,000:
This study derives typical production curves of tight oil wells based on monthly production data from multiple horizontal Eagle Ford shale oil wells. Well properties initial production (IP) rate and production decline rate were documented, and estimated ultimate recovery (EUR) was calculated using two empirical production decline curve models, the hyperbolic and the stretched exponential function.
IP = 500 bbl/day, D = 0.3 and b = 1 resulting in an EUR of 250 kbbl with a 30-year well lifetime, however, with the recognition that this extrapolation is uncertain.
(Source)
Each of these analyses are pointing to EUR’s that are in the range of 250,000 to 350,000 barrels and across every shale basin.
The Danger Of This Deceit
The summary is we have lots and lots of actual data and supporting studies all pointing to the idea that the amount of oil that will come out of these shale wells is half or less what’s being popularly reported.
In Part 2: The Massive Coming Oil Shock, we connect the remaining dots that show an oil price spike caused by an oil supply shortage is inevitable at this point, likely within the next 2 years. Thought $5 a gallon gas was bad back in 2008? You’re really going to hate gas $10 a gallon (yes, it could get that ugly).
An oil price of this magnitude will smash many a budget. Families on the edge will not be able to afford the gas to get to their jobs, nor the commensurate rise in price of all the other goods and services they depend on to live (as oil is an input cost in nearly everything). Millions of households will be financially wrecked many communities will become largely unlivable as they lose their anchor employers.
Add the popping of the financial markets on top of things, and we’ve got a true crisis greater than anything we’ve lived through so far.
Click here to read Part 2 of this report (free executive summary, enrollment required for full access)
Then there is the Arctic, Siberia, and deep water resources waiting for prices to go up which prices when these bountiful sources get tapped will go down again.
Then there is new technology that comes out that was not economically feasible until prices went up. Fear not, the capitalists will come to the rescue!
It’s called the law of diminishing returns, and it applies to all human activities that depend on natural resources…The highly productive and inexpensive wells drilled in the Permian and elsewhere fueled America’s economic rise. Conventional production in the lower 48 peaked in 1971. The vastly more expensive exploitation of tight formation (shale) oil has extended production in the last 10 years, but at the cost of investors losing money steadily on wells that didn’t meet break even. Saudi Arabia is also taking steps to reduce its reliance on oil revenue, obviously because reserves are declining…When that’s gone, and with additional consumption coming online with our idiotic encouragement of the third world, the cost of getting oil out of the ground, and the resulting cost, will skyrocket.
The term “fossil fuel” was coined in the 1950s when not much was known about the nature of naturally-occurring hydrocarbon products. Environmentalists have used this misconception about naturally occuring oil to their advantage; hence, the now-discredited concept of “peak oil”.
Oil is abiotic in nature, being produced deep within the earth by yet-unknown processes. Russian oil interests have been drilling deep wells, as much as 30,000 feet deep and coming up with oil deposits–far deeper than that of decayed plant and animal materials.
It turns that many of our depleted oil wells are “filling back up”; oil is migrating from deep within the earth, upward to many of our present drilling sites.
There are certain interests that do not want to see oil as a plentiful natural resource–FOLLOW THE MONEY…
Fuck yeah!! ABIOTIC OIL!!! Been saying that for years. Got laughed out of this forum. Fuckers like Admin reamed me a new asshole. Now that the great anarchyst has spoken truth, what will you fucken Assclowns say now? You can start by kissing my ass and begging for forgiveness.
That has to hurt…..somebody.
Very little, if any, and mostly gas. You are an idiot…
Not to any significant extent, no.
The reality is that there is more than enough oil in the world even with all the restrictions on drilling for it, that is why the price is and will most likely remain for some time at a low level.
If a war disrupted ME, South American or Russian oil on the world market that would be a boon for our oil industry and we would make a decent profit by opening up production and exporting it. That would bring a great deal of foreign money into our economy which would be a major benefit to us boosting the economy on every level.
America consumes about 8 million barrels/d more than it produces, and you are talking about exports?
The EIA has way different figures, Pyrrhus:
https://www.eia.gov/energyexplained/index.cfm?page=oil_imports
There are now companies running around examining the many depleted wells and restructuring them to get more oil out of them with great success.
There are companies in the business of finding new oil fields by seismic means after which they sell the info to drillers, who then are much more successful, which, of course, lowers costs of discovery.
The technology of fracking gets better every year so that older wells can be returned to production.
Congress passed legislation that allows the US to export oil and petroleum products, because supplies were building up and storage was not keeping up with the flow.
Then there is abiotic oil . . . as well as a whole lotta oil in Siberia, the Arctic, and probably a lot of other places that will be explored as demand rises.
The U.S. has coal up the yin yang. It awaits technology that will burn it clean. Not to worry.
You’ve gotta be fucking kidding me. You see the domain? Dot-gov?
I guess you believe the BLS numbers on unemployment too?
BWAHAHAAHAHAHAH!!!
Yeah, “not to worry”. Jesus Christ…
Have a look Dawg. It’s so odd that you escaped drowning when as a puppy you were an ugly little bastard. But now look at you! Handsome and well-loved by your many friends and lovers.
https://www.bp.com/en/global/corporate/energy-economics/energy-outlook/oil-supplies-and-abundance.html
“In a world where there’s an abundance of potential oil reserves and supply, what we may see is low-cost producers producing ever-increasing amounts of that oil and higher-cost producers getting gradually crowded out.”
Spencer Dale, group chief economist
Hey dumbfuck: first of all, go eat a bag of dicks. Second, you bolster your argument by quoting somebody from British Petroleum. You know, the guys that sell oil for a living.
Possibly even lamer than your first source.
I have to admit I am very impressed with how you have named yourself and with your choice of high level insults. With your intelligence I am hopeful that you can find some statistics to offer us lesser beings. One thing I don’t quite understand, though, is why you ridicule what has been presented, but offer nothing whatsoever to help anyone progress in their understanding of the world. Maybe “Dawgs” just like to shit on anyone not in their kennel thinking that is all dawgs need to do, or can do?
“I have to admit I am very impressed with how you have named yourself and with your choice of high level insults.” Nice. Let’s have a look at the previous:
“Have a look Dawg. It’s so odd that you escaped drowning when as a puppy you were an ugly little bastard. But now look at you! Handsome and well-loved by your many friends and lovers.” ~Bigfoot
Just flinging it back at you. Apparently you don’t like it.
I disagree – strongly – with your assertion that we needn’t worry about oil. EROI has been dropping steadily for over a hundred years. Why do think we are squeezing oil out of shale and fracking? It’s because the low-hanging fruit is long gone.
You trot out statistics from the government, and big oil. I find this humorous to say the least, and pointed it out.
You say I offer no progress in understanding the world. I gave you numbers. What would you have me do?
Hey, Dawg, where do you think Chris Martenson gets his statistics upon which he claims “peak oil?” Not that it matters when he’s been wrong since forever and now the world is awash in oil. Have you seen the price? It’s relatively low and big oil producing nations are cutting production right in the face of peak oil! Do you find that odd at all?
Unfortunately, it looks like another case of short term profits, and be damned with the long term consequences. Everyone, EVERYONE in business today is after one thing, and that is – make your money quickly, running whatever scam you can, hopefully cash out before people figure out what is going on, and then if you are found to be a scammer by some miracle of a prosecutor finding their courage, cash in those political favors you paid for as insurance in advance and pay the fine. It works locally, nationally and internationally. It is THE BUSINESS PLAN of choice for today’s Harvard graduates. Look around. It is EASY to spot, if you are looking for it.
This formula has worked like a charm since the 2008 bail outs. Banks, Tesla, Exxon Mobile, BP, Amazon, Google, Lockheed. You name any large company of today, and it is the same formula. Some bigger, like in the case of Tesla, where the ENTIRE company is one big scam, or smaller, more long term examples such as Chesapeake Energy (referring to the above fracking problems). The graphs and investor presentations on their website literally look exactly like the graphs in the above article. ONE BIG PONZI SCHEME.
I also like his thesis that interest rates now are energy prices. Whenever man fails to exercise its own rational controls, nature steps in to become the control. That is what this is. Oil IS an interest rate in the real world, not controlled or “printed” by any central bank or government.
This IS all going to come to a BIG and powerful crescendo, and then a crash on an epic scale. the only question is the timing. Prepare accordingly, as it will happen every bit as suddenly as waking up on Sept 11, 2001 to a different world….No free lunch, just free thinking, and then free fall.
What a crock of s***. There is plenty of oil. And no chance of the price spiking because the banks are no longer controlling the price. Take the price of oil off your worry list.
I admit I have not much technical expertise on this subject. I have doubts about ‘peak oil’ and its proximity . Also doubts about the abiotic genesis theory as a real source. Afghanistan has oil (and minerals) untapped. Cuba has oil fields mostly untapped. God knows where else and to what lengths we will go for it.
Big Oil does run the world in my world view along with big pharma and it’s medical monopolistic-like hold on every aspect of health care. (((I am still factoring in other actors)))
Mainly I post here a bit about fracking as there is news about it in my neck of the Gulf of Mexico where I fish often. Fracking on land doubtless works and I support technology to decrease our oil dependence. The harms it causes are widely documented and dismissed mostly. The scam the author of the article points out does not surprise me; even if I cannot fully follow his metrics. I see it as business as usual by the usual suspects.
“Lawsuit Launched Against Trump EPA for Approving Fracking Waste Dumping Into Gulf of Mexico Dec. 08, 2017
The Center for Biological Diversity filed on Thursday a formal notice of intent to sue the Trump administration for allowing oil companies to dump waste from fracking and drilling into the Gulf of Mexico without evaluating the dangers to sea turtles, whales or other imperiled marine life.
In September the U.S. Environmental Protection Agency (EPA) finalized a Clean Water Act permit for new and existing offshore oil and gas platforms operating in federal waters off the coasts of Texas, Louisiana and Mississippi. The permit allows oil companies to dump unlimited amounts of waste fluid, including chemicals involved in fracking, into the Gulf of Mexico.
“The Trump administration is letting the oil industry turn our oceans into toxic-waste dumps. The EPA’s supposed to protect water quality, not help pollute the Gulf,” said Kristen Monsell, a senior attorney at the Center for Biological Diversity. “It’s time for the courts to remind this agency that its mission is to safeguard the environment and public health.”
Thursday’s notice letter highlighted the fact that the agency’s approval of the permit without studying risks to imperiled species in the Gulf of Mexico is a violation of the federal Endangered Species Act.
Fracking chemicals and other contaminants in produced water raise grave ecological concerns because the Gulf of Mexico provides important habitat for whales, sea turtles and fish—as well as being federally designated critical habitat for imperiled loggerhead sea turtles. Dolphins and other species in the Gulf are still suffering the lingering destructive effects of the 2010 Deepwater Horizon oil spill.
Federal waters off Texas, Louisiana and Mississippi host the largest concentration of offshore oil and gas drilling activities in the country. Previous records requests revealed that oil companies dumped more than 75 billion gallons of wastewater into these waters in 2014 alone. Records also show that fracking has been on the rise in the Gulf of Mexico, and the EPA has failed to conduct any meaningful review of the environmental impacts of dumping fracking waste into the water.”…
https://www.ecowatch.com/fracking-waste-gulf-of-mexico-2515883905.html
Are you trying to pull peak oil out of your ass to explain the collapsed economy sport? You are kidding right? Oil is so cheap the Arabian Hillbillies in The House of Saud are torturing their relatives to pay their credit cards.
Lets all get on the same sane page. Race is NOT a social construct. Society is a RACIAL CONSTRUCT. Lets do the Math.
Diversity+Economy = Bankruptcy.
The Iron Law of Economics: Once you go black, you go broke.
Math is the Most Racist Thing on Earth.
Damn what a. Bunch of racist smart assets. I appreciate all of you for your connection to reality.
Dr. Doom I laughed for 5 minutes. Your comment is so obviously true.
Maybe one of the energy experts here like Starfucker or Post-Hole-Digger in Geology can set me straight here.
Although estimates vary significantly, at least one source (Chris Martenson at Peak Prosperity) has made the claim that 100 years ago, we got about 30-100 barrels of oil for every 1 barrel’s worth of energy expended in harvesting said oil.
Apparently, that figure now stands at around 3:1, and falling. The astute here will recognize this metric as Energy Return On Investment (EROI).
So if Peak Oil is bullshit, oil is plentiful, wells are filling back up, and so on, how do you explain the drop in EROI? After all, even if the price of oil were to rise to $1 MUSD per barrel, the point would be moot if the EROI is 1:1 or less.
I bet most know a big reset is coming. The behind the scenes push is to see can wrestle control from the US without been destroyed by the US while the USA still has the ability to do so. We will eventually become a non player on the big decisions for the world while we descend into chaos and then attempt to put something back to gather under new world leadership. My guess anyway.
Anyone who says Peak Oil is bullshit and then goes on to use terms like “run out” or “amount”doesn’t understand the process at all. It is ALL about the quality of energy and the difficulty in extracting it. EROEI. Equally foolish is to look at current low prices and excess reserves and say look Peak Oil is all bullshit. Peak Oil is an epoch, not a single event.
Human beings can never (literally never) use all the oil on/in the planet. This is NOT an ARGUMENT.
This particular article is about FRAUD and the dangers that fraud may present to the economy, and not directly about Peak Oil, in any case.
I don’t know if oil in the Earth’s crust is abiotic or not and neither do any of you. I do not know for certain if any of the predictions made here will come true, neither do any of you, nor do the folks at Peak Prosperity. But is certainly is possible and therefore worth my consideration.
As is made clear, they analyze data and make their best guesses about an unknown and uncertain future. This is what critical though looks like…not “Peak Oil is bullshit” because I read it, because I say so or because I don’t want to think about it.
Don’t worry, bigfoot has provided data from the government and the oil industry that everything’s super-cool.
Never mind the dropping EROI.
According to NASA scientists, there are other worlds (celestial bodies) that are composed primarily of hydrocarbons–without the plant and animal fossils necessary to produce oil. The bunny-huggers are aghast to find out that oil is a “renewable resource”…it blows their fraudulent misconceptions and hatred of humanity about energy out of the water…
I’ve no idea how oil is produced, or whether it is renewable. If it is renewable, it’s a moot point since we are apparently consuming it at a far greater rate than it can replenish.