Thursday, October 30, 2008

Out On A Ledge

After looking over recent oil production and export data, coupled with recent reports of OPEC cuts in the works, I think it's safe to say that we are Post Peak now.

I don't believe that OPEC really needs to cut production to bring prices up. They'll be coming back up after the election anyway. I think they are seeing slides in their production, and they wish to give the impression that the decline is intentional. This will lead the public to believe that OPEC is in control. If OPEC were to announce that they are in decline and helpless to counter it, they'd be toast.

We're entering a period that resembles the post 2001 trough except that there will be no new high when it's over. The fields will too far gone to be ramped up to a new peak. So we may see oil production extend out into a ledge for a time, if we're lucky.

This unfortunately is going wreak havoc with the world financial systems. Governments and banks will frantically try all sorts of measures to rebuild their economies, but most of these measures will do more harm than good. Without a growing energy base to power their industries, the money will be loaned without being returned. Without growing industry, there aren't sufficient profits to repay interest on the loans.

I think it's likely that we'll drop to 2002 production levels, while exports will go much lower. This would be at least a 6% drop. This is the energy equivalent of 600 nuclear power plants. I don't see alternatives picking up the slack in any meaningful way.

I was wrong previously in calling the peak previously. I think I called it in 2005. So I'm taking this chance to get it all wrong again. :) Now I'm saying it's 2008...

Good Luck All!

2 Comments:

At 2:24 PM, Anonymous edgar said...

Hi Wease,

The only reason we were wrong in 2005 was because they started adding in "all liquids". We could be wrong again if they do something total unsustainable like ramping up CTL to 10 mb/d, but I doubt they could even do that, and it would be suicidal from 2030 on.

The problem with the deceit, the "drill baby drill" and other memes is that it fools the public into thinking everything is a-okay but then when the shortages start there will be no time to do anything else. How are we going to build 600 nukes when pedro construction worker can't get to the site, much less the concrete and such. Will we go back to building "boom towns"?

Bottom line, we were right in 2005 on conventional, and likely you are correct about all liquids three years later. If the ksa and russia go down at the same time, which they will, we, as a society, are up the creek with no paddle. At the present time people are in such denial that it doesn't matter if we stand down on the street corner w/ a "The End is Near" sign or not, they won't believe us. They just can't imagine anything other than what we have right now. Tick Tock. Best.

 
At 5:28 PM, Blogger Weaseldog said...

Thanks Edgar, you're right. I had forgotten that aspect of it.

We've been saying 'Conventional Oil' for years. I'm not sure when that phrase dropped out.

Insidious, isn't it?

 

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