Peak Oil 101

[K-Dog]

What are the variables and how do they relate to each other.  Can you write the relationship as an equation?

[TDoS]

What are the variables and how do they relate to each other.  Can you write the relationship as an equation?

A) Indeed. The Word document of documentation has 127 pages. 42374 words. Pages 94 to 127 are a detail of the more important variables. The file management of outputs chapter is about 6 pages long. All variables are not contained in that document, but more the concepts of their use. 

B) To which relationship do you refer? Because when it comes to the producing nations of the world, grouped into regions with assumptions of correlation, across the required product streams, demand/price relationships in the sectors, forward looking assumptions in changing variables with different rates of change, using various statistic techniques to create the best fit probability density functions to most of these moving parts, and so on and so forth. So...which relationship do you have in mind? But generally, no, equations are not utilized for relationships....probability density functions are.

As there are often no analytic solutions to the multiplication/division/addition/subtraction of disparate probability functions, a simulator is the only way to put them together to form a master output distribution of price from all of these underlying uncertainties, relationships and correlations.

As just one simple example, if you take two distributions, 1) a shifted, truncated lognormal of oilfield occurrence probability of field sizes classes and 2) a trianglular distribution of potential number of fields remaining generated from another process, you can't analytically solve for 3) the mean expected field size distribution of the resulting multiplicative combination of the two. 

Probability work is just so cool, but once the engineers bump into the non analytic nature of some of these types of statistics issues, they just want to spit. You can't blame them, they are designed for precision. Amusingly, even though they themselves are tied up in the certainty, they can't avoid the uncertainty and are absolutely affected by it.

Have you ever heard of the asymmetrical stop-loss function?

True story. Being introduced around the office one day back when I started, the boss introduced me to the engineering group. The head cock of the walk was detailing how his refinery calculations had turned out to be within 0.2253546% of optimal, and the others were going around the room introducing what they did and doing the standard chest puffery of engineering precision and accomplishment, and then, me being the new guy, they offered the expected..."so...what do YOU do...?" and then 6 pairs of eyes are all just daring you to be a bigger stud then them.

I glanced around, couldn't resist the urge I display so often online and said..."well....I'm a DAMN good guesser". There were 3 snickers, fury from the eyes of Mr Cock of the walk, and the guy beside me burst out laughing. He then said...you guessed it...."well....isn't that why when we draw up the perfect bridge design  to hold the designed weight....WE DOUBLE EVERYTHING when we're done!"

The asymmetrical stop loss function.

True story.

[RE]

I am not a suit.

Do you wear a suit when you go to work?  If you do, you're a SUIT.  Since you advised me to wear a suit when I go lawyer shopping and you undoubtedly wear one yourself at any of the meetings where you do a power point with your stochastic models, I give it a high probability you meet all the criteria for being a suit.

Inquiring minds want to know.  If you don't answer or equivocate, you get cooler time.

But of course.

So..here we go.....

So my answer for the most likely price of oil (in this case a mean) in 2025 based on all the individual months and their accompanying uncertainty is $65.83, give or take.

Fortunately I have good scanning skills and was able to skip reading the verbal diarea for the number, which is in close agreement with the expert hired by BoA.

So now the question is, WTF are the experts being polled by Reuters and pumped by OilPrice.com?  Clearly they are people trying to jawbone the price higher, since it's $10 higher than the model says is likely.

RE

[TDoS]

I am not a suit.

Do you wear a suit when you go to work?  If you do, you're a SUIT. 

I love your definition. I accept it. The last time I wore a suit was about 2-1/2 years ago. One of those big presentation deals that I'm not allowed to talk about. For the same reason I recommended you wear one when you pitch your big idea. Will wearing a suit for that presentation make you a "suit"? Because if it doesn't make you a "suit" by your definition, it doesn't make me one either.

Since you advised me to wear a suit when I go lawyer shopping and you undoubtedly wear one yourself at any of the meetings where you do a power point with your stochastic models, I give it a high probability you meet all the criteria for being a suit.

Except for the one I just mentioned. Prior to wearing my last suit for a business meeting, I think the last time before that would have been...ummm....slightly pre-Covid. Call it January 2020. So, if someone wears a suit twice in 4 years, does that make them a suit?

Fortunately I have good scanning skills and was able to skip reading the verbal diarea for the number, which is in close agreement with the expert hired by BoA.

Who gives a shit. I don't do work to validate anyone else's work unless someone pays me to. Or asks nicely.  Oh yeah, and what was their estimate of uncertainty around the number they provided? 

So now the question is, WTF are the experts being polled by Reuters and pumped by OilPrice.com? Clearly they are people trying to jawbone the price higher, since it's $10 higher than the model says is likely.
RE

The results as provided from my system allow for a low probability above $70.  A whiff of chance close to $80/bbl for the year.

[RE]

Will wearing a suit for that presentation make you a "suit"? Because if it doesn't make you a "suit" by your definition, it doesn't make me one either.

Yup, it would make me a suit as soon as I drop on the uniform.  Just like you are a Cop as soon as you wear a cop uniform, even if you're just a security guard.  It means you take on the expected behavior and role of that type of uniform.  Which as I said was one of the reasons I quit the banking biz.  In that biz, you have to wear the suit every day, and it better not be a cheap one if you want to climb the corporate ladder.

Will I wear a suit when I go shopping for lawyers?  No, but I will go so far as to do "Business
Casual" with a collar shirt and tie and I'll wear real pants instead of my usual pajama bottoms, plus I'll wear the prosthetic leg under them and I'll put in my dentures too.  I clean up fairly well, and the "look" I will have would probably best be called Disabled Academic. lol.  I'll look like somebody's Calculus professor, which should work fairly well to convince the suit that I'm reasonably intelligent.

The results as provided from my system allow for a low probability above $70.  A whiff of chance close to $80/bbl for the year.

Yes, I know and I agree.  The question is, who are the "experts" polled by Reuters that are quoted in the OilPrice.com article?  Who would make a prediction nearly $10 north of what seems likely?

RE

[TDoS]

Will wearing a suit for that presentation make you a "suit"? Because if it doesn't make you a "suit" by your definition, it doesn't make me one either.

Yup, it would make me a suit as soon as I drop on the uniform.

Well if that is how you allow a simple clothing choice to make the man as it were, then we are both asshole pricks and all the rest of it on your bad people connotation list. Welcome to the club!

I'll look like somebody's Calculus professor, which should work fairly well to convince the suit that I'm reasonably intelligent.

Confusing ones appearance with character, intelligience, honesty etc etc sounds like it falls within the scope of a solid stereotyping plan for sure. Were you taught this perspective by someone, or did you learn it on your own?

Because from one suit to the other, I went in exactly the opposite direction myself.

The results as provided from my system allow for a low probability above $70.  A whiff of chance close to $80/bbl for the year.

Yes, I know and I agree.  The question is, who are the "experts" polled by Reuters that are quoted in the OilPrice.com article?  Who would make a prediction nearly $10 north of what seems likely?

Don't know. Don't care. Not my dog in their fight. Might know some of the BOA names...I've gone round with some of them before, folks in England, maybe a year or two back. Smart, knowledgeable, knew their way around analysis, seemed informed. 

But I'm not paid to match up against what newspapers print. They "know" as much stupid shit as the internet does with it comes to the intersection of science, analytic thought, analysis and econometric modeling. Throw in appropriate expression of outcomes and the playing field is relatively thin.

[RE]

Were you taught this perspective by someone, or did you learn it on your own?

Learned it over the years observing all the folks my dad hung out with, then the ones I met in HS, college and working world.  Each uniform accompanied a certain typical personality type.  Of course there are variations, and some people will change their behaviors depending on how they dress.  So they act one way when they dress to go to a party, another way when they dress for work.  Then what they become over the years tends to depend on how much time they spend dressed one way or the other.  Somebody who spends every day in a Suit and works 12 hour days that way becomes more like that uniform behaviorally than another who only does it periodically.  Same thing if it's a Cop uniform or a Nurse uniform or whatever.  Each uniform has a set of behaviors that accompany the uniform, and the people wearing it expect that.  It's why they wear uniforms, it telegraphs that information.  This is basic psychology.  The Fashion industry is built on this.

Don't know. Don't care. Not my dog in their fight. Might know some of the BOA names...I've gone round with some of them before, folks in England, maybe a year or two back. Smart, knowledgeable, knew their way around analysis, seemed informed. 

But I'm not paid to match up against what newspapers print. They "know" as much stupid shit as the internet does with it comes to the intersection of science, analytic thought, analysis and econometric modeling. Throw in appropriate expression of outcomes and the playing field is relatively thin.

It's an important detail because it's worthwhile to know who is pitching out clearly bad predictions.  Who are they and why does Reuters poll this particular set of experts, then publish the poll which a rag like OilPrice.com goes and reports?  They must be trying to influence investors, I can't think of another reason to do that.  So in effect somebody is perpetrating a fraud although you couldn't prove that legally.

RE

[TDoS]

Were you taught this perspective by someone, or did you learn it on
But I'm not paid to match up against what newspapers print. They "know" as much stupid shit as the internet does with it comes to the intersection of science, analytic thought, analysis and econometric modeling. Throw in appropriate expression of outcomes and the playing field is relatively thin.

It's an important detail because it's worthwhile to know who is pitching out clearly bad predictions.

"Bad" is a relative concept. $10 +/- in a given future year probably doesn't qualify.

Who are they and why does Reuters poll this particular set of experts, then publish the poll which a rag like OilPrice.com goes and reports?  They must be trying to influence investors, I can't think of another reason to do that.  So in effect somebody is perpetrating a fraud although you couldn't prove that legally.
RE

You presume intent where none may exist. If you aren't a big name (you seriously think Gail The Actuary is a name?) you might write for some of these rags because you get name recognition. The information they work with? Unlikely to be raw data. Scrape websites of companies and state web pages maybe? Might not have the skills to use it if they did. So they take free EIA/IEA/OPEC reports and data and weave a story as best they can. No rigging of market desires or anything else, just best efforts.

What do you think their information budget might even be? Next to nothing? Which is why they use all the free stuff, and oftentimes themselves read the writings of others, mix in some personal take or spin, call that "research" and write it up.
 
There are analysts out there who are just doing the best they can with what they've got. "Influence" investors? You don't think the investors who are good at what they do? I say those BCG folks are damn shitfire on top of things. And they know the difference between Gail telling them we are all doomed...because of high oil price...oops...no...because of low oil prices...oops...its about ALL energy....ad infinitum...and those worth top dollar for their work. And you don't find them handing that out for free.

[RE]

You presume intent where none may exist. If you aren't a big name (you seriously think Gail The Actuary is a name?) you might write for some of these rags because you get name recognition. The information they work with? Unlikely to be raw data. Scrape websites of companies and state web pages maybe? Might not have the skills to use it if they did. So they take free EIA/IEA/OPEC reports and data and weave a story as best they can. No rigging of market desires or anything else, just best efforts.

What do you think their information budget might even be? Next to nothing? Which is why they use all the free stuff, and oftentimes themselves read the writings of others, mix in some personal take or spin, call that "research" and write it up.
 
There are analysts out there who are just doing the best they can with what they've got. "Influence" investors? You don't think the investors who are good at what they do? I say those BCG folks are damn shitfire on top of things. And they know the difference between Gail telling them we are all doomed...because of high oil price...oops...no...because of low oil prices...oops...its about ALL energy....ad infinitum...and those worth top dollar for their work. And you don't find them handing that out for free.

I never mentioned Gail Tverberg nor is her name associated with this article, which was written by the Ruskie girl over there, Tsvetana Paraskova.  WTF do you bring up Gail?  She's not involved in this at all.

Nothing exists in a vacuum, so I don't buy no intent as plausible.  Plus nobody asked for advice, they merely polled a bunch of "experts" who are anonymous and took an average from their responses.  So the question remains of who these anonymous experts are and why a poll is published with a number that is more than 15% off to the high side.  Reuters is a huge newz organization with plenty of money and resources to do research.   That's a huge difference for anybody who invests of course.  Big institutional investors with their own in house experts probably don't pay attention to this but these guys who pitched out those numbers are selling to somebody.

RE

[TDoS]

I never mentioned Gail Tverberg nor is her name associated with this article, which was written by the Ruskie girl over there, Tsvetana Paraskova.  WTF do you bring up Gail?  She's not involved in this at all.

I brought up Gail as an example because she the prototype of the "analyst" opinion written up in these articles...and her insipid analysis continues to this very day. Tsvetana I have been watching for awhile as her articles show up there fairly often. She doesn't do pesudo oil/energy "expert" charade like Gail does, she sticks more to mainstream titles and ideas and just appears to fall into "normal writer without direct experience" type.

You were not specific about whom you presumed was trying to rig the markets, but Gail would certainly not be one of them obviously.

Nothing exists in a vacuum, so I don't buy no intent as plausible.

Of course you don't. You have your way of figuring out problems, it has worked for you since you were 4 and smarter than everyone around you. You've decided you are correct, therefore you are correct. All quite self referential.

You asked a question and I answered it. Not from your position of believing in some macro level idea, but from direct experience. In your world, there is no reason to incorporate people with decades of experience in the undersanding of a thing, if you happen to believe it otherwise.

Plus nobody asked for advice, they merely polled a bunch of "experts" who are anonymous and took an average from their responses.  So the question remains of who these anonymous experts are and why a poll is published with a number that is more than 15% off to the high side.  Reuters is a huge newz organization with plenty of money and resources to do research.  That's a huge difference for anybody who invests of course.  Big institutional investors with their own in house experts probably don't pay attention to this but these guys who pitched out those numbers are selling to somebody.
RE

I know Reuters has money and resources. As does most everyone else in my arena of interest. So what? My job isn't to make money off of whomever speculating in the markets. My job is to do solid analysis upon which to make decisions, short the market, go long in the market, whatever. Renewable folks are also asking questions in my area of expertise.

It has been quite a change. I made a career starting out explaining why peak oil 20+ years ago was a crock, being right about that morphed into explaining how big shale resources could be and quantifying it as it was happening, and now the renewables folks are asking questions about flattening US production and the geologic and cost limitations, to find the point for renewables in various forms to undercut fossil fuels. And to some extent trying to figure out the next US or world peak oil to "pile on" as it were.

[RE]

Of course you don't. You have your way of figuring out problems, it has worked for you since you were 4 and smarter than everyone around you. You've decided you are correct, therefore you are correct. All quite self referential.

First you drag Gail Tverberg into this out of the blue and now you get all huffy because I find it unlikely there is no agenda underlying this poll?  None of this has anything to do with the article or the mismatch between the BoA numbers and the Reuters poll numbers.  You're just cluttering this up with irrelevancies to confuse the issue.  Enjoy the cooler.

RE

[K-Dog]

What does the argument about peak oil have to do with real world conditions?

The bailer is lowered into a slurry of oil and mud 1000 feet down.  Holes on the end are opened by a plunger that is pushed up when the bailer hits bottom.  An old engine from a dumptruck lifts the bailer up and it is dropped onto the retaining pond.  The plunger opens the holes when the bailer is dropped and oil squirts out like the money shot in a porn movie.  The oil slurry is put into 55 gallon drums, and the oil is collected from the top after it separates from the mud.

Another 55 gallon drum boils oil for distillation into diesel fuel and gasoline.  The Diesel is used to run the well.  The gas is used in motorbikes.

Saying all this is a bit messy is an understatement.  Local farmland is destroyed and the best minimum wage job around is working the oil.  There are no good jobs for the locals.  The locals do not know what peak oil is.  All they know is that they are screwed.

The Dutch started this clusterfuck over 100 years ago.

[K-Dog]

more:

[RE]

The article leads with this:

Offshore oil projects are experiencing a resurgence due to higher prices

What higher prices are they talking about?  Today's price is $68, and it's been under $70 since mid November.  The EIA predicted a glut a few months back. The last time it was over $80 was in mid July.  This reporter is a tad behind the times.

It is of course not just the frackers that have high costs and relatively expensive oil, the same is true for the deepwater drillers.  At under $70 they aren't profitable either, so the wells will be shut in.

The oil also isn't really expensive, as I pointed out in a prior post.  Taking into account inflation, oil is actually cheaper now than it was in the 80s.  The problem is that everybody's credit line has been maxed out.  Industrial enterprises never really are profitable, theey basically just burn energy and turn natural resources into waste products.  Nothing of lasting value is ever created no "wealth" is produced.  Even the most durable goods end up as landfill eventually.  Skyscrapers eventually get demolished and replaced.  Carz and planes go to junkyards.

All of this is paid for with credit, the Petrodollar being the primary credit instrument for the last 50 years.  Every country and every corporation has borrowed against the future, and now just payin interest on all they borrowed before consumes their income.  So new credit is not being issued, the money supply iss not growing, and thus the oil price cannot go up.  Is there oil down there?  Sure, plenty.  It's just not profitable to pump it up or frack it out of the rock.

Credit is now being dished out to build renewable" energy production facilities.  Just as once the TBTF banks loaned money to drill oil wells, now they make loans to cover the desert in solar panels or floating windmills in the North Atlantic.  These so called "endless" energy production facilities are not in fact endless, they will be junk in 50 years time also unlessconstantly maintained and replaced.  Will people be able to afford the energy they produce to pay off the debt incurred to build them and the annual maintenance costs?  I doubt the credit scheme works anywhere near as long as it did for fossil fuels.  If you begin it with John D. Rockefeller, Standard Oil and Chase Manhattan, the Dollars-Oil credit scheme lasted about 150 years.  I'll be surprised if they get 20 years out of the renewables scheme.

As I mentioned in a prior post, the way the Energy Crisis is manifesting itself in the capitalist economy is as a Credit Crisis, and what we are beginning now is the Greatest Depression, one that will not end until Industrial Civilization has completely collapsed and at least 90% of the current population has bought their ticket to the Great Beyond.  Kuntsler called it the Long Emergency, which is a good way to describe it.  JHK is a jackass, but he's quite good at turning a phrase.

Cuba is the Canary in the Coal Mine, and over the next few years we'll see Cubas popping up all over the globe as various sovereign states lose their access to the international credit markets.  Where this is going to be most interesting is in Europe, because European countries are far more dependent on the industrial economy than Cuba.  Lights out for hours every day can be handled in Havana,  lights out in London, Paris or Berlin for hour every day will be anarchy.  No way will those goobermints last very long, nor will the EU.  This is why they are advising their populations to prep up.

Collapse has entered a new phase.  2025 will see big changes in many locations around the globe.  Break out the Popcorn.



https://oilprice.com/Energy/Crude-Oil/A-Looming-Supply-Glut-Could-Undermine-the-Offshore-Oil-Boom.html

A Looming Supply Glut Could Undermine the Offshore Oil Boom

RE

[RE]

Down to $67/bbl today!  Can we make it to the $50s?  How low can they go?

https://www.reuters.com/business/energy/oil-prices-dip-extended-opec-supply-cuts-highlight-weak-demand-2024-12-06/

Oil prices fall on supply glut fears despite OPEC+ output cut extension

RE