Re: [asa] Peak Oil day was July 11. 2008

July 11, 2008 is before any economic slowdown seriously reduced demand. The
recession may have started in the US at the beginning of 2008 but the impact
on global energy demand lagged that, didn't it?

Randy

----- Original Message -----
From: "John Burgeson (ASA member)" <hossradbourne@gmail.com>
To: "Don Winterstein" <dfwinterstein@msn.com>
Cc: "asa" <asa@calvin.edu>
Sent: Saturday, July 11, 2009 10:15 AM
Subject: Re: [asa] Peak Oil day was July 11. 2008

> Yeah -- you may be right. But what I've seen and read so far suggets
> only that the "peak" may flatten out -- not rise.
>
> Glenn has more data that supports this, but he has left the list.
>
> Burgy
>
> On 7/11/09, Don Winterstein <dfwinterstein@msn.com> wrote:
>> You may be right about the peak as history, but there are two reasons why
>> you may not be: politics and economics.
>>
>> In an economic downturn, demand drops and producers have less motive to
>> produce. This will eventually turn around.
>>
>> Saudi Arabia has proved it can increase production if it decides to do
>> so,
>> but Iran and Iraq also have huge reserves, ranking second and third in
>> easily producible oil. Both Iran and Iraq have been producing largely
>> without the benefit of modern technology for years. It stands to reason
>> they both could greatly increase production if their political systems
>> made
>> it a priority. (Iraq is now trying to attract investment from Western
>> companies, but their terms have been so unattractive that they've had few
>> takers. They'll learn.)
>>
>> Don
>>
>> ----- Original Message -----
>> From: John Burgeson (ASA member)<mailto:hossradbourne@gmail.com>
>> To: asa<mailto:asa@calvin.edu>
>> Sent: Thursday, July 09, 2009 9:01 AM
>> Subject: [asa] Peak Oil day was July 11. 2008
>>
>>
>> Just for the record -- about 5 or 6 years ago Glenn Morton, and to a
>> much less extent me, argued on this list that the day of "peak oil"
>> was less than a decade away.
>>
>> The argument below is that it did happen -- on July 11, 2008. From now
>> on, the world will produce less each day than the day before!
>>
>> Burgy
>>
>> ---------- Forwarded message ----------
>> From: Post Carbon Institute
>> <newsletter@postcarbon.org<mailto:newsletter@postcarbon.org>>
>> Date: Tue, 7 Jul 2009 18:22:12 -0400
>> Subject: MuseLetter 207/July 2009
>> To: hossradbourne@gmail.com<mailto:hossradbourne@gmail.com>
>>
>> [1]Read current MuseLetter online | [2]Subscribe | [3]Unsubscribe
>> Links:
>> 1.
>> http://heinberg.wordpress.com/2009/07/07/207-peak-oil-day<http://heinberg.wordpress.com/2009/07/07/207-peak-oil-day>
>> 2.
>> http://postcarbon.list-manage.com/subscribe?u=311db31977054c5ef58219392&id=9189b80df4<http://postcarbon.list-manage.com/subscribe?u=311db31977054c5ef58219392&id=9189b80df4>
>> 3.
>> http://postcarbon.list-manage.com/unsubscribe?u=311db31977054c5ef58219392&id=9189b80df4<http://postcarbon.list-manage.com/unsubscribe?u=311db31977054c5ef58219392&id=9189b80df4>
>>
>> [4]Download printable PDF version here (PDF, 91 KB)
>> Links:
>> 4.
>> http://heinberg.files.wordpress.com/2009/07/richardheinberg-museletter-207.pdf<http://heinberg.files.wordpress.com/2009/07/richardheinberg-museletter-207.pdf>
>>
>> [5]richardheinberg.com
>> Links:
>> 5. http://richardheinberg.com<http://richardheinberg.com/>
>>
>> _Greetings,_
>>
>> _Here is MuseLetter 207 for July 2009._
>>
>> _Best wishes,_
>>
>> _Richard_
>>
>> _1. Peak Oil Day_
>>
>> On July 11, 2008, the price of a barrel of oil hit a record $147.27 in
>> daily
>> trading. That same month, world crude oil production achieved a record
>> 74.8
>> million barrels per day.
>>
>> For years prior to this, a growing legion of analysts had been arguing
>> that
>> world oil production would max out around the year 2010 and begin to
>> decline
>> for reasons having to do with geology (we have found and picked the
>> world's
>> "low-hanging fruit" in terms of giant oilfields), as well as lack of
>> drilling rigs and trained exploration geologists and engineers. "Peak
>> Oil,"
>> they insisted, would mark the end of the growth phase of industrial
>> civilization, because economic expansion requires increasing amounts of
>> high-quality energy.
>>
>> During the period from 2005 to 2008, as oil's price steadily rose,
>> production remained stagnant. Though new sources of oil were coming on
>> line,
>> they barely made up for production declines in existing fields due to
>> depletion. By mid-2008, as oil prices wafted to the stratosphere, every
>> petroleum producer responded to the obvious incentive to pump every
>> possible
>> barrel. Production rates nudged upward for a couple of months, but then
>> both
>> prices and production fell as demand for oil collapsed.
>>
>> Since then, with oil prices much lower, and with credit tight to
>> unavailable, up to $150 billion of investments in the development of
>> future
>> petroleum production capacity have evaporated. This means that if a new
>> record production level is to be achieved, further declines in
>> production
>> from existing fields have to be overcome, meaning that all of those
>> canceled
>> production projects, and many more in addition, will have to be quickly
>> brought on-stream. It may not be physically possible to turn the tide
>> at
>> this point, given the fact that the new "plays" are technically
>> demanding
>> and therefore expensive to develop, and have limited productive
>> potential.
>>
>> On May 4 of this year, Raymond James Associates, a prominent brokerage
>> specializing in energy investments, issued a report stating, "With OPEC
>> oil
>> production apparently having peaked in 1Q08, and non-OPEC even earlier
>> in
>> 2007, peak oil on a worldwide basis seems to have taken place in early
>> 2008." This conclusion is being echoed by a cadre of other analysts.
>>
>> Maybe it's a stretch to say that the production peak occurred at one
>> identifiable moment, but attributing it to the day oil prices reached
>> their
>> high-water mark may be a useful way of fixing the event in our minds.
>> So I
>> suggest that we remember July 11, 2008 as Peak Oil Day.
>>
>> We are now approaching the first-year anniversary of Peak Oil Day.
>> Where
>> are
>> we now? The global economy is in tatters, yet oil prices have recovered
>> somewhat (they're now about half what they were in July 2008). World
>> energy
>> consumption is down, world trade is down, the airline industry is
>> shrinking,
>> and most of the world's automakers are on life support.
>>
>> It is too late to prepare for Peak Oil–a year too late, in fact. Now
>> the
>> name of the game is adaptation. We are in an entirely new economic
>> environment, in which old assumptions about the inevitability of
>> perpetual
>> growth, and the usefulness of leveraging investments based on
>> expectations
>> of future growth, are crashing in flames. Even if economic activity
>> picks
>> up
>> somewhat, this will occur in the context of an economy significantly
>> smaller
>> than the one that existed in July 2008, and energy scarcity will
>> quickly
>> cause most green shoots to wither.
>>
>> It is impossible to say what will happen in the future with regard to
>> oil
>> prices. Clearly, very high prices kill demand by undercutting economic
>> activity. Thus it is possible that the barrel price of petroleum may
>> never
>> break last year's record. On the other hand, if the value of the dollar
>> were
>> to collapse, then the sky's the limit for prices in dollars per barrel.
>>
>> It is easier to forecast the oil supply trend: though we'll see
>> level-to-rising production temporarily from time to time, in general
>> it's
>> down, down, downhill from now on.
>>
>> Even though Peak Oil is now in the past, its annual commemoration on
>> Peak
>> Oil Day may serve an important purpose by reminding us why our economy
>> is
>> shrinking, and by focusing our thoughts on ways to facilitate the
>> transition
>> to a post-petroleum world.
>>
>> What are some appropriate ways to commemorate Peak Oil Day? I'd suggest
>> spending time in nature, engaging in a 24-hour oil fast, or organizing
>> a
>> neighborhood bicycle parade and solar-cooker bakeoff.
>>
>> Mark your calendar. What will _you_ be doing on July 11?
>>
>> _Help us "celebrate" Peak Oil Day by signing [6]our petition._
>> Links:
>> 6.
>> http://www.thepetitionsite.com/1/peak-oil-day<http://www.thepetitionsite.com/1/peak-oil-day>
>>
>> _2. Interview with Hervé Duval_ ([7]www.voltairenet.org)
>> Links:
>> 7. http://www.voltairenet.org<http://www.voltairenet.org/>
>>
>> HD: We were told by most media that the origin of the financial crisis
>> is
>> to
>> be found within the financial system. Is that satisfactory to you or,
>> as
>> you
>> hinted with foresight in _The Party's Over_, could the lack of
>> confidence
>> in
>> future growth due to cheap oil production peaking also be a major
>> factor?
>>
>> RH: In 2008 we saw the biggest energy price spike ever. Historically,
>> energy
>> price spikes have always led to recessions. Therefore it would have
>> been
>> reasonable to expect a serious recession beginning around the first
>> quarter
>> of 2008. In fact, the recession began somewhat earlier and has proven
>> to
>> be
>> deeper and more persistent than any other in recent decades. This is
>> because
>> a financial collapse had also become more or less inevitable due to the
>> existence of multiple bubbles in the housing and finance sectors.
>>
>> The impacts on the airline, trucking, and automotive industries are
>> largely
>> from energy prices; the fall in real estate values and rise in
>> foreclosures
>> is not so directly related to oil.
>>
>> However, at the deepest level, our societal expectation of perpetual
>> economic growth is based on the assumption that we will always have
>> increasing amounts of cheap energy with which to power the engines of
>> production and distribution. This expectation of growth became
>> institutionalized in ever-increasing levels of debt and in increased
>> financial leveraging. Thus when the amount of energy available started
>> to
>> level off or decline, the entire financial house of cards came tumbling
>> down.
>>
>> Unfortunately, world leaders have largely misunderstood the crisis.
>> They
>> assume it to be entirely financial in origin, and they also assume it
>> to
>> be
>> transient; they believe that if we can prop up the banks sufficiently,
>> the
>> economy will begin to grow again and all will be well. In fact, our
>> current
>> financial system cannot be made to function in an era of declining
>> energy
>> supplies. We need an economy that can supply basic human needs without
>> increasing the rate at which we consume resources. That will require
>> the
>> creation of monetary systems and financial institutions that are not
>> based
>> on debt, interest, and leveraging.
>>
>> HD: Do you think speculation on energy markets is going to gather pace
>> again
>> in spite of last year's episode? If so, according to you what is the
>> best
>> solution for the snake to stop eating its own tail?
>>
>> RH: Speculation in energy futures is not helpful in our collective
>> process
>> of adjusting to the winding down of the era of cheap fuel. Without some
>> controls on the futures market, we are likely to see more big swings in
>> fossil fuel prices, as we witnessed over the past 18 months. When fuel
>> prices skyrocket, the economy takes an enormous hit–again, as we have
>> just
>> seen. When the price collapses, that discourages investment in future
>> energy
>> production.
>>
>> OPEC has actually helped somewhat to moderate these price swings by
>> increasing or decreasing production to keep the oil price steadier than
>> it
>> would otherwise be. But OPEC is losing its already limited ability to
>> do
>> this, because most member nations are seeing declining production and
>> have
>> little or no spare production capacity. Saudi Arabia is the only major
>> swing
>> producer left, and one nation really cannot balance production rates
>> for
>> the
>> whole world much longer.
>>
>> The only real solution is some sort of international agreement to
>> ration
>> production and consumption, as I suggest in my book _The Oil Depletion
>> Protocol_.
>>
>> HD: What do you think of the growing number of scientists casting doubt
>> on
>> the human origin of climate change? Within the peak oil movement,
>> people
>> like Jean Laherrère are also very skeptical...
>>
>> RH: I'm not aware that the number of scientists casting doubt on the
>> human
>> origin of current climate change is growing; my perception is the
>> opposite.
>> Yes, I know that Jean Laherrère, whom I respect enormously, has raised
>> questions on this score. As a geologist, he is accustomed to thinking
>> in
>> terms of millions of years, and the Earth's climate is indeed quite
>> variable
>> on such long time-scales. And so I can understand why he might wonder
>> whether what we are seeing now is due to climate processes involving
>> changes
>> in solar radiation, eccentricities in the Earth's orbit–the well-known
>> Milankovitch effect–and changes in ocean circulation patterns. However,
>> climate scientists have thoroughly investigated the likely role of
>> factors
>> other than carbon emissions and found that they are insufficient to
>> explain
>> the warming that is currently occurring.
>>
>> Essentially, I concur with the conclusion of most climate scientists:
>> that
>> we humans are taking an inherently unstable system–the atmosphere and
>> climate–and forcing it to its breaking point by adding enormous
>> quantities
>> of greenhouse gases.
>>
>> HD: What do you think about this hypothesis: the international carbon
>> trade
>> project is but a way for the financial elite to keep afloat and for the
>> financially rich/resource poor countries to obtain the right to burn
>> the
>> last fossil fuel reserves in exchange for money and thus deprive
>> financially
>> poor/resource rich countries of the right to develop? To put it another
>> way,
>> the heart of the matter is not really "Are we going to burn the last
>> fossil
>> fuel reserves?" (we surely are, lest we give up on economical growth),
>> but
>> "Who is going to burn them?".
>>
>> RH: I am skeptical of international carbon trading schemes for many
>> reasons,
>> including the fact that they will result in the creation of an enormous
>> derivatives market that will require tight regulation if huge financial
>> bubbles and crashes are to be avoided. Carbon caps are necessary, but
>> there
>> are probably better ways of enforcing those caps than the creation of a
>> new
>> class of derivatives; for example, a rationing system that engages the
>> entire citizenry, such as Tradeable Energy Quotas (TEQs), could work.
>>
>> In the end, fossil fuels will be used by those who can pay for them.
>> Sometimes this occurs indirectly: China burns coal on behalf of North
>> America and Europe so that it can produce cheap goods for export.
>>
>> In any case, however, development based on consumption of fossil fuels
>> is
>> no
>> longer a path to wealth and security, as it was in the early 20^th
>> century.
>> Today it is a trap. It merely creates dependence upon energy sources
>> that
>> are becoming more scarce and expensive. Poor nations will now be much
>> better
>> off avoiding that trap altogether.
>>
>> I realize that this is much easier for a mere a journalist to say than
>> for
>> a
>> leader of some nation whose people have been denied the benefits of the
>> modern era. However, this is one of the stark realities of this
>> still-new
>> century.
>>
>> HD: What should be the priority in terms of public decision-making?
>> Preparing for the energy crisis or climate change?
>>
>> RH: In many respects, the solutions to both problems are similar:
>> reduce
>> fossil fuel dependency, and increase renewable energy production.
>>
>> However some proposed solutions to the climate crisis make no sense in
>> light
>> of fossil fuel supply limits. An example is the capture and storage of
>> carbon from coal-fired power plants. This is a project that will
>> require
>> enormous investment and decades for deployment; but meanwhile, coal
>> prices
>> will be escalating, and this fact is seldom included in the cost
>> estimates
>> for "clean coal." The peak of world coal production is probably less
>> than
>> two decades away, as I discuss in my new book [8]Blackout: Coal,
>> Climate
>> and
>> the Last Energy Crisis. It therefore makes more sense to use scarce
>> investment capital to build renewable energy production capacity rather
>> than
>> to build a vast, costly infrastructure to support continued use of a
>> depleting, increasingly expensive, carbon-intensive fuel.
>> Links:
>> 8.
>> http://www.richardheinberg.com/Blackout.html<http://www.richardheinberg.com/Blackout.html>
>>
>> HD: Do you see an increasing trend toward resource conflicts? If so,
>> how
>> do
>> you explain it?
>>
>> RH: This is to be expected. Humans have always fought over essential
>> resources. Now that the energy resources that fuel modern society are
>> poised
>> to become more scarce and valuable, it is foreseeable that conflict
>> over
>> control of those resources will increase. Given this, it is incumbent
>> upon
>> policy makers at the national level to anticipate where such conflicts
>> are
>> likely to erupt, and to seek to prevent them. Ultimately the only way
>> to
>> do
>> so is to reduce competition for those resources by reducing dependence
>> upon
>> them where possible (some resources, such as water, we simply cannot do
>> without), and by forging agreements to limit production and consumption
>> of
>> fossil fuels via depletion protocols.
>>
>> But of course this will require an enormous shift in attitude on the
>> part
>> of
>> world leaders. Currently their thinking revolves entirely around
>> gaining
>> competitive advantage–in essence, they are more interested in knowing
>> how
>> to
>> win resource conflicts than in how to avoid them. And that is an
>> increasingly dangerous way of thinking as the world becomes more
>> populous
>> and resource-constrained.
>>
>> HD: According to you, how big is the part played by the increase in
>> fuel/fertilizer/pesticides costs in the developing food crisis?
>>
>> RH: There are some aspects of the food crisis that do not immediately
>> seem
>> to be related to fossil fuel dependency. For example, there are
>> increasing
>> shortages of fresh water for irrigation–but many times this is due to
>> climate change, which is in turn due to carbon emissions from the
>> burning
>> of
>> fossil fuels. Then there is soil erosion–but this is often caused by
>> modern
>> industrial production methods involving the use of tractors and other
>> fuel-fed farm machinery. Another factor is the genetic uniformity of
>> modern
>> crops, which makes them more susceptible to evolving pests, and hence
>> requires the use of more petroleum-based pesticides. As one follows out
>> the
>> causal chains leading to these disparate threats to our food system,
>> nearly
>> all of them tend to lead back to one source.
>>
>> Altogether, our modern fuel-based food system is critically vulnerable
>> on
>> many levels, and most of that vulnerability is traceable to our
>> reliance
>> on
>> fossil fuels. The inevitable reduction in the supply of tractor fuel
>> will
>> hurt farmers, and agricultural chemicals will become increasingly
>> unaffordable. High petroleum prices will make the long-distance
>> distribution
>> of food more costly. Climate change and drought will shrink crop
>> yields.
>>
>> We face a global food crisis that is entirely foreseeable, and whose
>> causes
>> are obvious. The needed policies are also obvious: we must reform our
>> entire
>> food system so as to reduce its reliance on fuel.
>>
>> HD: Can you tell us briefly about the goals and impact so far of the
>> work
>> you are doing with your colleagues at Post Carbon Institute?
>>
>> RH: Currently we are assembling a stellar group of Fellows who share a
>> similar understanding of the global crisis, and who are interested in
>> collaborating with regard to public education. We see this as a
>> critical
>> historical moment for rethinking our culture's basic assumptions about
>> economic growth, energy consumption, food systems, climate change, and
>> population–issues that are closely intertwined, but rarely addressed
>> systemically by policy makers.
>>
>> At the same time, Post Carbon Institute is working closely with the
>> [9]Transition Initiatives, which is a grass-roots network of
>> communities
>> seeking to promote a post-fossil fuel economy. Unless needed policy
>> changes
>> are being adopted, modeled, experimented with, and promoted by
>> individuals
>> and communities, national leaders will continue to drag their feet.
>> Links:
>> 9. http://transitionus.org<http://transitionus.org/>
>>
>> We see the current economic crisis as a fundamental and historic
>> turning
>> point. The global economy has reached non-negotiable limits to growth.
>> Now
>> everything depends upon our willingness to cooperatively adapt to those
>> limits.
>>
>> We believe that life can in fact be better without fossil fuels, and
>> without
>> continual growth in population and consumption. But the transition from
>> our
>> current fuel-fed growth paradigm to a steady-state, renewable-energy
>> future
>> will likely be very difficult. Humanity will get there one way or
>> another:
>> resource limits ensure that. We simply want to make the transition
>> easier,
>> fairer, and more survivable for all concerned.
>>
>> [10]Back to top
>> Links:
>> 10.
>> file://localhost/tmp/XXXXqx1xQW/L8442-861TMP.html#top<file:///tmp/XXXXqx1xQW/L8442-861TMP.html#top>
>>
>> [11]Remove me from this list
>> Links:
>> 11.
>> http://postcarbon.us1.list-manage.com/unsubscribe?u=311db31977054c5ef58219392&id=9189b80df4&e=dca393690f&c=6886eefcc7<http://postcarbon.us1.list-manage.com/unsubscribe?u=311db31977054c5ef58219392&id=9189b80df4&e=dca393690f&c=6886eefcc7>
>>
>>
>>
>> --
>> Burgy
>>
>> www.burgy.50megs.com<http://www.burgy.50megs.com/>
>>
>>
>> To unsubscribe, send a message to
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>>
>
>
> --
> Burgy
>
> www.burgy.50megs.com
>
>
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Received on Sat Jul 11 11:26:24 2009