Volatility, peak oil and stagflation

[*T*]

For metalman, fro Gregor.us.

Overhead Crush

A concept that’s key to resource depletion is the higher volatility phase, in which both price and supply start to hit ceilings and floors in accelerated fashion. This tends to appear first during the actual peak supply period, or peak plateau period. The pattern has been seen in previous eras in such things as wood, fish, and whale oil. When the post-peak phase gets underway the price amplitude increases even further, playing havoc with supply and demand. As demand gets killed, and then finally collapses, it causes confusion about supply. But then, as demand returns, any questions about supply are soon answered as demand once again bumps up against the supply ceiling.

Visually, we can think of demand in this phenomenon as being in a kind of contracting triangle. Every time consumption resumes after a previous demand crash, it hits the ceiling at a lower level. This is the point where, if you find yourself living in the age of biomass and wood, you get rescued by coal. For example. This is also the point where, if you are living in the age of oil, it’s less likely you get rescued.


...

[thunderdownunder]

Re: Volatility, peak oil and stagflation

T -Ive got real bad news for you.
Think down under - coal for 300 years in the Bowen basin 70ft - 400 ft thick and thats just the stuff 50 ft below the surface. More than 1 million square kilometers of pure carbon. But the greens hate carbon

LNG - enough to last for 200 (proven) years in the North West Shelf (Woodside) we sell it to the Japs, China and the west coast USA @ Eight (8)cents/ litre to get rid of the stuff. 4 Trains in production but could be boosted to 15. Just not enough $$$$ in it at present to construct any more. and shipping is a BIG problem. LNG needs to triple in price. don't forget the greens hate Gas

Oil - 1500 capped wells in the Canarvon, Cooper, Canning, Barrow, Surat and the underexploted Nullabor basin. We got light crude coming out of our ass.
Problem is the tyranny of distance. pipelines would have to run a minimum of 300 klms up to 1500 klms to get it to procces and at $70/ barrel US it is just not economic . Don't forget that oil is carbon and the greens hate carbon.

We not short on energy down here - Just the price is way to cheap to make a profit (return on capital invested).

Look up Oil ,gas and coal fields noted, in Australia - we are sitting on a frigging fortune. No shortage just we are not Arab goat herders.

Apache, Chevron, Shell, Mobil, BHP, ROC, and a myriad of others are just waiting for the Arabs to go back to goats and camel herding.

Truth be told we haven't even opened permits for 5% of the available known oil and gas areas. Coal is just everywhere and the Coal methane is just being explored and produced as we speak.
No shortage here, nothing to see, move along.

Yes your graph is right - its called diminishing returns. Bouncing balls follow the same pattern as the Kinetic energy is lost through friction, heat and air resistance.

Down here Energy is not a problem for Centuries to come but price and distance is. But greenies hate Energy as it is melting the planet and we are all gunna drown. I'll lay a small wager that you freeze and starve in the dark before the Sea level rises more than 1 inch.
I'll let you in on a small secret - Climate change is pretext for taxation to kick the can down the road a while longer. Cap and trade my ass

[*T*]

Re: Volatility, peak oil and stagflation

[cjppjc]

Re: Volatility, peak oil and stagflation

*T*

To me it seems hard to believe the price of crude has run up so fast in the face of the global economy. Maybe a large portion of the run up is like the last time. Financial speculation.

[Raz]

Re: Volatility, peak oil and stagflation

Down here Energy is not a problem for Centuries to come but price and distance is. But greenies hate Energy as it is melting the planet and we are all gunna drown. I'll lay a small wager that you freeze and starve in the dark before the Sea level rises more than 1 inch.
I'll let you in on a small secret - Climate change is pretext for taxation to kick the can down the road a while longer. Cap and trade my ass

Now I know why I've always liked Aussies - they cut out the PC crap and say just what they mean!;)

Although I DO believe in Peak [Cheap] Oil, I agree with your assessment of the environmental fringe.

[metalman]

Re: Volatility, peak oil and stagflation

For metalman, fro Gregor.us.

peak cheap oil kinda sorta... no clues on when it started, if it started... no tie to the macro econ... don't see any 'time to short us stocks' or 'time to short cre' type timing info.

[charliebrown]

Re: Volatility, peak oil and stagflation

agree with most of this. Right now the greens are in control, it will take people in the u.s. paying $5.00+ for gas, and freezing in the winter before the other side (energy libertas) will be able to wrestle political control away. Last summer's 4.00 gas almost did it, but the price collapsed too fast to make the political point stick. My Jan natural gas bill was $300. If the price of gas did not collapse in fall, my bill would have been double or more. That's the kind of bill that can break a budget.

Also agree that the cap and trade thing is just a thinly veiled method to tax us more. The gvt needs the money. cap and trade will be rammed through. The hell with u.s. competiveness, the hell with j6p getting a big bump in his energy costs. It's for the good of the planet

I think the political control of energy will make the volatility that much higher. May not be because of peak energy, but because energy will be in control of the gvt. this week were drilling, this week were not ...

[KGW]

Re: Volatility, peak oil and stagflation

*T*

To me it seems hard to believe the price of crude has run up so fast in the face of the global economy. Maybe a large portion of the run up is like the last time. Financial speculation.

Maybe? Does a bear defecate in the woods? :p

[*T*]

Re: Volatility, peak oil and stagflation

*T*

To me it seems hard to believe the price of crude has run up so fast in the face of the global economy. Maybe a large portion of the run up is like the last time. Financial speculation.

I think it is speculation like the $147/bbl. Almost all hard and fast moves are. Peak cheap oil is a decades-long process. It's definitely not tradeable, maybe it's investable. The price today has almost nothing to do with it. Maybe the 5y moving average has... who knows.

[*T*]

Re: Volatility, peak oil and stagflation

T -Ive got real bad news for you.
Think down under - coal for 300 years in the Bowen basin 70ft - 400 ft thick and thats just the stuff 50 ft below the surface. More than 1 million square kilometers of pure carbon. But the greens hate carbon

LNG - enough to last for 200 (proven) years in the North West Shelf (Woodside) we sell it to the Japs, China and the west coast USA @ Eight (8)cents/ litre to get rid of the stuff. 4 Trains in production but could be boosted to 15. Just not enough $$$$ in it at present to construct any more. and shipping is a BIG problem. LNG needs to triple in price. don't forget the greens hate Gas

Oil - 1500 capped wells in the Canarvon, Cooper, Canning, Barrow, Surat and the underexploted Nullabor basin. We got light crude coming out of our ass.
Problem is the tyranny of distance. pipelines would have to run a minimum of 300 klms up to 1500 klms to get it to procces and at $70/ barrel US it is just not economic . Don't forget that oil is carbon and the greens hate carbon.

We not short on energy down here - Just the price is way to cheap to make a profit (return on capital invested).

Look up Oil ,gas and coal fields noted, in Australia - we are sitting on a frigging fortune. No shortage just we are not Arab goat herders.

Apache, Chevron, Shell, Mobil, BHP, ROC, and a myriad of others are just waiting for the Arabs to go back to goats and camel herding.

Truth be told we haven't even opened permits for 5% of the available known oil and gas areas. Coal is just everywhere and the Coal methane is just being explored and produced as we speak.
No shortage here, nothing to see, move along.

Yes your graph is right - its called diminishing returns. Bouncing balls follow the same pattern as the Kinetic energy is lost through friction, heat and air resistance.

Down here Energy is not a problem for Centuries to come but price and distance is. But greenies hate Energy as it is melting the planet and we are all gunna drown. I'll lay a small wager that you freeze and starve in the dark before the Sea level rises more than 1 inch.
I'll let you in on a small secret - Climate change is pretext for taxation to kick the can down the road a while longer. Cap and trade my ass

Sounds more like good news than bad!

This paragraph surely is in support of "peak oil"

We not short on energy down here - Just the price is way to cheap to make a profit (return on capital invested).

I.e. there is loads of oil but the easiest stuff goes first.

[*T*]

Re: Volatility, peak oil and stagflation

peak cheap oil kinda sorta... no clues on when it started, if it started... no tie to the macro econ... don't see any 'time to short us stocks' or 'time to short cre' type timing info.

Gregor does sometimes tie to the macro picture. No 'time to short us stocks' or 'time to short cre' type timing info of course. Don't see why you'd expect it there. You might also see Simmon's book which is classic peak oil thesis. Simmons strikes me as a doofus with a manifesto, however his book does make it clear that oil is not 'about to run out', just that the easier stuff has.

Remember folks, "we are near peak oil" means literally "We have used less than half our oil up".

I have a pretty open mind about this. I'd like to know the truth.

[ThePythonicCow]

Re: Volatility, peak oil and stagflation

I'd like to know the truth.

I think you've come to the wrong planet. Sorry.

[Chomsky]

Re: Volatility, peak oil and stagflation

Maybe? Does a bear defecate in the woods? :p

It does!

[*T*]

Re: Volatility, peak oil and stagflation

peak cheap oil kinda sorta... no clues on when it started, if it started... no tie to the macro econ... don't see any 'time to short us stocks' or 'time to short cre' type timing info.

Then how about this:
Hubbert Peak

This does not mean that the world is running out of oil: it means that we are running out of the cheap pumpable oil that has fueled the economic development of the 20th Century.

No timing for trades, but you can't time this thing to better than a few years anyway. No 'time to short stocks' etc, but I don't see how that's relevant.

[BlackVoid]

Re: Volatility, peak oil and stagflation

Peak Oil is not about reserves. It is about FLOW-RATE.

If you have a 1000 gallon water tank at home, but only a small hole in it that is dripping only a glass of water daily, you will still die of dehydration - despite having a lot of water.

Reserves do not matter. Flow-rate does.

Another thing is energy return on energy investment. In Canada the oilsands have a return of 1 to 2 (1 unit of energy invested and 2 gained). This is CRAP. The fact that we are producing oil from the oilsands tells the story: we do not have any better anymore. Those 1500 capped wells could well be energy losers. The more oil you produce from them, the more energy you lose. If those wells were better than the oilsands, they would be producing. AND THEY ARE NOT PRODUCING.

Non-OPEC peak oil is already here, so from now it all depends on OPEC. We would know more, but most OPEC countries have reserves that are unaudited state secrets. Peak Cheap Oil (the term used here frequently) is in the PAST (ended with the peaking od Mexico and North Sea). Marginal cost for new production is around or above the current market price. Cheap Oil has peaked and is now in decline at a rate of 6.7% (IEA study determined this decline rate for existing production wells).
As for real Peak Oil, it will only be recognized several years after it happens.