The Etp Model Has Been Empirically Confirmed

[Write4U]

Futilitist,
Whatever said:
"The embedded energy in the oil production system is not actual energy."

I believe it's called "potential usable energy".

Great question, Write4U. Thank you.

Here is what BWHill says (from the Etp book):

"Although qualitative indicators point to the world's oil reserves being in an advanced stage of depletion, the investor/planner needs more than qualitative reports about the petroleum depletion event. They need quantitative estimates about what to expect from its price and availability over a period great enough to plan and execute a project. With capital difficult, and expensive to procure an energy surprise has gained the capacity to place many projects, that would have otherwise excelled, over budget and behind schedule. The scope of any project of significant duration can not today be effectively ascertained without considering the potential impact of the depletion of our most widely used and efficacious commodity. Depletion: A determination for the world's petroleum reserve provides the planner and astute investor with the specific information they will need to define and effectively pursue their objectives!"
...
"Petroleum depletion is further advanced, and its production will decline faster than generally assumed. Conventional reservoir appraisal methods are founded on First Law premises, but neglect Second Law effects. Although extremely applicative to individual field analysis, when applied to the status of the world's petroleum reserve they produce inconsistent results. In consequence, the last 25% of the world's energy supplying reserve will be orders of magnitude more costly to produce than was the first 25%. The advancing depletion of the world's petroleum reserve could bring about changes of a magnitude that have not been witnessed for millennium! To navigate this conflicting, and difficult era an understanding of the events taking place will be essential. It is our hope that this report will contribute to that endeavor."
~BWHill

Civilization is very complex. We need good forecasting tools to plan effectively. Our survival depends on it. If we just ignore the bad news all the time, and pretend everything is fine, we will surely be blind sided. Hoping for the best is okay as long as you plan for the worst. ---Futilitist

Ok, all that makes sense to me, but the use of the result of thermodynamic functions of oil seems to have been well established ?
If we start with the potential energy contained in a gallon of crude and then compare this to the actual energy contained in a gallon of processed oil (gasoline at the pump) we can exactly calculate the thermodynamic losses (entropy) of the oil being processed.

The constant here is that thermodynamics of extraction and processing and refining, once established, results in a fixed cost per gallon to produce.
When this process changes, such as drilling deeper, fracking, better methods of refining, the cost per gallon can be accurately calculated and adjusted to still yield a profit for the producers.

When we compare the exponential depletion of oil with the actual cost of processing, it becomes clear (to me) that when the same processes yield less and less crude, or even stops from total depletion of a well (abandonment), that well is no longer part of the equation, which also can be calculated very precisely, but this process will be gradual as wells close at irregular intervals.

While obvious oil and the energy it produces are subject to thermodaynamic functions, it seems to me the most inaccurate way of predicting "the price of oil", other than explaining the underlying thermodynamic functions which are causal to the energy loss from crude to refined. This function cannot be manipulated, it is a natural law.

But from my experience in business, cost (price) of anything, is directly related to cost of production and delivery, plus a margin of profit. Actually a very simple equation.

But the causes for price fluctuations are of not attributable to thermodynamic functions, but to the cost of refining, cost of delivery and greed of the seller (just saw an old picture of Katrina where a gallon of gas cost 16.99) and cannot be predicted with any percentage of confidence. The prediction of prices going down even as supply (of an essential commodity) dwindles, is counter intuitive, unless the suicidal principle of "strength through exhaustion" is applied.

But I just cannot imagine a direct connection with thermodynamics of a gallon of still sequestered (untapped) crude oil and an accurate pricing model of the availability of that still unknown quantity. The price of oil on the market has already been calculated with great precision.

One thing is sure, we will run out in the near future (as compared to a human lifetime) and I have yet to see a reliable substitute to feed the industrial monster we have created.

In another thread the driver ant was cited as a destructive force. But driver ants only raid when supplies run short and need to be replenished to sustain the hive. Again this reminds me of Trump ( a candidate for the presidency) advocate invading the oil rich countries and just taking their oil, a clear sign of driver ant mentality.

I am trying, but failing to find a direct connection of the law of thermodynamics (other than natural thermal disasters) and the price of oil.

I have never heard of the concept that rare minerals are cheaper than abundant minerals. On the contrary, ...............

Can you explain why oil depletion should result in lower prices, when oil is used for so many other applications than than fuel?
And why thermodynamics would have anything to do with that?

How does ETP predict prices other than in an already known equation?

 

[brucep]

Ah interesting background. In my case it was Shell, in the UK, Dubai, Houston TX and the Netherlands. I can honestly say I have never encountered any scepticism about climate change within the company over my 30 odd years with them, though of course there was a lot of debate about what the strategic implications of it would be for a fossil fuel company. BP has been similar so far as I can see. I'm less sure about Total Fina Elf but then that is more recently assembled group of companies.

I was shocked, though, when I had my Houston assignment around 2000, to discover how widespread climate change scepticism was in the US and, separately, how crude and grossly self-interested the lobbying from the US oil companies to government was. I suspect it is just a feature of the US political system that everyone argues aggressively for his own narrow business interests and then one sees who wins each fiercely fought battle. Oil companies simply cannot do that sort of thing elsewhere - it would be suicide in terms of public image, for one thing.

Shell has evidently now decided what to do: bet the farm on a shift to gas - hence the recent BG acquisition. It also seems to be trying to harness its upstream expertise for CCS, though without regulatory help it is hard to see this getting off the ground commercially. They also toy with renewables, but it does not seem clear what a company such as Shell brings to the party. Possibly offshore expertise is useful for anchoring wind turbines and so forth, but it seems a bit tenuous.

I think Shell is a very intelligent oil company. The only work experience, with Shell, was when I was working offshore. Shell inspectors were the best I worked with. They understood the construction and diving components of the project and knew when to get excited. Never suspicious as the uninformed. You can't help being a bit embarrassed if you're an American. An Atheist couldn't be elected dog catcher in this country.

 

[Write4U]

I think Shell is a very intelligent oil company. The only work experience, with Shell, was when I was working offshore. Shell inspectors were the best I worked with. They understood the construction and diving components of the project and knew when to get excited. Never suspicious as the uninformed. You can't help being a bit embarrassed if you're an American. An Atheist couldn't be elected dog catcher in this country.

I am sure the today's technology can predict with some accuracy how much oil can still be extracted from the untapped reserves, but according to the stockmarket, "futures" are highly speculative and can yield great profits or great financial loss.

Then there are the unforseen mishaps (uncalculated disasters) such as in the Gulf of Mexico, for using cheap substitutes instead of more expensive but more reliable extraction practises. How much did that spill cost the economy in actual loss of oil , as well as the clean up and cost to the fishing industries, and who ends up paying for that? Does that have anything to do with thermodynamics?

Futilitist, much as I am trying to understand the connection between Thermodynamics, oil production and transport, and variables, the cost of which can render all predictions practically useless by the addition of billions of dollars to the cost of production from unintended consequenses.

Perhaps I am missing the point, but as yet I have not been able to tie thermodynamics in with production of natural resources, other than as a result of the direct impact of emission of actual activities which affect the thermodynamics and only then can be calculated with some precision.

Let me give a simple equation. If I have 2 gallons of gasoline, I have an calculable potential for energy by the laws of thermodynamics.. Now if I try to pour both gallons in a larger container and I spill half a gallon in the process, my original calculation of inherent potential is no longer valid and must be recalculated after the fact. It is in that stage where I lose ability to understand the connection between the two with any precision. Forgive me, when I sound off topic, but when an equation uses three sets of activities, it seems to me all three must be considered at the same time, else it just becomes an educated guess, hoping nothing will go wrong. And it always does, eventually.

 

[Futilitist]

Ok, all that makes sense to me, but the use of the result of thermodynamic functions of oil seems to have been well established ?
If we start with the potential energy contained in a gallon of crude and then compare this to the actual energy contained in a gallon of processed oil (gasoline at the pump) we can exactly calculate the thermodynamic losses (entropy) of the oil being processed.

That method would only account for the rising cost of refining the oil into gasoline. It does not account for the rising energetic cost of getting the oil out of the ground. Fracking, tar sands, and deep water oil production are much more expensive than the conventional crude production it replaces. Oil exploration in the Arctic is more costly than oil exploration in Texas. Refining sour crude is more expensive than refining light sweet crude.

It is important not to mix up the chemical energy contained in a barrel of crude with the energetic cost of producing that barrel of crude. Both are thermodynamic in nature, but they are two very different things. The chemical energy contained in a barrel of 37.5 API crude oil has basically not changed over time. But the energetic cost of oil production and exploration has risen dramatically (exponentially). This means that the average net energy (EROEI) of a barrel of oil must, in fact, decline over time.

The Etp model does not consider the chemical energy contained in a barrel of oil, since that is basically constant. Instead, the Etp model calculates the rising energetic cost of oil production by using the second law of thermodynamics to find the rate of entropy change in the entire oil production process over time.

The constant here is that thermodynamics of extraction and processing and refining, once established, results in a fixed cost per gallon to produce.

This is not true. Entropy and the second law of thermodynamics mandate that the cost of extraction, processing, and refining must rise over time.

When this process changes, such as drilling deeper, fracking, better methods of refining, the cost per gallon can be accurately calculated and adjusted to still yield a profit for the producers.

As I just explained, these processes are getting more and more expensive all the time due to the rising entropy production in the oil production life cycle.

And these rising production costs can only be paid for if the end consumers can afford it.

Oil affordability requires that the net energy available in an average barrel of oil must be sufficient to produce enough over all economic activity to pay the full cost of oil's production plus investment in future production, with enough left over so that the producer can make a profit. Thus, the oil production system and the economy must run in a mutually supporting, self-sustaining thermodynamic loop. But this loop cannot run forever. That would be perpetual motion and that would violate the second law of thermodynamics. The Etp model shows that the thermodynamic price limit was reached in 2012. The price of oil must decline from here on out.

When we compare the exponential depletion of oil with the actual cost of processing, it becomes clear (to me) that when the same processes yield less and less crude, or even stops from total depletion of a well (abandonment), that well is no longer part of the equation, which also can be calculated very precisely, but this process will be gradual as wells close at irregular intervals.

The process will not be gradual at all. Entropy production is rising exponentially (accelerating). The net energy in a barrel of oil is only declining faster over time. That means that GDP will fall, decreasing the consumer's oil affordability.

And economically speaking, the irreversible conditions have already been set for the rapid loss of much of the oil production system. There is simply no way to fix this dilamma. The full cost of production is currently not being met. So all oil producers must produce flat out in order to maintain any cash flow at all. If they stop producing, they will go bankrupt, so there is really no choice. The resultant oil glut keeps the oil price from rising. So the only way the price of oil can rise is if much of the oil production system is destroyed in the process. And the lack of oil affordability for consumers means that they will not be able to pay for the cost increase. Catch-22. The eventual outcome seems pretty clear to me.

While obvious oil and the energy it produces are subject to thermodaynamic functions, it seems to me the most inaccurate way of predicting "the price of oil", other than explaining the underlying thermodynamic functions which are causal to the energy loss from crude to refined. This function cannot be manipulated, it is a natural law.

The Etp model is the most accurate price forecasting tool ever devised. It forecasted the yearly average oil price from 1960 to 2013 with an accuracy of 96.5%! And since the price collapse, beginning in June of 2014, the price of oil continues to stay below the Etp maximum price curve, as predicted by the model.

That's pretty damn good. What more do you want?

But from my experience in business, cost (price) of anything, is directly related to cost of production and delivery, plus a margin of profit. Actually a very simple equation.

Then why doesn't that simple equation yield a proper profit for oil producers right now?

You are leaving out the thermodynamic loop between the economy and the oil production system. Producers do not set the oil price all by themselves. Consumers must be able to afford to buy the oil at a price that includes a profit for the producers. The net energy in a barrel of oil must provide sufficient GDP for this to happen. The Etp model accurately accounts for all of this.

But the causes for price fluctuations are of not attributable to thermodynamic functions, but to the cost of refining, cost of delivery and greed of the seller (just saw an old picture of Katrina where a gallon of gas cost 16.99) and cannot be predicted with any percentage of confidence. The prediction of prices going down even as supply (of an essential commodity) dwindles, is counter intuitive, unless the suicidal principle of "strength through exhaustion" is applied.

The Etp predictions are not really counterintuitive at all. It just seems that way because prices must now fall instead of conveniently rising as we have become accustomed to.

I don't know what you mean by the principle of "strength through exhaustion". Basic game theory is all you need to account for the current behavior of oil producers.

But I just cannot imagine a direct connection with thermodynamics of a gallon of still sequestered (untapped) crude oil and an accurate pricing model of the availability of that still unknown quantity. The price of oil on the market has already been calculated with great precision.

It has been calculated (i,e, discovered by marketplace), but not predicted with an accuracy of 96.5%. Only the Etp model actually does this.

Any untapped barrel of oil that has yet to be produced, can only be produced by using the energy of oil that has already been produced. Think about it. The available quantity under the ground is not relevant, since it is only theoretically producible without using the energy from oil that is already above the ground.

One thing is sure, we will run out in the near future (as compared to a human lifetime) and I have yet to see a reliable substitute to feed the industrial monster we have created.

That is basically correct. But we have the Etp model to make a more exact forecast. This is a big improvement over guessing.

I have never heard of the concept that rare minerals are cheaper than abundant minerals.

Oil is not a mineral. It is our primary energy source. The production of minerals, and everything else, currently requires the energy from oil.

Can you explain why oil depletion should result in lower prices, when oil is used for so many other applications than than fuel?

Sure. The production of oil must pay for itself. It's primary use is as a fuel source and this use sets the oil price. Oil production makes oil available for other uses. This is like a subsidy.

How does ETP predict prices other than in an already known equation?

If you mean the equation you suggested, that makes no sense, since your equation does not predict the price of oil. If you mean the already existing second law of thermodynamics, the answer is that the Etp model is a unique application of a second law statement that had never been accomplished before.



---Futilitist

 

[Futilitist]

Then there are the unforseen mishaps (uncalculated disasters) such as in the Gulf of Mexico, for using cheap substitutes instead of more expensive but more reliable extraction practises. How much did that spill cost the economy in actual loss of oil , as well as the clean up and cost to the fishing industries, and who ends up paying for that? Does that have anything to do with thermodynamics?

In the end, the oil consumer pays for everything.

Futilitist, much as I am trying to understand the connection between Thermodynamics, oil production and transport, and variables, the cost of which can render all predictions practically useless by the addition of billions of dollars to the cost of production from unintended consequenses.

Ideally, the thermodynamic loop of the economy and the oil production system is a dynamic system in equilibrium. The laws of thermodynamics set the energetic limits of the oil price, basically the physically possible oil price range. Supply and demand blindly discover the actual oil price within that range. Over time, the rising entropy of the oil production life cycle naturally causes the physically possible price range to rise. Supply and demand keep finding the price within that range. If supply and demand get out of wack, the price of oil may temporarily get outside the sweet spot. But the laws of physics will eventually cause supply and demand to bring the oil price back to a healthy range where both consumers and producers are happy. Natural disasters, wars, etc. also can temporarily mess up the balance, but as long as the problem isn't too severe, the system will eventually come back into thermodynamic balance.

This all works great until the whole system reaches the absolute maximum thermodynamic price.

From that point on there can no longer be a good price for oil because the cost of oil production continues to rise, while oil affordability must fall.

Unfortunately, we reached that thermodynamic price limit in 2012.

Maybe this will help a little. Before I discovered the Etp model, I created the Futilitist Collapse Challenge:

In the oil price graph above, the black line represents the rising cost of oil production, and the green line represents the falling affordability of oil for consumers. In a reasonably functioning economy, the green line will be above the black line, and oil will trade in between the two lines. In june of 2014, the black line crossed the green line and the price of oil crashed.

The green line is now no longer on top of the black line, as it is supposed to be. We have entered a new economic paradigm, in which consumers can no longer afford high priced oil, and producers cannot make a profit on low priced oil. Catch-22.

The challenge (game?) is to come up with some sort of realistic scenario whereby the green line resumes it’s former healthy position above the black line, and oil once again trades in between them. I don’t think it can be done. If a workable solution cannot be arrived at, I submit that there is no possible way to avoid the collapse that has already begun.

C’mon, folks, take the Futilitist challenge. Try to save the world, and prove me wrong at the same time. I dare you.
--------------

This was my simple, intuitive way of understanding our situation before I had the definitive physics proof of the Etp model. No one here could solve the Futilitist Collapse Challenge when I presented this in the Apocalypse Soon thread.



---Futilitist

 

[Write4U]

That method would only account for the rising cost of refining the oil into gasoline. It does not account for the rising energetic cost of getting the oil out of the ground. Fracking, tar sands, and deep water oil production are much more expensive than the conventional crude production it replaces. Oil exploration in the Arctic is more costly than oil exploration in Texas. Refining sour crude is more expensive than refining light sweet crude.

I agree.

It is important not to mix up the chemical energy contained in a barrel of crude with the energetic cost of producing that barrel of crude. Both are thermodynamic in nature, but they are two very different things. The chemical energy contained in a barrel of 37.5 API crude oil has basically not changed over time. But the energetic cost of oil production and exploration has risen dramatically (exponentially). This means that the average net energy (EROEI) of a barrel of oil must, in fact, decline over time.

I agree.

The Etp model does not consider the chemical energy contained in a barrel of oil, since that is basically constant. Instead, the Etp model calculates the rising energetic cost of oil production by using the second law of thermodynamics to find the rate of entropy change in the entire oil production process over time.

I agree.

Write4U said: ↑
The constant here is that thermodynamics of extraction and processing and refining, once established, results in a fixed cost per gallon to produce.

This is not true. Entropy and the second law of thermodynamics mandate that the cost of extraction, processing, and refining must rise over time.

Sorry, I worded that poorly. The key was the statement "once established" (by periodic measurements), results in a variable cost per gallon. And I agree these costs will rise, which will drive up the cost of oil. The net thermodynamic effect may well be lower entropy, because of the lower use of oil due to its higher price. This is how I see it, from a normal business model of supply and demand, which dependend on the price of goods. Oil prices have lower and upper limits of practical usefuness. When there is no demand for an abundant energy source, the price drops. When there is a great demand for an abundant energy source, the price (value) rises. When there is no demand for a limited supply, that supply is artificially lowered as a "going-out-of business, CLOSE OUT SALE".
But when there is great demand for a limited supply of a particular energy source , not only will the price go up , but will result in establishing a monopoly over the remaining resources and sell them at high prices as specialty fuels. The reverse process happens at this moment where hybrid energies are beginning to compete with conventional energies. As alternative fuel production increases, its prices will drop, resulting in greater sales of hybrid vehicles. Increased production of hybrids will bring dow the price of hybrids.
Another example of a still abundant valuable item is the diamond. De Beers controls just about all the diamond mining and distribution in the world and they releases their unbelievable large stock (silos full) incrementally to keep prices high. Actually diamonds are an abundant crystal, you just don't have access to them. Not only that, de Beers only releases large (high end) diamonds, only if the buyer also buys a De Beers selection with it. That selection is of lower end diamonds and usually end up as supermarket jewelry.

As I just explained, these processes are getting more and more expensive all the time due to the rising entropy production in the oil production life cycle. And these rising production costs can only be paid for if the end consumers can afford it.

I completely agree. Specialty goods in short supply will always be higher priced.

Oil affordability requires that the net energy available in an average barrel of oil must be sufficient to produce enough over all economic activity to pay the full cost of oil's production plus investment in future production, with enough left over so that the producer can make a profit. Thus, the oil production system and the economy must run in a mutually supporting, self-sustaining thermodynamic loop. But this loop cannot run forever. That would be perpetual motion and that would violate the second law of thermodynamics. The Etp model shows that the thermodynamic price limit was reached in 2012. The price of oil must decline from here on out.

I disagree that the net energy in a barrel changes from any external pressures. A barrelfull of oil has a specific energy potential, unless you change the oil itself, not if that energy is insufficient to perform a specific task outside the barrel.
I disagree with this also, if it does it would be a "close out sale", but that is not like ly to happen. When replaced by alternative fuels, oil will still have functionality in many areas. Plastics, for one. The price of oil may take a temporary drop for economic reasons, but the price will rise inevitably as more and more wells close and fracking begins to affect human habitat.
For the rest, I completely agree.

The process will not be gradual at all. Entropy production is rising exponentially (accelerating). The net energy in a barrel of oil is only declining faster over time. That means that GDP will fall, decreasing the consumer's oil affordability

I agree, but would add that inflation will be the result.

And economically speaking, the irreversible conditions have already been set for the rapid loss of much of the oil production system. There is simply no way to fix this dilamma. The full cost of production is currently not being met. So all oil producers must produce flat out in order to maintain any cash flow at all. If they stop producing, they will go bankrupt, so there is really no choice. The resultant oil glut keeps the oil price from rising. So the only way the price of oil can rise is if much of the oil production system is destroyed in the process. And the lack of oil affordability for consumers means that they will not be able to pay for the cost increase. Catch-22. The eventual outcome seems pretty clear to me.

I agree.

The Etp model is the most accurate price forecasting tool ever devised. It forecasted the yearly average oil price from 1960 to 2013 with an accuracy of 96.5%! And since the price collapse, beginning in June of 2014, the price of oil continues to stay below the Etp maximum price curve, as predicted by the model.

That's pretty damn good. What more do you want?

I am not sure if oil production is at maximum, but eventually each well will dry up and close.

Then why doesn't that simple equation yield a proper profit for oil producers right now?

"Due to the recent dramatic increase in domestic crude oil production, significant changes in the system have occurred," department spokesman Bill Gibbons said. The test sale was needed to "appropriately assess the system's capabilities in the event of a disruption," he added.

http://www.reuters.com/article/2014/03/12/us-usa-energy-reserves-idUSBREA2B12V20140312

continued next page[/QUOTE]

 

[Write4U]

continued from above.
Tthe release of existing US stock of oil reserves was one reason for lower world prices. Oil companies themselves have enormous stocks of oil in reserve. This oil is already paid for at old low prices and will still yield a hansome profit.

You are leaving out the thermodynamic loop between the economy and the oil production system. Producers do not set the oil price all by themselves. Consumers must be able to afford to buy the oil at a price that includes a profit for the producers. The net energy in a barrel of oil must provide sufficient GDP for this to happen. The Etp model accurately accounts for all of this.

Again I would say it's not the net energy per barrel, but the number of barrels available to do the task.

The Etp predictions are not really counterintuitive at all. It just seems that way because prices must now fall instead of conveniently rising as we have become accustomed to.

Who do you suggest would run such a losing operation, except through government assistance (overtake)?

I don't know what you mean by the principle of "strength through exhaustion". Basic game theory is all you need to account for the current behavior of oil producers.

It was referenced by Bartlett in his lecture..

It has been calculated (i,e, discovered by marketplace), but not predicted with an accuracy of 96.5%. Only the Etp model actually does this.

That is quite remarkable, but I cannot comment on a direct relationship between the two phenomena.

Any untapped barrel of oil that has yet to be produced, can only be produced by using the energy of oil that has already been produced. Think about it. The available quantity under the ground is not relevant, since it is only theoretically producible without using the energy from oil that is already above the ground.

That is basically correct. But we have the Etp model to make a more exact forecast. This is a big improvement over guessing.

It certainly would be. Time will test the model.

Oil is not a mineral. It is our primary energy source. The production of minerals, and everything else, currently requires the energy from oil.

I agree, and we can include coal and gas into that equation.

Sure. The production of oil must pay for itself. It's primary use is as a fuel source and this use sets the oil price. Oil production makes oil available for other uses. This is like a subsidy.

Not really, oil is by its high energy ratio and versatility (its a hydro carbon) a valuable commodity for many purposes.

It is refined and separated, most easily by distillation, into a large number of consumer products, from gasoline (petrol) and kerosene to asphalt and chemical reagents used to make plastics and pharmaceuticals.

https://en.wikipedia.org/wiki/Petroleum

If you mean the equation you suggested, that makes no sense, since your equation does not predict the price of oil.

That's correct, IMO, prices of goods are dependent on so many variables, that anything other than that, in spite of temporary fluctuations, I am inclined to a long term increase in price of oil.. Reason? Production costs will not go down but will relatively go up.

If you mean the already existing second law of thermodynamics, the answer is that the Etp model is a unique application of a second law statement that had never been accomplished before. --Futilitist

If true, it would be an exciting new model. Alas, in this area I don't have sufficient nowledge to contribute.
And for that very reason, my arguments for and against your proposition should be considered as probing rather that an attempt to refute.

 

[Write4U]

continued from above.
Tthe release of existing US stock of oil reserves was one reason for lower world prices. Oil companies themselves have enormous stocks of oil in reserve. This oil is already paid for at old low prices and will still yield a hansome profit.

Unfortunately, we reached that thermodynamic price limit in 2012.

Maybe this will help a little. Before I discovered the Etp model, I created the Futilitist Collapse Challenge:

In the oil price graph above, the black line represents the rising cost of oil production, and the green line represents the falling affordability of oil for consumers. In a reasonably functioning economy, the green line will be above the black line, and oil will trade in between the two lines. In june of 2014, the black line crossed the green line and the price of oil crashed.

Excellent graph. But is this not too general in scope? How wide is the green line? How narrow is the black line?

Also, it does not reveal the initial gross profit margin over cost. If your initial profit is 20% , you can easily drop your price 10% and stil make a good profit. In that case the green line can be extended for awhile from demand of the "specialty" industries (many of a military nature) which can afford corporate controlled higher prices for limited supply of "essential resource", oil.

I can see the black line attain a lower rate of increase (consolidation of companies) resulting in a lower slope and thereby extending the green affordability line, although, no doubt, there would be reduction in consumption.

. In short, oil will lose its value only when it is no longer available at all (outlawed), just like whale oil. There is no demand for a non-product.
But I believe I am beginning to get the gist of the argument, though it seems somewhat esoteric to me, but may well be based on sound science.

C’mon, folks, take the Futilitist challenge. Try to save the world, and prove me wrong at the same time. I dare you.
This was my simple, intuitive way of understanding our situation before I had the definitive physics proof of the Etp model. No one here could solve the Futilitist Collapse Challenge when I presented this in the Apocalypse Soon thread. ---Futilitist

 

[Kondratieff]

Conclusion: Production of Oil as a primary fuel will stop. I totally agree with that. The implications are staggering.

Hello Everyone,

I don't think oil production will stop/ I don't think oil prices will drop to zero dollars in 2021 - that does not make sense - Oil will still be extracted from legacy fields, according to BW Hill.

In fact, I remember reading shortonoil when he said that other effects will start "kicking-in" as it becomes evident that the world would not longer be able to support the extraction of expensive oil. Some of this (more expensive, harder to get) Oil will be transformed into an "energy-carrier", because our society will continue to invest in it using other energy sources to run the petroleum industry (natural gas?, electricity from other sources?). The main reason is that we have invested vast amounts of capital in machinery/vehicles/transportation means that could only function with oil, so it would make sense from a financial point of view to continue with the business. In that case, oil prices will be around 30 $... of course, if the system hasn't broken before

I can't say that BW hill is right - I guess we are going to find it out very soon - but, something that I can't deny is that the industry / oil producing countries need higher prices to replace/explore/extract the present oil reserves.

Best Regards,

 

[origin]

This was my simple, intuitive way of understanding our situation before I had the definitive physics proof of the Etp model. No one here could solve the Futilitist Collapse Challenge when I presented this in the Apocalypse Soon thread.

Delusion is fun, huh?

 

[Beer w/Straw]

Could you link the "Apocalypse Soon" thread?

It's actually sounds pretty wicked.

 

[Futilitist]

I don't think oil production will stop/ I don't think oil prices will drop to zero dollars in 2021 - that does not make sense - Oil will still be extracted from legacy fields, according to BW Hill.

The Etp model forecasted the price of oil with a 96.5% accuracy only up until 2013. That was when we were still on the way up, following the original Etp curve, generated by the second law of thermodynamics. Since 2012, we have been only limited by the Etp maximum price curve. I believe the Etp maximum price curve represents a physics ideal that is unachievable in the real world.

The Etp maximum price curve represents only a best case scenario. Thermodynamically speaking, it is the theoretical perfect trajectory for our civilization during a vicious net energy descent. It is the highest oil price thermodynamically possible, which is great (and necessary) for oil producers. The problem is consumers.

When I first looked at the Etp model, I hypothesized that it would be impossible to follow the Etp maximum price curve in actual practice. To do so would mean that consumers would gain zero net energy profit. I figured there would have to be gap between the maximum price and the actual one. That would seem to be the case, at least so far.

I believed we were already in the early stages of collapse before I ever saw the Etp model. I am glad I found it. I believe it accurately portrays the thermodynamics of the situation and fixes our current position in terms of timing.

There are plenty of very good reasons to believe that things could get catastrophic soon. I won't list them all here.

Limits to Growth came out in 1972. It's author, Dennis Meadows, thinks we are in the early stages of what he calls a multiphasic collapse. That means so many positive feedbacks that you can't accurately predict anything. Chaos. Not the smooth, controlled descent necessary to acheieve BWHill's projections.

Civilization is now beginning to experience what is about to be an unprecedented, massive net energy decline. It makes sense to think this might trigger collapse. I see no reason to suppose that civilization will dodge this bullet.

In fact, I remember reading shortonoil when he said that other effects will start "kicking-in" as it becomes evident that the world would not longer be able to support the extraction of expensive oil. Some of this (more expensive, harder to get) Oil will be transformed into an "energy-carrier", because our society will continue to invest in it using other energy sources to run the petroleum industry (natural gas?, electricity from other sources?). The main reason is that we have invested vast amounts of capital in machinery/vehicles/transportation means that could only function with oil, so it would make sense from a financial point of view to continue with the business. In that case, oil prices will be around 30 $... of course, if the system hasn't broken before

I think BWHill said the price will settle around $11 or so.

I can't say that BW hill is right - I guess we are going to find it out very soon - but, something that I can't deny is that the industry / oil producing countries need higher prices to replace/explore/extract the present oil reserves.

This is absolutely correct. That is why things are about to get exciting.



---Futilitist

 

[Futilitist]

Delusion is fun, huh?

Denial is fun, huh?

Could you link the "Apocalypse Soon" thread?

It's actually sounds pretty wicked.

It's just the coolest thread ever (with the exception of this one, of course). Too bad the management saw fit to lock it.

http://www.sciforums.com/threads/apocalypse-soon.133084/

Enjoy.


---Futilitist

 

[Write4U]

Hello Everyone,

Write4U said: ↑
Conclusion: Production of Oil as a primary fuel will stop. I totally agree with that. The implications are staggering.

I don't think oil production will stop/ I don't think oil prices will drop to zero dollars in 2021 - that does not make sense - Oil will still be extracted from legacy fields, according to BW Hill.

Note: I did qualify the statement as "a primary fuel".

In fact, I remember reading shortonoil when he said that other effects will start "kicking-in" as it becomes evident that the world would not longer be able to support the extraction of expensive oil. Some of this (more expensive, harder to get) Oil will be transformed into an "energy-carrier", because our society will continue to invest in it using other energy sources to run the petroleum industry (natural gas?, electricity from other sources?). The main reason is that we have invested vast amounts of capital in machinery/vehicles/transportation means that could only function with oil, so it would make sense from a financial point of view to continue with the business. In that case, oil prices will be around 30 $... of course, if the system hasn't broken before

The looming question is if we will be ready with alternatives when oil production drops and rising prices make its use for transport no longer viable.

I can't say that BW hill is right - I guess we are going to find it out very soon - but, something that I can't deny is that the industry / oil producing countries need higher prices to replace/explore/extract the present oil reserves. Best Regards,

The prospect scares me. I can foresee great wars with untold suffering. One beneficial side effect is that a drastic drop in population will in part solve the problem. Where man fails to respect Natural law and begins to rely on spiritual guidance, Nature will answer, but not as savior, but with a minor adjustment in the human population problem. As Carlin said, to the earth we are but a surface nuisance and it will solve that problem with an implaccable force known as Natural Selection

 

[Russ_Watters]

OK, people invest in successful corporations to make a profit, fair enough.

But when (fracking) corporation manage to escape EPA restrictions and responsibilities, such as the Halliburton Loophole, the moral dynamics of making a profit change. The equation then changes from honest profit to "profit at cost of other people"....

That's so naive: Corporations care about profit, period. You are trying to split a hair that does not exist.

 

[Russ_Watters]

Hardly. I did not originate peak oil theory. I did not write "Limits to growth". I am not Jay Hanson or David Price or Richard Duncan. I did not create the Etp model.

[Lies skipped for now]
Ok, fine, I concede: your crackpot sources are about as good as the chemtrails and anti-vax crackpots. Big win for you!

For everyone's info; I'm traveling for work for the next week (busy suppressing The Truth and a 100 mpg carburetor), so my participation here will be inconsistent. Not that there'should really anything new anyway, but I do enjoy a crackpot roast! Have fun with the Fute while I'm gone!

 

[Write4U]

That's so naive: Corporations care about profit, period. You are trying to split a hair that does not exist.

Therein lies the problem, they don't care where the profit comes from. Government subsidies with tax payers money, exemptions from EPA regulations (Halliburton Loophole). Lots of profit to made from un-controlled production and just plain old market manipulation. I doubt that Anti Trust laws apply to energy providers.

It is in the splitting of hairs that produce higher profits for oil companies. To an individual a dime is 10 cents. On a Corporate scale a dime (saved) translates into millions of dollars.

Example: Oil R&D are tax deductible expenses, but oil companies do not only declare (deduct) these expenses, but then charge the customer for these write-offs, and add a profit margin on top. Kinda double dipping, IMO.

General example of Big Business manipulations. In response to a question about Trump's bankrupties, I believe he declared three, but that may be wrong. In any case, Trump proudly replied that he had profited handsomely from his manipulation of Bankruptcy Law (designed to protect the poorest). In this process, I believe some 1200 employees lost their jobs.When someone asked if that was an ethical use of this law, he replied "it was legal".

Some Corporations are so big, they actually take on a life of their own. The term is called Tulpa.
Citizens United is proof of the existence of Tulpas ( i.e. a corporation (an abstract entity) is now a "person" with a "voice".

 

[Write4U]

[Lies skipped for now]
Ok, fine, I concede: your crackpot sources are about as good as the chemtrails and anti-vax crackpots. Big win for you!

For everyone's info; I'm traveling for work for the next week (busy suppressing The Truth and a 100 mpg carburetor), so my participation here will be inconsistent. Not that there'should really anything new anyway, but I do enjoy a crackpot roast! Have fun with the Fute while I'm gone!

I wish you a safe trip and great success with the project!

 

[Futilitist]

"Predictions:
Oil prices will begin to creep-up over the next 6 months or so on their own as existing wells dry up and new ones DON'T come online (individual wells don't last long). Then a new equilibrium would be reached somewhere between today's and last year's prices."
~Russ_Watters
April 10, 2015.
Brent Crude price: $56.81

Today's Brent Crude price: $47.71



---Futilitist

 

[krash661]

I think BWHill said the price will settle around $11 or so.


This is absolutely correct. That is why things are about to get exciting.



---Futilitist

except this bw hill guy is clueless as too how oil is tied to cross rates.
do you grasp what cross rates are ?
obviously not, including this bw hill character.