Beyond the Peak Oil Delusion: Two Scenarios for Oil Markets



Oil prices have declined substantially from the heady “peak oil delusion days” of the last decade. Now we are offered two separate narratives explaining why oil prices are likely to stay low: Demand depletion vs. splintered demand.

The first [narrative] centred on technology. Amy Myers Jaffe of the University of California Davis suggested that a “technology revolution” will further decouple energy use from economic growth. Big Oil no longer dominates, and Chinese demand can no longer be relied on… with every new indicator of falling demand, the impetus will be for suppliers to pump out more, and turn their resources into money while they still can.

Another narrative, hinging on geopolitics, came from the geopolitical strategist and former diplomat Peter Zeihan. He suggests that oil will cease to be a global market… Mr Zeihan pointed out that China, Japan, Taiwan and South Korea, all dependent on oil imports, are geographically far removed from any oilfields. They risk being drawn into conflict with each other, as they compete to send navies to escort tankers all the way home.

___ FT (sub)

Short Video: Dependence of China on Global Trade

Why China must grab and control territory that is not China’s — violating international law — in order to have any chance to control its access to global trade in the future. The alternative would be to cooperate peacefully with the outside world, which would not be like today’s China at all.

The peak oil delusion still rules supreme among people with nothing important to do or think about. But serious people need to pay closer attention to what is actually going on, so that they can adjust their plans as the global geopolitical and economic picture inevitably shifts.

Unlike the peak oil armageddon delusion and the climate apocalypse cult hoax, in the real world there are genuine concerns.

Global Financial Tremors: SWIFT Banking System Hacked Again

__ SWIFT, the global financial messaging network that banks use to move billions of dollars every day, warned on Thursday of a second malware attack similar to the one that led to February’s $81 million cyber heist at the Bangladesh central bank.

… The organization [SWIFT], a Belgian co-operative owned by member banks and used by 11,000 financial institutions globally, said that forensic experts believe the second case showed that the Bangladesh heist “was not a single occurrence, but part of a wider and highly adaptive campaign targeting banks.” __ Another SWIFT Heist

If (presumably Russian and Chinese) criminal/state organisations are successfully hacking the global money transfer system, the infrastructure of global trade and economics is not as secure as governments and media pretend. That might cause some people a bit of concern.

Simulating the End of the World

In the years since it was incorporated by the Department of Homeland Security by Congress, NISAC has assembled a multidisciplinary team of physicists, geologists, data and environmental scientists, computer programmers, and more, all to try to comprehend the marvelous, terrifying complexity that touches every aspect of our daily lives.

… In one 2009 paper, NISAC analyzed how fear will affect cities in the days after an attack or pandemic. “The impacts to food demand caused by household stress, fear, hoarding, and observing others doing the same could be far greater than those caused simply by the disease itself,” conclude the three authors.

… In many cases, NISAC’s job is to show why the government shouldn’t be concerned about a particular disruption. Adaptation isn’t always negative; in fact, humans are remarkably good at surviving. Modeling how humans will respond to crises is its own scientific challenge—and one that’s important for NISAC. __

In the days of hoaxed holocausts, it is important that at least some groups of bright people with top computing resources can get together and look at potentially serious problems from the ground-level up — without all of the madding crowd assumptions that pollute so much of modern discourse from governments, media, academia, political lobbies / foundations / thinktanks etc.

Collateral Supplies and Infrastructures

Humans organise themselves on many levels, to supply basic needs. From the individual level to the family to the non-governmental community to the governments on all scales, hierarchies of supply and control tend to form almost spontaneously. But all of these supply structures and infrastructures contain fatal flaws and weaknesses.

Recent concerns about resilience and anti-fragility have seeped into the public sphere — largely via alternative, non-official pathways of information. The combination of robust resilience with anti-fragility would involve adding a lot of (often ad-hoc) parallel pathways of supply and infrastructure to human comminities on all scales. And it would absolutely involve the incorporation of much higher levels of competence (and Dangerousness) into our young.

Robust Resilience and Anti-Fragility Involves Knowing What Won’t Work (Among Other Things)

It will do no one any good to sink resources into expensive parallel energy infrastructures that are dependent upon grid-scale wind and solar energy. Big wind and big solar are unpredictable, low-quality, exorbitantly expensive sources of unreliable energy that cannot be depended upon even at the best of times — much less in the worst. Learning to trash the bad ideas wisely but quickly can mark the difference between a culture that survives, and one that commits suicide.

But the concepts of micro-grids and micro-supplies in parallel with vulnerable central grids and supplies, make a great deal of sense from the standpoint of robust resilience. Likewise, a toughening of grid and generation infrastructures against EMP, cyber-attack, and physical attack, make sense from a robustly resilient perspective.

It is Never Too Late for a Dangerous Childhood

A human network cannot be resilient or anti-fragile if its nodes are incompetent, fragile, and corrupt. This is the problem of modern governments, academia, foundations, think tanks, media, and political organisations of all types.

A strong injection of competent Dangerousness is needed. For the most part, such an injection must take place from the bottom up at this time — given the general corruption and incompetence so prevalent at the top levels of media, government, academia, etc.

While focusing on helping to build competent Dangerousness within the human infrastructure, we also need to focus upon building parallel infrastructure and supply lines.

Hope for the best. Prepare for the worst. It is never too late (or too early) to have a Dangerous Childhood.


Commodity Price Cycles

150 Years of Boom and Bust
Super Cycles of Commodities Prices to the mid 1800s

Peak Oil Delusion as another Historic Price Mania

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7 Responses to Beyond the Peak Oil Delusion: Two Scenarios for Oil Markets

  1. yoananda says:

    climate change and peak oil are backed with solid academic (not main stream though) science.

    • alfin2101 says:

      “Climate change” and “peak oil” are poorly defined phrases that are not backed by anything at all. First, define your terms precisely, eg, “catastrophic anthropogenic global warming” then provide actual solid backing to support the better defined assertion. The term “climate change” is pure bull shite, since climate always has changed and always will change as long as the planet has oceans, an atmosphere, and variable orbital cycles around a variable sun.

      Likewise, the term “peak oil” is pure ambivalence. Define your terms, provide some sort of time horizon, then support them with something more than tautological arguments (computer models) and groupthink claims.

      For example, in place of “peak oil,” use the term “global economic collapse from hydrocarbon fuel scarcity.” Predict a time range within which such a collapse will occur, and provide a scale of magnitude for the collapse. Then provide solid evidence to support your claim.

      Any other type of comment, such as the comment above, is worse than meaningless.

      • yoananda says:

        Fair enough.
        Don’t have the time right now. It would require a very long post to meet your requirements.
        In the meantime (like I said, plenty of academic research on the subject, it’s just the last one I read) :

        The Low and Best Guess (BG) scenarios suggest that world fossil
        fuel production may peak before 2025 and decline rapidly thereafter

        • alfin2101 says:

          “The Low and Best Guess (BG) scenarios suggest that world fossil
          fuel production may peak before 2025 and decline rapidly thereafter”

          The key words are “may peak before 2025” connected to the the phrase “decline rapidly thereafter.” Of course, anything at all “may happen before 2025” so the prediction is conveniently safe until 2025.

          This prediction (scenario) is almost identical to scenarios dating back to the early, mid, and late 20th centuries, and the early 21st century. The dates were different of course, and have passed long ago, unremarked and unrepented. The methodologies for the legions of prior failed predictions over the past century were virtually identical to the methodology for the predictions (scenarios) given at your linked source. So, new predictions based upon the same methodologies of dozens of failed predictions spread over the past century. Not impressive, my friend.

          First explain why the dozens of almost identical past predictions based upon almost identical methodologies have failed. Then tell me why the new predictions are so credible.

          The same reasoning applies to long term climate prediction. Chaotic systems such as climate are not amenable to the tautological computer models (GIGO) which are the best that can be done at this time — and for the foreseeable future. The butcher’s thumb is on the scale of climate prediction, and any result obtained in that way will be spurious.

          • yoananda says:

            1st, “may” is just scientific jargon. Maybe you are not used to read them.
            2nd, there are plenty of false prediction, and plenty of good ones too. Not all of them are failure. Most of the time it’s in between.
            3rd, like I said, there are plenty of acedemic publications on the subjet. I just gave ONE of them. Maybe you don’t like this one, maybe you are not satisfied with all of them, but, still, it’s the best and most serious studies we have on the subject.
            Predicting peak oil will not happen MUST be backed with serious argument. Saying “it has not happen till now” is not one of them 😉
            4th, the best argument I’ve seen is sumerized like this : perpetual growing need faster and faster innovation cycle. We are approching COGNITVE (collectives) limits of theses innovation cycles. (I’m obviously speaking of an academic paper, which have examined the speed of theses cycles)
            To my knowledge it’s the best explanation I read.

            (I hope my english is not too bad, I’m french).

          • alfin2101 says:

            It is true that an infinite number of failed prior predictions cannot in themselves invalidate future predictions. But warning bells should go off in wise mens’ heads, suggesting deeper levels of logic involved than are being acknowledged by current arguments.

            The question is not whether the Earth is a finite planet or that there must be a limit to the amount of hydrocarbons that can be economically produced and consumed. That assertion is simply a truism, too simple and obvious to even state in an intelligent conversation. It is a question of timing, ingenuity, substitution, and complex adaptation on many levels. Most contemporarily educated persons are not prepared to follow the trails of multi-level logic to understand why past predictions of doom have failed, and why it is extremely likely — although not guaranteed — that similarly based future predictions of doom are also likely to fail.

            Your best argument above may well be the best that “peak oilers” can come up with. The “complexity” argument by the students of Tainter is very similar. Arguments by Gail Tverberg are likewise similar and quite cogent for the most part.

            The fatal flaw in those arguments is the inability to view these realities on multiple logical levels — where “phase changes” are possible. The false dichotomy of “doom vs. cornucopia” or “catastrophic disruption vs. business as usual” exposes the superficiality of the lines of reasoning as surely as a large dunce cap.

            If you have not seen it or thought it through, you like most bystanders are at the mercy of your prior experience. I can certainly not blame you for that. The fact that reality is more complex than humans can imagine gives everyone a blanket (and for all practical purposes, valid) excuse for pursuing an infinite array of diverging, poorly defined, unsupported points of view.

            Intelligence, creativity, and razor-sharp logic are insufficient. One must be able to follow multiple lines of reasoning on multiple logical levels, all at the same time — weighing incomplete evidence that is subject to rapid change at any time. Humans cannot typically do this thing. 😉

            Non-linear phase changes, complexity, non-deterministic chaotic processes, all play their parts, and cannot be reliably modeled using modern or near-future technology.

            The good thing about your link (“peak oil in 2025 followed by rapid decline”) is that its scenarios are attached to time frames, and predict subsequent events. That way, it is clear when the prediction fails.

            And everyone was so sure that the peak would happen in 2005! Back to the drawing board.

  2. Matt Musson says:

    I believe a limited Nuclear Exchange in the Middle East between Iran, Saudi Arabia and Israel will elimiate a majority of Middle East Oil and Infrastructure. Not only will the price of oil skyrocket – it might have at least a limited cooling effect on the planet. And, arguements about Peak Oil will be moot.

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