'Having done a lot of research and analysis for years about Saudi proven oil reserves, I reached the final conclusion that Saudi reserves couldn’t be more than 55 billion barrels (bb) rather than the 266 bb the Saudi have been claiming for years.
Moreover, the Saudis haven’t been transparent enough about their production capacity. Their oil production peaked in 2005 at 9.65 million barrels a day (mbd) and has been in decline since. In my estimate, their production capacity doesn’t exceed 8.5 mbd. Moreover, they never had a spare capacity of 2 mbd as they have been claiming because to have such a spare capacity would mean that their production capacity is 12 mbd and this figure has never been tested. When they say they are producing 10 mbd, at least 1.5 mbd come from their stored crude.
With estimated stored crude oil of 130 million barrels , the Saudis could continue to meet their customer needs for less than a month after which their stored oil would have been totally exhausted. The proof they aren’t telling the truth about the timetable for repairs is that they have been telling their customers that some lighter grades would likely be replaced with heavier crude grades.
The truth about Saudi oil potential and reserves will eventually come out. And when it does, the global oil market will get the shock of its life with a horrendous global oil crisis to match.'
There is a very large amount of oil production on hold or at low capacity in North America because the prices are currently too low and very much expected to go higher in the future.
Prices will rise up to 50% but that isn't much of a crisis or unprecedented.
Renewables will become more attractive and their growth will accelerate a little.
If a 50% price increase isn't a crisis, then what is?
And more importantly, oil prices are less important to the economy than most people believe.
TL: DR - Oil prices are not that important
10y ago we were at almost twice the price and developing countries weren't "on strike full-retard" or seeing oil driven defaults.
The closest to a country really being screwed recently by oil prices have been exporters, especially Russia which depends on higher prices to balance its budgets and had been harmed byow prices.
That's not to say that oil prices "aren't important". It's just that every industry/economy/etc had been forced to learn to weather price volatility. That's. Why there is such a developed futures etc market.
Some context: Indonesian govt. subsidizes fuel to quite a large degree, up to ~50% of relative to petrol prices. Over the years, they've been trying to draw down, but it's a touchy subject.
Last year, ~10% of state budget was spent on fuel subsidies (to give us a sense of scale).
indonesian Ministry of Finance state budget 2018
CNN indonesia post saying fuel subsidies was over the alloted budget:
https://www.cnnindonesia.com/ekonomi/20190102172609-532-3580... - sub)
edit: some posterity
I'd argue that this is exactly the sort of price stabilization mechanism that makes oil volatility less scary it sounds on its face. The government is centralizing (and, more controversially, socializing) the financial cost of creating internal price stability. This is actually pretty common, and I'm not sure 10% of budget (at peak) is as outsized as it sounds. In the USA, this takes the form of buying and releasing oil from the strategic reserve, but also in a mountain of foreign policy (read: military) spending on maintaining stable supply lines for energy trading.
Moreover, think of it in the opposite direction. Imagine a getting hit with a 10% tax increase even if a richer guy gets 15%. Him being taxed more doesn't necessarily make that 10 feel much better.
Oil prices were double what they are today in 2014, and triple in the depths of the 2008 recession (before falling to roughly current levels in 2009). They were roughly half current levels in the 2000 recession. They were roughly equal during the oil crisis in the 1970s.
Sudden shocks to oil prices seem to be able to cause recessions, like the 250% increase in 1973 or the 200% increase from 2007-2008, capping off a 500% (!) increase from 2002-2008. But these are a lot bigger than the 50% increase postulated here. We've withstood 50% increases (1994, 2004, 2016) or even 150% increases (dot-com boom) with no ill effects.
It's the prisoners' dilemma, but applied to exploiting consumers!
Oil prices were about 2x of what they are today in early 2010's, and I recall nothing of the sort.
Fortunately for me, they hadn’t read the newspaper lately.
It was a lot of fun to quote the collapsed oil price from a newspaper I found lying around and then relax the rest of the debate.
2015-present the price has been around $50-60 with some points below 30 and above 70
Has that 50% drop been some kind of miracle?
We would just be returning to prices of the previous decade.
[Actually petrol is down about ~7%, 140p->130p per litre https://www.racfoundation.org/data/uk-pump-prices-over-time; and fuel-oil about ~10%, £300->270 per 500 litres https://www.cheapestoil.co.uk/articles/trend. But, compare that to https://www.macrotrends.net/2480/brent-crude-oil-prices-10-y... showing 2012 prices at 4 times 2015 prices.]
I think when people are thinking of "oil prices", as consumers they're converting that to "petrol prices" (and fuel oil if they use that) and thinking "if petrol/heating prices rise >50% that's going to be very hard".
Petrol prices only falling by four-twelths when the crude price fell by nine-twelths suggests that petrol costs a lot on top of the crude price and that a 50% crude increase might lead to, say a >100% petrol price increase.
On top of all of those factors I would only guess that at high prices profit margins fell by ratio which was recovered (or just increased) when prices fell.
Why? If petrol price is fairly inelastic to crude price (for reasons siblings note) that means it would increase a little, not a lot.
Something like 5% of world natural gas consumption is to drive the Haber process to create fertilizer that then drives everything else in modern agriculture. Now, natural gas and oil prices are not as correlated now as they used to be (due to fracking) but there seems to be some residual connection between the two, so that could be something to look out for.
That’s probably it.
A 50% price increase would be bad for people who have to drive and are in a financially precarious situation, but it's not any more a catastrophe than all the other various things that affect people in financially precarious situations, which upper-middle-class people can shrug off as a mild annoyance.
The only times gas has been unavailable for a sustained time is when the government fixed prices or otherwise prevented the market from working.
For example, when there's a natural disaster and anti-gouging laws kick in, gas becomes unavailable.
Later, the DoE started allocating (i.e. rationing) gas to gas stations.
Reagan abolished these by executive order as one of his first acts as President:
and the gas lines disappeared overnight and never returned.
I'm surprised it isn't talked about more. During the gas allocation times, there'd be a glut of gas in Florida and long lines in California because the DoE would allocate gas based on the previous year's usage patterns. Things change constantly, and the DoE was unable to adapt.
I had a friend who bought a gas station. It took him months to get a gas allocation from the DoE because the gas station across the street challenged his allocation, for obvious reasons.
When the market decides where to put the gas, the tanker trucks take gas from the glutted areas and move it to the shortage areas as a natural action. Any reasonable business moves product to where it is selling.
I personally don't think that will ever happen. The increased adoption of renewables means oil demand will not outstrip supply.
The increasing penetration of renewables is dwarfed by increased population + raising living standards.
If the Saudis are under-reporting their reserves, that's why. They don't want oil prices to be higher because it makes alternatives more competitive. It doesn't help them to sell oil for 50% more for a few years while that spurs everyone to buy electric cars and charge them with solar panels, only to have that demand reduction cause oil prices to decline below their current level and stay there forever. Or worse (for them), for consumption to decline to the level that consumers no longer strongly oppose a carbon tax, which would naturally cause consumption to fall off a cliff (as intended) as even more people switch to alternatives.
On top of that, the alternatives need volume to build economies of scale which make them more competitive. This is already happening but would happen faster with higher oil prices, and as it does the result is a permanent reduction in alternative energy costs, making oil less competitive even at lower prices.
They are (kind of), or at least talking loudly about it. They just don't seem to be very good at pulling off these sort of ambitious large scale projects.
Moreover, you don't have to replace all cars to significantly reduce oil demand when each replacement with an electric vehicle reduces that driver's oil consumption by 100%, particularly when the vehicles most likely to be replaced as a result of higher oil prices would be the ones that drive the most miles. On top of that, the non-electric vehicles sold during periods of high gas prices would tend to be high fuel economy vehicles as well, and the vehicles in the existing installed base most likely to be junked would be the most inefficient ones.
The Chinese market in particular is fascinating from an EV perspective. Particularly because it seems to indicate that non-personal vehicles (especially buses, delivery trucks, and semi-trucks) are either going to be not far behind in electrification or even possibly slightly ahead.
It is starting to look like in the US it will be the case that commercial vehicles may electrify faster than the personal vehicle market (at least partly because manufacturers aren't really selling EVs for personal auto sales in a tautological fallacy that they think they won't sell in the US). Amazon's big recent deal with Rivian, for instance, should put a lot of commercial EVs on the streets. UPS' similar older, quieter deals with multiple companies pushing them to hybrid trucks only already and an entire EV fleet supposedly in the next several years. Proterra seems to be making great headwind in the US bus market, as another example.
I think there are some interesting possible big disruptions on the horizon:
- Oil prices go up (as this article is about)
- EVs become the cheapest powertrain option for any new vehicle. VW's ID.3 is already cheaper than all comparable Golf models, and most of the other German manufacturers expect to hit that switchover (due to efficiencies of scale) for almost all their models no later than 2023. (Chinese manufacturers seem to have mostly hit the switchover point already. Most other Asian manufacturers aren't far behind. Traditional US manufacturers GM and Ford are idiots and lagging everyone else again.)
- Somewhat similar to above, a small disruption in the complex web of internal combustion engine supply chains could potentially domino to greatly increase new ICE vehicle costs, and even potentially have similarly drastic consequences to ICE vehicle repair/maintenance costs. Internal combustion engines (especially compared to EV motors) have a lot of little, very specialized parts. Even just one supplier pivoting could have fascinating consequences. (With perhaps the only counter-disruption being something like 3D printing hitting certain machining specifications that seem currently unlikely.)
The middle one is definitely happening. The article here suggests the first one is maybe closer than people expect. The third one is one I'm amusedly watching, and I think is going to be a quick accident after the middle one happens. If German manufacturers move to certain sales benchmarks, that definitely affect global suppliers that are Germany-based such as Bosch, as just one example of many, and GM/Ford certainly have plenty of Bosch pieces in their supply chains, whether they admit it or not.
What about the issues with lithium and coltan supply for batteries ?
What about the ~+33% increase required in electric power generation to replace oil in transportation ?
I just don't see how it could be a "surprisingly quick" transition... even if we had started it early !
Lithium is in large supply (Atomic Number 3, right, third place on the Periodic Table), and is easily recyclable from current batteries.
Cobalt is a miniscule portion of current battery compositions. Most battery companies have been working to minimize or remove it. It should be recyclable, but it's never been economically feasible to recycle it from current battery compositions because a) it is such a minority component of current batteries, and b) Cobalt is cheap. (Cobalt is a "waste product" or by-product of Nickel mining today. The threat to Cobalt supply is that most Nickel mines today are in politically questionable regimes such as Columbia and the Democratic Republic of the Congo. But Nickel mining is likely something that continues to happen regardless of politics.)
> What about the ~+33% increase required in electric power generation to replace oil in transportation ?
If every car on the road today switched to EV tomorrow, but made sure to charge only during the "bathtub" of off-peak (evening) hours, there's absolutely no increase in power generation needed. Our culture's day-time peak generation capability, which has to account for most of our industrial use, is more than sufficient so long as consumers are smart about when they charge.
(The difference between Peak demand during the day and off-peak evening hours really is huge. "Filling in the bathtub" that the off-peak hours create in the demand chart is considered something of a holy grail for decades in utility grid planning because it would mean more base load generation that doesn't have to shut down every night and can run more continuously/smoothly every day.)
Smart Grid solutions exist and are being planned where cars can even help solve demand problems by acting as sitting batteries (as owners allow them to) that utilities can "loan" power from a car during peak demands, and pay back with "interest" during off-peak (and potentially doing so at an incredibly granular level).
All of which is to say that there are already market solutions to the increased electricity consumption of EVs.
Peak rates might go up, perhaps, but the natural tendency of most EV owners is already to charge during off-peak (at home on the evenings), even without the extra incentives of big cost differentials between peak and off-peak utility rates. Most EVs today already have okay off-peak hours selection tools built-in, even without the detailed electricity price-sensitivity options that Smart Grids might eventually bring to the market. (But Smart Grids are certainly on utility road maps because there's a lot they could do with that extra demand sensitivity.)
I've yet to hear a worst case for EV electricity demand that would need 33% more capacity at Peak demand. That's an interesting and presumably unlikely scenario.
Being at the 3rd place in the atomic table isn't a guarantee of availability - after all hydrogen is first, is 75% of the mass of the universe, and yet isn't directly available to us ! (at a low cost)
And recycling batteries won't help much when the goal is to massively increase production...
The only EV producer that's outright complained about battery availability is Tesla, and it's very easy to wonder how much of that was marketing spin to cover other production issues (and the accusation of the traditional car manufacturers that car production is hard and has huge startup hurdles), and maybe even PR/marketing spin to their own investors to explain insourcing battery production (building the "gigafactory") rather than partnering with an existing battery manufacturer.
Tesla probably has scaled faster than most other car companies, but yet it has also scaled much less comparably (to say Renault or VW just signing delivery or plant contracts in partnership with existing battery manufacturers rather than building their own factories from 100% "scratch").
I'd love to see a better analysis of the battery market right now. I'm betting the catch-22 that car manufacturers don't feel a lot of consumer demand for EVs has more on bottlenecking EV production than batteries in the current term.
Not arguing, but here's the data that should be reconciled:
And for most of the period on that graph, we didn't have the alternatives we do today. When oil prices spiked in 1979, people bought smaller cars that got better mileage, but they still ran on petroleum and used gas stations, and then people started buying petrol SUVs when gas prices came back down. If that happens in 2020 then people buy electric cars rather than econoboxes, and then we get more charging infrastructure and more battery research and economies of scale, and there would be no obvious advantage in ever switching back even if oil prices subsequently declined to their current level.
No such thing. Prices will always hit a point where demand decreases. Inelastic isn't 100%.
So, it’s true, right up until it’s not
Good old-fashioned fraud. Oil prices had nothing to do with it.
Source: acquaintance who spent three years in court testifying about the rampant fraud in the mortgage industry. He worked for an investment bank which is no longer with us.
But I guess that it's a bit academical, as that bubble would have popped soon enough anyway...
You realize that this is the clusterfuck? no? We are looking to a Jojo effect. Oil prices too high? Recession. Oil prices too low? Oil producers can't afford to invest and produce (what is already happening now).
This is actually the reason why we will never run out of oil. No kidding. I assume most of the oil will stay there, where it is. In the ground!
Which is how the free market prevents shortages. Whenever there's a sustained shortage or glut, look for government interference.
Why? Why would it not simply stabilize at say 20% higher than now?
> This is actually the reason why we will never run out of oil.
That is either word games or nonsense. People will keep extracting oil and there is only finitely much available at reasonable prices. Note that "run out" here does not mean there is no oil left. Just like a country "running out of food" does not mean that there is nothing edible anywhere in the whole world.
How about 100 or 150%? Above 100 USD you may be able to afford gas. Many people can't.
"That is either word games or nonsense. People will keep extracting oil and there is only finitely much available at reasonable prices."
There are two points you ignore.
Falling ROEI (return of energy invested) on energy invested. Good oil has a ROEI over 20 (over 100 AFAIK for the first wells long time ago). This is sinking. It is 1:2 ROEI for shale gas. At 1:1 if does not make sense to try extracting.
The same with money. Energy and money are interlinked.
Have a look of the money invested for further exploitation by big oil companies. Constantly sinking. The problem is you need high oil prices to justify investments. At the same time running an economy above 100 USD for oil is tricky. People can simply not afford it. Maybe you can, again, many people cant.
This has nothing to do with what you quoted or what we were discussing.
> At the same time running an economy above 100 USD for oil is tricky. People can simply not afford it. Maybe you can, again, many people cant.
Exactly my point.
Question: when will earth’s oil reserves be 100 percent depleted?
OK, timeout. Before you grab a pencil and break out the scratch paper, I should warn you — the answer isn’t 14.2 years. Or 20.4 years. Or any other number of years.
Of course it will, because we have mroe than enough oil to burn to put out enough CO2 to take us to +20 deg warming or more. So unless we get cheap CCS (carbon capture and storage) it's a good thing that most of the oil stays in the ground.
Non-obviously, only about half of the price of filling up is for the natural gas, the other half is electricity cost to compress it to pressures way beyond the pipeline pressure. This makes home based filling impractical, and CNG filling stations are fairly sparse.
Source: In 2017, I _really_ wanted to get a CNG Crown Vic/Town Car for HOV access, part of which was planning for a purchase in Los Angeles and driving to the Bay Area, refueling on the way; with the limited range, and without access to PG&E stations, I'd need to go up the coast, because I wouldn't make it on the 5.
I owned an LPG-fueled car and it was really no different than gas-fueled one, other than more frequent need for refuel (I had a small tank installed where the spare tire used to be, and it only had around 100 miles of range).
In the 90's (!) much of the taxi fleet (and a good number of trucks) in Moscow, Russia was powered by CNG. Everything worked fine, in spite of a much lower level of technological advancement. If gasoline were to permanently go to $6+/gal, and the industry was deregulated a little, you'd see CNG retrofits that cost sub $1K and last for the lifetime of the car in basically no time at all. All the tech has been in place for decades, it's just a matter of demand now.
> tanks are supposed to be inspected every 3 years, and they expire 20-30 years after manufacture (and the tanks may have been manufactured much earlier than your vehicle). Some fuel stations (notably, PG&E's) require proof of recent inspection. And, replacing the tanks when they expire isn't economically feasible, leaving you with a lump of coal.
wouldn't all of these problems be addressed more adequately by a larger potential customer base & supporting infrastructure? (e.g. annual car inspection==tank inspection, cost decreasing due to bigger market, etc)
broader point still stands I think - if this was required of everyone every year, a secondary market like propane tanks for backyard grills, etc would probably emerge or it would be part of mfg warranties.
side note: no, I don't think market solves everything.
China has sub-$15k equivalent EVs today. Cheap EVs are certainly physically possible even with today's scales, and partly it's just the catch-22 perception hump of "EVs are only for early adopters and luxury cars" (for both consumers and manufacturers) keeping EVs from hitting some scale benchmarks to push them cheaper.
The used market still isn't showing a lot of EVs, but that seems to be that statistically most EV owners keep their cars for longer. That's an interesting statistic, that maybe points to reliability on one side, and a possibly very different replacement rate on the other side. Which is to say that the average EV first owner is currently keeping their vehicle for 7-10 years rather than the 4-5 year replacement rate that has been of typical of ICE vehicle sales. (If EV owners were only keeping their cars for 4-5 years, as you suggest of some hypothetical "HN bubble" that would be a lot more of them on the used car market, and in turn fewer complaints of the high cost of EVs. The long first life of an EV is also keeping the costs up and affecting depreciation rates.)
I'd love to get an EV one day, when the pricing is less nutty than it is today. But it has to be economically viable for me. Right now it's not.
And for electricity, the utilities actually need the extra demand because of energy efficiency reducing lighting costs and distributed solar and subsidized wind providing occasional gluts. Since EVs can fairly easily be set to charge (most the time) on a schedule when electricity is most abundant, this is good for everyone.
EDIT : Whoops, my bad, somehow forgot that we were talking about transportation, which is "only" a quarter of power use...
So you need to go from 24 to 24+(34-1)/4 = ~32 Gwh/year, a 33% increase, and you expect to be able to do that in 2-3 years ?!
(Napkin calculations, not taking into account various (in)efficiencies and intermittency issues, but the order of magnitude should be roughly this one...)
US average electricity is ~475 Gigawatts. But there's a huge difference between average electricity and nameplate capacity. Natural gas peaker plants have about a 200GW nameplate capacity in the US but only produce about 25GW average. If we ran just the peaker plants all-out, we'd generate an additional 175Gigawatts.
US gasoline consumption is about 400 million gallons per day. I drive a Volt, and typically I get about the same range in 10 kWh that I would in a single gallon (Model 3s do even better, however). So roughly speaking, We'd need about 4 TWh per day, or about 167 Gigawatts average extra. Technically, averaged over the year, then, our peaker plants would have enough extra capacity to produce enough electricity. But natural gas combined cycle plants would also generate about another 100GW if ran all-out. (None of this is terribly realistic as there will be local transmission constraints and weather-related demand spikes which the peaker plants are needed for, but it is instructive.)
However, it'd take a good 10-15 years to mostly turnover the whole gas car market in the US even with a revived "cash for clunkers" program, so the capacity expansion would have plenty of time to sort these things out. We can expand solar and wind over this time even while phasing out gas.
The main thing, however, is the battery production.
It's 4% of electricity coming from oil, sorry for the confusion.
(Hmm, I might have made another mistake here - eh, it's smaller than the uncertainty anyway...)
167/475 = 35%
Nice to see that the math seems to check out with your data too. The issue of intermittence would warrant whole books of studies, hard to do it properly in comments here...
(Hint: we don't. It's estimated it would take us minimum of 2 years to complete the required infrastructure build out)
I don't see how this negates the parent w/r/t the parents-parent.
Unfortunately we aren't going to run out of oil anywhere near soon enough to save the planet. We need to do it the hard way.
And it never meant running out. It's exactly what it says on the tin: a peak and a probably very long tail of decline.
There is also "peak oil" as the prophecy of imminent collapse of industrial civilization, which was a much bigger thing a decade or so ago. It may still have some loyal believers.
I think that people unfortunately have the means to extract far more oil than we have the means to safely burn in Earth's atmosphere.
You are talking about peak oil supply. Instead, what if we run into peak oil demand.
IE, instead of running out of oil, we run out of oil demand, as everyone moves away from oil onto better technologies.
The cost of solar panels and wind has been going down dramatically over the last couple decades, and is only continuing to do so.
The percentage of electric cars is also increasing.
There is a lot of oil in the ground. It isn't going to run out in the next decade. By which time these technologies will have become even better.
In brief, the idea is that once we enter a decline phase in fossil fuel availability — first in petroleum — our growth-based economic system will struggle to cope with a contraction of its very lifeblood. Fuel prices will skyrocket, some individuals and exporting nations will react by hoarding, and energy scarcity will quickly become the new norm. The invisible hand of the market will slap us silly demanding a new energy infrastructure based on non-fossil solutions. But here’s the rub. The construction of that shiny new infrastructure requires not just money, but... energy. And that’s the very commodity in short supply. Will we really be willing to sacrifice additional energy in the short term - effectively steepening the decline - for a long-term energy plan? It’s a trap!
Yes, "we" would be willing to tolerate the use of increasingly scarce fossil energy to build non-fossil energy resources. Because the "we" investing in new non-fossil energy is largely separate from the "we" who worry about paying this month's bills if gasoline prices go up by a dollar a gallon.
Investors care about what consumers want insofar as they see a way to profit by building things that consumers will pay for. Building non-fossil energy projects in a time of high fossil energy costs counts. Depleting their investment capital to temporarily subsidize retail level prices of fossil-derived energy doesn't count. They were never going to offer to do the latter, and even populist politicians (of the American variety) rarely propose seizing wealth to directly subsidize gasoline/electricity/natural gas at the retail level. American politicians have different approaches to making energy cheaper.
There's a relatively small number of countries in the world that directly subsidize fossil fuels at the retail level for large swaths of the population. If this blog entry were written about e.g. India or Egypt I would find the political/institutional problem with higher fossil energy prices plausible as described. But it doesn't describe most of the world's democracies, nor China (for different reasons), nor most other countries.
For instance, in Europe road transportation fuels tend to be heavily taxed - so they have the option of lowering those taxes to amortize any potential oil shocks (but not too long, and at the cost of taking the budget hit - a bit like India/Egypt in the end...)
It's only people pushed toward bad decisions by short-term desperation (weak government leaders facing rioting, individuals too poor to steer market investment decisions) whose behaviors would set up this "energy trap." Market-driven investors and rational governments alike will invest resources into reducing future consumption of an increasingly expensive fuel even if it somewhat exacerbates the immediate problems caused by higher fuel prices.
 Building nuclear reactors as a reaction to high oil prices made more sense than may be obvious now. At the time, France actually did produce a lot of electricity by burning oil. Oil-fueled electricity became much less popular after the 1970s except in petro-states and in isolated locations. Surprisingly, Pakistan managed to make the same mistake in the 1990s of building oil-fired electricity plants, which became very expensive to operate less than a decade later.
And Macron was really an idiot when he thought that asking the poorest people to pay the most for the ecological transition was going to fly...
But isn't this also a symptom of an energy trap - the government itself not having any slack left for long-term planning ?
(Note that, in the end, the above seems to be very similar to issues in Egypt - government balance taking a hit due to less income from fossil fuels - well except that the Egypt issues are more dramatic, being caused by the country becoming a gas importer instead of exporter...)
And I am saying that it is going to take us a much longer time to run out of oil, than it is to build all that new infrastructure. Not because building the infrastructure is easy, but because there is a whole lot of oil in the ground, and therefore we have a lot of time.
IE, people will stop using oil, because the price of solar, ect has gone down, way before we come close to actually running out of oil.
I am indeed unsure (and a bit scared) about the potential from oil sands (and maybe shale oil = kerogen).
The potential oil production capacity of the world has massively increased, because of fracking.
And if oil prices go up, a whole lot of oil in the US and Canada , become immediately profitable to extract.
I think you are severely underestimating how much non conventional oil there is, that we could start extracting, if it became profitable.
No, it's not.
> All resources on Earth are finite. What’s special about oil?
Nothing; it would be special if it was an extractable resource and didn't have a peak where utility vs. cost of extraction meant that extraction declined from the peak.
> Why not peak aluminum or peak concrete or peak cobalt?
Aluminum and Cobalt, as extractable resources, will probably also have extraction peaks.
Now there are multiple schools of thought, but one of them holds that when reality diverges so much from theory as in this plot, it’s time to question the theory.
For example, Mad Max in 1979 comes from that sentiment.
These were real problems people faced, although it wasn't exactly a full panic.
Oil "scares" on the other hand were threats that raised eyebrows, and caused dramatic price fluctuations in anticipation potential problems. Each "scare" really only hit the wallet and bank account, without altering real behavior.
In that sense, yes, there were a few other "scares" between Jimmy Carter and present day. Each grouping came periodically, maybe every ten years. Almost all of them were tied to Iraq.
The first was the invasion of Kuwait in 1991. I think gas prices blew past $2/gallon for the first time.
The second was 9/11, and $4/gallon gas starting late 2001. This one was rough. Pretty much everyone I knew was groaning about gas prices, and with Iraq invasion rumors people started thinking $5 would break them.
The 2003 Iraq invasion actually resulted in a downward trend (due to international theft or spoils), but it's ever been below $2 again, and it's been back up to $4 at the pump, here and there, depending on geographic region and state taxes, here and there.
With the 2008 meltdown, oil prices weren't displaying any gouging, and there wasn't much of a scare at the 2001 decade mark, because as others have mentioned, fracking has buoyed domestic production.
We're going to have to do this the hard way, as the other poster mentioned. Decide to keep it in the ground.
Additionally, tar sands are very marginal economically. Arguably not profitable right now. Fracking tight oil is cheaper, and even that is not being pursued as vigorously as it was when oil prices were higher.
And there are environmental regulations that get in the way of oil shale/kerogen extraction. And for good reason.
Which encourages renewable development. Renewables would not be as successful today with oil at $20/bbl.
Solar can be cheaper for daytime generation before it's cheaper for nighttime generation (when you need to tack on the cost of storage). Electric cars may already have a lower TCO, but if you already have an ICE car, it may not be worth the transaction costs of immediately selling it and buying an electric car instead of waiting until you would have bought a new car anyway, whereas it could be if gas prices were higher. The TCO is also affected by how much you drive, so the gas price that justifies replacing your car depends on how much you drive it.
There isn't a price level where $0.01 below it no one can justify buying an electric car and $0.01 above it everyone can. The higher oil prices get, the more people end up on the other side of the line.
The real question is, as the old cars become unreliable and age out of service, how does the TCO compare as between the new cars that will replace them?
I fully expect that electric cars will have a reasonable TCO in the future.
For traders, at exactly which point matters a lot.
> Unfortunately we aren't going to run out of oil anywhere near soon enough to save the planet.
Yes, it's probably a good estimate: It doesn't mean that we won't achieve the "peak" in some decades, eventually even "more expensive" options will be used up, just that that won't prevent having much more CO2 than now.
"The main conclusion of this study is this from 2018:
-only 6 countries have not yet reached peak: Brazil, Canada oilsands, Kazakhstan, Iraq, UAE,
-19 countries (out of 35) have or will have a decline rate of 5 %/a
It means that, excluding the 6 countries before peak, the best and the simplest way to forecast
future production is to decrease present production by 5 % per year"
"6 countries have not yet reached peak" and "excluding the 6 countries" surely doesn't sound like "peak" everywhere.
So yes, it seems that, at longest, in "some" decades the global peak will do happen. Laherrere also documents why the exact predictions are hard (see all the graphs there).
My point is more, whoever thinks that "scientists will always find something" surely thinks in short enough frames. There is a finite amount of fossil fuel material on Earth.
OPEC had been keeping the prices around 100 until the tar sands extraction became big and they had to drastically cut prices because they couldn't handle the loss of revenue.
There is an enormous amount of oil tied up in those tar sands and it is very extricable, but it is considerably more expensive to extract such that it isn't economical at current prices.
No one bought SUVs in 2008-2010, but now they're one of the most popular types of cars and ford has alltogether stopped making car models
The greater the cost the more conservation makes business sense.
If an efficient fridge is only 15$/month cheaper it's not replacing your current fridge. At 50$/month it quickly pays off.
It is now just a matter of capital costs replacing old infrastructure with new while ramping up the industries that provide the replacements.
Inefficiencies scale with ramp up speed, but if you increase the cost of fossil fuels those inefficiencies are more competitive so you get a faster ramp-up.
Estimates generally exceed the total known amount of in-ground crude oil.
Enough to supply North America for a century.
Enough that it would never all be used, the price of extraction guarantees other renewable sources of energy will be very competitive while petroleum products will remain available near the previous peak raw petroleum prices from a few years ago (prices collapsed when production of this newer source started to ramp up).
It has been a really good foreign policy lever against Russia and unfriendly middle-east countries, limiting their oil profits and always holding over their heads that we could subsidize the shit out of it and drive them into poverty and ruin.
(Also, "it would never all be used" is a given, what is the expected "peak gas" date ?)
2.) shale oil is NOT being extracted - you're confusing with tight oil
3.) we don't know whether extracting shale oil even makes sense - for all we know, it might never become economically and energetically viable
(IMHO, considering global warming, tight oil/gas & tar sands did not make sense in the first place either - especially since the whole tight oil industry hasn't even shown to be financially and therefore probably energetically profitable !)
4.) even if we did, the (E)ROI (and therefore, the pollution involved) is likely to be dismal
5.) a century ago, world oil production was a few million barrels per day, you can't just both assume business as usual and the consumption to stay flat when taking into account future consumption...
Just looking at solar and battery manufacturing growth, on the order of $100 billion / year is being invested annually in these technologies. I think it’s very reasonable to conclude that doubling the investment would not nearly double the rate of advances, because all the top experts are already fully employed and fully funded.
So that's ~$380 G$/y for "just" the "top banks".
From a public investment perspective, the trend is that fossil fuel R&D is shrinking, and renewables investment is increasing or steady. Renewables public investment was first higher than fossil fuels in 1998, and has been higher than fossil fuel public investment 9 out of the last 10 years. 
 - https://www.iea.org/statistics/rdd/
And I see that the biggest US tight oil firms had a deficit of nearly 7 G$ for 2018, so I'd assume that their development costs (which are the majority of their costs due to the very high depletion rate) are even higher - so where does yours "order of magnitude greater" comes from ?
It's pretty much a wash.
Don't expect higher oil prices to spur renewables, it has never happened, and never will. Instead renewables become profitable (and thus popular) when we become more efficient at making and installing them.
I want to see some data to back up this claim.
> It's pretty much a wash.
I guess you'd need energy to make up >90% of the cost to make it "pretty much a wash"?
I'll try to get some, but do a thought experiment: What component of, say, a solar panel cost is not energy?
> I guess you'd need energy to make up >90% of the cost to make it "pretty much a wash"?
Yes, and it is.
Not in terms of you have to pay oil companies all that money, but rather that energy is the multiplier that all prices are based off of.
If oil costs go up, then your suppliers costs go up, all the way down the chain. Including salaries - since the workers need more money to buy stuff, they want higher salaries.
Think about what is costs to make something, every single thing, at it's endpoint costs energy.
So oil tripling overnight would not result in a tripling of energy prices. There would be a small increase as load is shifted to other sources.. and there would be an increase in transportation costs of solar panel delivery. But the cost of a panel would barely increase. And those factories near nuclear, hydro, etc plants would see a slight competitive advantage over those in areas where energy comes from oil (but again, coal is a big source of energy.. oil much less so).
By the very nature of energy, oil prices CAN'T triple without all other energy sources also tripling.
If there was a shortage of oil then the price of oil simply could not go up unless there just wasn't enough energy from other sources. Oil (and natural gas) are the most flexible of all energy sources, most of them are pretty maxed out, but oil and gas can adjust to take up slack.
Here’s retail energy prices: https://www.eia.gov/totalenergy/data/annual/showtext.php?t=p...
Show me where it went up anything close to 5x
This is false. You can't freely substitute oil with nuclear-generation as price vary. There are a huge number of cars and airplanes and plastics production that depend on oil.
The title is total trash, and it seemed alarmist but IIRC the premise of the entire book is basically what you describe, at least in my very pedestrian understanding of energy / petroleum markets.
Are you familiar with this title, or the author? Your post makes me want to pull it out for a re-read.
edit: maybe not. really spotty reviews. 
 - https://www.amazon.com/Coming-Economic-Collapse-Thrive-Barre...
 - https://www.goodreads.com/review/show/13711731
And of course oil reserves have had the unfortunate tendency to significantly increase whenever the oil price is high.
Because they're planning to IPO? Surely if Aramco had double the production capacity, it would be worth more to investors because it would be better equipped to handle disruptions.
>What Saudi is trying to do by not revealing the true picture is to protect its reputation as a reliable oil supplier, especially to its target clientele in Asia, so we have to take all of these comments with a hefty pinch of salt,
It isn't necessarily trivial to raise production.
I'm skeptical. Maybe the Saudis don't have the capacity they say they do. They have the capacity that they're delivering, though, and that capacity is enough for the needs of the market...
... until some other supplier has a problem. But while the results may be a shock and a crisis, I suspect it won't quite add up to the apocalyptic terms of the quote.
SA inflating their production and capacity numbers is perfectly possible (and probably likely), but that kind of writing is not exactly trustworthy.
But some things to think about:
* With modern drone/missle capabilities, it seems quite easy to severely compromise global oil and gas production with just a few targeted strikes; mainly on the big refineries. Quite scary.
* Is Iran, after years of fighting proxy wars, now moving towards more direct conflict with Saudi Arabia?
I mean the Saudis have been commuting war crimes in Yemen, Iran may've supplied some equipment, but I certainly think the Yemenis would be motivated enough themselves.
The "anti-Houthi militias" are local branches of ISIS and al-qaida.
Which makes the current US policy even more confusing.
This whole mess escalated when houthi rebels tried to stop ISIS from taking over the government. Where did those come from? What did the Saudis do? At what point did they started bombing civilians??
Do you see the red line?
ISIS and al-Qaeda were not involved in any of the maneuvering around Sana'a, and the Saudi intervention kicked off when they realized that a) Hadi still had a power base in the south, and b) the Houthis were about to capture it
While true, in many countries a group like Al-Islah would probably be described in the Western media as "linked to ISIS" or something similar. They're part of the Muslim Brotherhood also regularly maligned in the West.
They're still being supported by the US military, with billions in arm sales, tactical support, and a heavy involvement in the ongoing blockade. While the Houthi forces can claim rather minor support from Iran.
And yes, it is unsourced...because the point is very much that OPEC is using this data to determine things like production share, so there is a massive incentive to fabricate data which no-one can prove.
The Trans-Arabian pipeline for example is a whopping 1214 km (754 mi) long!
Bottom line is that crazy shit happens. There is no way to mitigate all the substantial risks.
FYI it's not in use anymore.
Seriously, this might work for stopping people walking up to the pipeline with explosives - but it wouldn't stop someone with an RPG, recreational drone or (lol) cruise missile.
Half the battle within OPEC was over who lies how much and everyone coming to the table to figure that out and come to guidelines about production that are largely general guidelines in practice. Sort of "Ok everyone we're all way off the agreed numbers way too much let's dial it back for a bit." agreements.
I want to say that I've heard representatives in OPEC have openly say such things plenty of times.
The recent attacks are said to have cut Saudi production by 50%.
The Saudis claim production capacity of ca. 12 mbd. 6 mbd lost to attack. Their estimated stores are at ca. 180 million barrels.
To keep a happy face, the Saudis could sell from their stores to offset for the loss of Abqaiq and Khurais, but this can only be kept up a limited time, as the store is empty in roughly 30 days.
The time to fix the damage has been estimated at 8 months.
Does this mean the Saudis face losing 50% of their oil income in about 30 days?
I see articles linked quite often on EV forums I follow
I only remember Upstream  from when I was briefly in the oil industry ten years ago
I've read the site on an occasional basis for years. Usually I only end up there when looking for recent production updates. They often have good industry updates on production, expansion, etc. There is also plenty of quackery, over the top conspiracy writing, mediocre speculation and very questionable pumping & bashing.
This implication is so far beyond the pale it borders on satire.
Maybe those behind the attacks also went long, and some hedge funds picked up on that. Or maybe they just did a better job of understanding the escalation in recent months.
That is why, as a general rule, every year they "discover" approximately the same amount of oil they produced/delivered that year.
But maybe they'll "settle" for less. After all there is money to be made, the haggling is just about the price.
Counterintuitively, a high price may actually be scarier for SA than a low price. It may cause competitors to invest in exploration. And where fixed, initial cost make up a large part of costs, some competitors may continue to produce even if prices fall, and even if the investment was based on wrong estimates and may never actually reach break-even.
SA running out of oil would also hasten efforts to replace oil with renewables.
The typical reason for an IPO is a company in its early life phase which needs money to grow. There is no lack of cash in SA, so why would they sell off Aramco, if it had a great future?