The continuing crisis

Before Rogue resumes its regular commentary schedule next week, here are a few things that couldn't help but distract me from book-writing (and this was before I saw the New York Times' shocking story today on deforestation and climate change). Our perpetual state of war continues, moving more into Yemen and Somalia with secret CIA and DOD drone bases. Now American citizens can be targeted, without due process, for hellfire missiles. And while we may say al-Awlaki had it coming, one must wonder if hellfire missiles along with the entire security apparatus erected since 9/11/01 will not eventually be used in the streets and even cul-de-sacs of America. We're still leaving Iraq on George W. Bush's timetable. Did we "win"? Tom Ricks writes that somebody did, and it wasn't us, except for the "us" that's involved in the Military-Industrial Complex and D.C. real estate. We have become such a moral beacon to the world that Iran cited Gitmo in holding those U.S. "hikers" in solitary.

The economy is worse now than a month ago, and more analysts, economists and commentators are realizing a point I made some time ago: We're in depression territory. We don't have to be, but the cowardice of the Obama administration combined with the nihilism of the Republicans, all under the umbrella of the quiet coup of moneyed interests, have left us paralyzed and bewildered. The Occupy Wall Street movement is noble but small and mostly ignored by the corporate media. True, if the same numbers were Tea Party members, they would garner nationwide coverage.

Friends keep telling me of the coming working-class revolt (Mark Thoma writes about such here). I'll believe it when I see it. Civil insurrection is certainly likely as America continues its downward course, but it will play out with minorities burning their own neighborhoods and the whites and other better-offs retreating even deeper into suburban apartheid. The Revolution in a nation of dolts could only be caused by taking away television, video games, smart phones and cheap gasoline. Then, to the barricades!

Our collective madness has not dissipated in the least. We're doing nothing to address climate change. Same with peak oil, aside from the latest brightside piece of oil-industry propaganda by Daniel Yergin. The Republicans could easily win the presidency next year if they weren't so crazy. Bachmann and Perry have imploded, but the closest thing to an electable candidate, Mitt Romney, can't win the primaries. We shall see. I don't believe the Obama rhetoric in the least. Won't get fooled again.

See you Monday.

 

Comments

[Petro]

"The Occupy Wall Street movement is... mostly ignored by the corporate media."

That is a feature, not a bug. It inflames and legitimizes the movement.

Estimates range between 4,000 and 5,000 in New York today.

Some Marines are marching up there as we speak:

http://www.facebook.com/wardpeace

I think I just saw a pig fly by...

[AWinter]

As evidenced in Egypt, the revolts only come if the bread & circuses run out. A battered working class or a police state is a resident feature in most countries - 'nobody' cares about those things. The troubles start when the middle class falls down and even the fabled "creative class" is not exempted.
http://entertainment.salon.com/2011/10/01/creative_class_is_a_lie/singleton

This particular collapse has been happening in stages since the early 70s and will go on as a slow baroque squeeze. Amidst the political incoherence the puny uprisings will come asymmetrically -- no nationwide revolution will be televised. There will rather be regional losses of marbles (see AZ).

[Emil Pulsifer]

"Same with peak oil, aside from the latest brightside piece of oil-industry propaganda by Daniel Yergin."

Unfortunately, "peak oil" advocates seem to be every bit as dogmatic as the brightest "brightsiders".

I took a look at the Oil Drum article Mr. Talton seems inspired by:

http://www.theoildrum.com/node/8391?utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A+theoildrum+%28The+Oil+Drum%29

The author argues that "peak oil" has already occurred and as evidence offers the fact that oil production has been more or less stuck at a plateau since 2004. You can see what he means by looking at the following graph (scroll down the page for the hard numbers):

http://www.indexmundi.com/energy.aspx?product=oil&graph=production

One obvious problem with his argument is that, if a plateau lasting half a dozen years indicated peak oil, then by the same standards peak oil occurred dozens of times throughout the 20th century. Look at the graph (and especially the hard numbers) and you'll find similar plateaus from 1980-1989, 1990-1996, and so on.

That's because demand for oil depends upon economic activity and economic growth, and that isn't something that occurs continually, but in spurts. Above all, total production relies upon total demand. Now, take a look at this graph of world real GDP growth:

http://www.indexmundi.com/g/g.aspx?v=66&c=xx&l=en

Note that from 2004 the SAME plateau exists: if you look at the hard numbers for oil production, you'll even see the same sharp downward spike for 2009 in world oil production that you see in world GDP.

The fact remains that vast new supplies of canadian tar sands oil are coming online and the only thing standing in the way (not for long) is a distribution pipeline to get the oil to the United States or to the coast where it can be shipped to China.

"After a brief hiatus during the economic downturn, world oil consumption is rising again, pushing the price of a barrel towards $100. By 2035, believes the International Energy Agency (IEA), demand may reach 110m barrels per day (b/d), about 20% more than in 2009. For those who exploit the tar sands, which contain the world’s second-largest trove of oil, this is a welcome forecast. . .Thirst for fuel is not the only thing in the oilmen’s favour. The cost of production has fallen: a few years ago most firms thought the break-even price was $75 per barrel, but now companies such as Shell say new developments are economical at $50. The provincial and federal governments are unsurprisingly supportive."

http://www.economist.com/node/17959688

Is The Economist a shill for Big Oil too? How about the IEA? Is everybody (except of course for The Oil Drum)?

Incidentally, you can get an idea of what The Economist is talking about in terms of an production uptick by examining a version of the oil production graph given above but showing production growth rates rather than quantities:

http://www.indexmundi.com/energy.aspx?product=oil&graph=production

The problem of course is that the world economy is again stagnating, so not all of the conclusions of The Economist in January 2011 may apply, especially to the immediate future.

[AWinter]

Although Mr Yergin won't admit as much, the views of the pessimists and the optimists have been converging. Peak Oil used to be dismissed as a concept, now Mr Yergin predicts Peak Oil around 2030. Pessimists used to look only at hard geological limits, now they have included economics, new supplies, peak demand (not in a particularly pleasant way) into Peak Oil. By the way, production plateaus of the past had the added benefit of low, stable prices - no longer. The 'consensus' seems to be that oil production will stay under 100mb/d, the CEO of Total saying 95mb/d is "optimistic", the IEA saying 96mb/d is doable but uncertain. The 110mb/d scenario seems unreachable because of the rather terrifying decline of 4-5% per year in existing production. Demand in a healthy economy maybe would be so but who says the production rates will materialize and who guarantees the economy will be healthy, high oil prices and all?
The tar sands are low flow resources that will never exceed 3.5mb/d. Important but no savior of the world economy if that's lost in a single year. If Mr Yergin had accurately predicted reality we would have had well over 100mb/d by now at $35. Hasn't happened, won't happen. At least The Economist had the fortitude to admit that they were wrong about "cheap oil forever".

[koreyel]

Jon writes:

"True, if the same numbers were Tea Party members, they would garner nationwide coverage."

Aye.

And we'd have reels of judiciously edited video where mom and grandpa say with tears, "we just want a country back".

Which is all to hint:

It is way past time to start referencing the Tea Party as the "Oligarch's Tea Party". After all: Ownership where ownership is due...

Anybody besides me notice that when the Oligarch's Tea Party was young it was all afire about Wall Street? That was merely to build up the membership roles. Then by-and-by the powers-that-be faded out that populist track. Now you don't hear a single Tea Party leader saying anything about Wall Street (save that they are over-regulated).

My vote for dumbest Americans ever?

Ma and Grandpa Teabagger and the rest of the ignorant white slobs who let themselves become the tools of rogue billionaires. All chumps, who got played for chump change...

[koreyel]

Emil writes:

"One obvious problem with his argument is that, if a plateau lasting half a dozen years indicated peak oil..."
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

The idea of peak oil isn't predicated on that graph. Consider the first paragraph on peak oil from the Wikipedia:

"This concept is based on the observed production rates of individual oil wells, projected reserves and the combined production rate of a field of related oil wells."

Another important point: 20 million barrels.

That's a figure everyone should have in their heads. Why? Because that's the daily consumption of oil for the U.S. Every argument for and against drilling and conversation should be based first on that fact. IMHO failure to have that number in one's head, ought to disqualify one from any discussion on the topic...

Next....

How many millions of barrels will the Tar Sands pipe schlep every day? I wouldn't ask that question if I didn't know the answer. Does anybody here know off the top of their heads? Because again, IMHO failure to have that number firmly planted in one's head, ought to disqualify one from participation...

Now back to brightside and darkside, gloom and doom:

The solution to global warming and peak oil is one and the same. And no, it's not an Amish buggy, or in the oligarchical nonsense that there is endless supply of oil and global warming is a hoax. Please. I don't do stupid...

No. Global warming and our need for fuel are of such a scale that there is only thing that can match that scale: Life itself. Just as all the oxygen in our atmosphere was initially created by microbes, so it is to microbes humanity must turn to mute global warming and to provide the fuel.

All that is already being deeply investigated by scientists and engineers, and a ton of public and private money. The future of your children totally depend on our ability to manipulate the genomes of eukaryotes and prokaryotes. Our ability to do that is continuing on at exponential pace. Again it is a race: Scale versus scale versus scale...

I realize that not 1 in 10,000 Americans realize any of this and that many are being taught global warming is a hoax, science is a scam, and Big Government regulation is the problem. But don't blame me. Blame your oligarchs their teevee stations, and their puppet politicians. They are the ones making Ma and Grandpa Teabagger jump up and down like loons and shout: Drill. Dummy. Drill! All without knowing the first damn thing about the Keeling curve, or U.S. oil consumption per day, or the amount of oil the Tar Sands pipe will carry...

http://scrippsco2.ucsd.edu/program_history/keeling_curve_lessons.html

[Barry Graham]

If there isn't a revolt, I think revolution is still inevitable: http://dogobarrygraham.blogspot.com/2011/10/revolt-or-revolution.html

[azrebel]

koreyel,

very , very interesting info. thank you.

20 million barrels per day

pipeline 500,000 barrels per day

I'm sure Sarah Palin or Michelle O'Bachmann can work out the math. They are much smarter than me.

I will take your information and run it by Gov. Brewer and the AZ Republican legislature. I'm sure their analysis will set the record straight for us.

ANd I'm only asking this question because I know it is going to come up: Any chance of us putting a one cent per gallon tax on that pipeline oil so that we can help our schools? After all, the education of our children is our number one priority.

[Petro]

@Barry Graham, nice blog.

Question: Do you still think the #OccupyWallStreet protests are "not working," per your 9/27 post?

Do you still hold that the MSM is necessary for their growth?

(I'm not being confrontational, just wondering if your mind has been changed by the events of last weekend, and the growing #OccupyEverywhere phenomenon.)

[Rate Crimes]

"then by the same standards peak oil occurred dozens of times" - Emil P

As they say, "those were different times."

You appear to be ignoring spare capacity numbers. Your mention of the tar sands does not include EROEI.

[azrebel]

A Revolution vs A Gathering of the Cranky.

Just my opinion, but what we are seeing so far is a gathering of the cranky.

A revolution requires an empty belly, a thirsty throat or some condition that makes the human body so uncomfortable that any action is possible as long as it has the potential to stop the suffering the body is feeling.

Castro didn't start the Revolution at the buffet line in one of Cuba's casinos. It was out in the jungle with tired, hungry,thirsty, poor peasants with nothing to lose.

On this intellectual blog, never forget, we're animals first.

Millions of years uncivilized.
5,000 years civilized.

Easy to fall back on old ways.

[Petro]

For the first time in a long time, I am decidedly not feeling cranky.

[soleri]

You do not want to hear interviews with Occupy Wall Street protesters. You might pledge undying allegiance to them and solidarity with the cause. But behind the theater is little more than incoherent if well-meaning anger. What else could it be? Would it be better if we had a Council of the Concerned headed by Paul Krugman, Elizabeth Warren, and Bernie Sanders? Perhaps, but the fundamental problem is institutional failure. We keep thinking we can elect different politicians, or found a third party, or unleash a civic tidal wave among Hispanics that would rescue this nation. But it's too late for the unicorns-and-rainbows theory of "change you can believe in". We're failing because we no have longer have the capacity to generate necessary political reform. The citizenry is dumb with its own self-pleasuring escapism. The media? As stupid and possibly worse. We are experiencing something like sleep paralysis in an unprecedented economic and political crisis.

This crisis is worse than the Great Depression. In the 1930s, America was still a manufacturing powerhouse, culturally coherent and politically sane. Our debt was manageable and most workers were skilled and hard-working. There was a genuine left in America (located among actual workers, not just hipsters). The right was, then as now, vicious and bigoted, but there wasn't the horrifying specter of a major political party celebrating crude ignorance and meanness.

Ultimately, there will probably be a war. I'm not a romantic about these things because it's unlikely to unfold as we might like. Most of the military, the para-military public safety workers, and the quasi-militia gun nuts are on the right. Good luck beating them. But there's another way short of gun violence and oppression. It's the virtual opt-out where former consumers no longer submerge their authentic selves in a decadent empire of soul-crushing economic sectors. Instead of driving, you walk or bicycle. Instead of television, you tell stories and sing. Instead of exhausting your spirit in treadmills of "work", you develop new skills in crafts and gardening. Instead of medicating your physical self with toxic and expensive drugs, you heal yourself with real food and supportive community.

This is what I hope to see instead of demonstrations that will mislead us into thinking there's a political solution out there. It's too late for incrementalist reform. The sclerosis is too far advanced. So, I'll take a page from Jim Kunstler (World Made By Hand) and hope that some of us can find another way. This is going to be ugly and brutal no matter what happens. If you're on this site, you know better than most what's at stake.

[soleri]

http://politics.salon.com/2011/10/02/reactionary_mind_interview/

[cal Lash]

Soleri is the wisdom. A combination of all the great thinkers and I always let his comments swivel thru my mind like a good martini swishes thru my senses.
Also thanks Koreyel and AWinter for great insight and very readable commentary.
And after a review of Grahams blog I offer a quote From David Deutsch’s new book, The Beginning of Infinity.
“The earth’s biosphere is INCAPABLE of sustaining human life, because unlike other species, we are sustained by the knowledge that we have to keep creating.”

[Emil Pulsifer]

"A Winter" wrote: "The 110mb/d scenario seems unreachable because of the rather terrifying decline of 4-5% per year in existing production."

World oil production has been at a plateau between 70 and 72 million barrels per year since 2004 (not declining, but bouncing around within that range). Five percent of 70 is 3.5. Obviously there is no "decline of 4-5 percent per year" in existing production, if by "existing production" you mean total world oil production. Scroll down to look at the hard numbers:

http://www.indexmundi.com/energy.aspx?product=oil&graph=production

"The 'consensus' seems to be that oil production will stay under 100mb/d, the CEO of Total saying 95mb/d is 'optimistic', the IEA saying 96mb/d is doable but uncertain."

The January 2011 article in The Economist article cites an IEA projection of 110 mb/d by 2030. (Peak oil advocates sometimes fail to understand that references to oil "demand" are actually references to oil producton.) The IEA's 2009 reference scenario (the most recent one I can find) explicitly projects crude oil production in 2030 at 103.8 mb/d "not including processing gains" (which would further increase production). In a 2011, BP projects 102 mb/d by 2030.

But let's assume that peak production is 90-95 mb/d. Obviously, we're not at peak. As for the future, demand for non-producible oil simply can't occur: "demand" refers to actual bids on real supplies, not an abstract wish. That provides a limit on economic activity for which oil is a necessary input (else motivates technological adjustments that permit this restriction to be evaded). That means "peak oil" cannot drive prices up indefinitely, even when it is reached. "Peak oil" is simply another way of saying "a balance between demand and supply" -- at least, for as long as actual production can be maintained at a given level. This means that economic production in excess of that will need to be driven by other forms of energy or that productivity will need to increase (as indeed, it has historically and continues to), or both.

"If Mr Yergin had accurately predicted reality we would have had well over 100mb/d by now at $35."

That's a non sequitur: by the same logic, if peak oil advocates had correctly predicted reality, we would have reached peak oil many times over the past 40 years.

Koreyel wrote: "The idea of peak oil isn't predicated on that graph."

And yet the author of the Oil Drum article cites his own letter to the editor of the Wall Street Journal in support of just such a thesis: "Some people might call this "Peak Oil,” and we appear to have hit the plateau in 2005, not some time around mid-century."

Almost out of time. Maybe more tomorrow.

[azrebel]

Emil, I'm sitting in my closet with my shotgun, a months supply of Coast Guard approved survival food, two gallons of water, a 12 pack of Northern tissue rolls.

When you say, "Almost out of time", did you mean HUMANITY, or did you mean your computer time?

Please advise ASAP, it's hot in here.

[Petro]

@soleri:

"But there's another way short of gun violence and oppression. It's the virtual opt-out where former consumers no longer submerge their authentic selves in a decadent empire of soul-crushing economic sectors."

This has been a cant of mine since, well, since I've been "canting." I agree 100%. I interpret the #OccupyWallstreet differently than you - they are not demonstrations, but merely the much-needed carving out of the psychological space necessary for a tipping-point of people to realistically embrace opting-out. The re-validation of the consumer-crushed souls.

I don't necessarily even think that they are even conscious of what they are doing right now. But I see it. I see it well.

[Petro]

"...we are sustained by the knowledge that we have to keep creating."

*Have* to?

Somebody has a mouse in their pocket.

[Mick]

With great respect, many of you are missing something. Climate change and peak oil are utterly meaningless to people who are starving today. There are Americans starving to death at this very minute. In Florida there are large numbers of malnourished Americans. The US is in a crisis at this very minute.

We desperately need for the Wall Street protests to turn into an extremely violent revolution.

A violent revolution with severe punishment for the Corporate Thugs is the only way to save the United States.

[Petro]

Nice try, Mick. Unless "violent revolution" is your method of population reduction. Or something.

[Mick]

Folks, I am a pharmacist with clinical training, and if I lost my job, I would starve. Pharmacists can't get jobs in the US. Registered nurses in Florida cannot get jobs. It doesn't matter what your skills or background are. No one is hiring. The job market is horrible for nearly everyone, in every state.

In Florida, when a job is advertised, there are literally thousands of applicants.

If anyone knows of locations with better job prospects, I'm all ears.

I recently applied for a government pharmacy job, and was told that I am among 60 applicants that they will be interviewing -- for one position.

The US has one really big problem -- there are not enough jobs.

[Mick]

The Tea Party does not even believe the nonsense that they spout. The Tea Party nut cases want to abolish Medicare -- for other people, but they want a plan that let them keep their coverage. They want a border fence, but want cheap labor and hire illegal immigrants themselves. They denounce Obama's health care reform, but demand free prescriptions and free medical care for themselves. The Tea Party is a big stupid scam and a joke. They just want all the money and benefits for themselves. They want benefits but don't want to pay taxes. The Tea Party is complete garbage and only a flaming idiot or a complete liar would buy into any of that nonsense. Anyone who belongs to the Tea Party should be prohibited from voting, because anyone who is criminally insane, completely corrupt, or completely brain-dead should probably not be allowed to vote. The Tea Party is just one big bag of bull excrement.

[Mick]

Here is why a violent revolutions makes perfect sense.

Some Americans are going to have to choose to either quietly starve to death, or go out shooting.

I would prefer to pick up an AK-47 and go out shooting. Starving is not pretty.

There is not a chance in Hell of getting a job if you get laid off. The Republicans and Tea Party jerks want to take away Food Stamps and Medicaid.

Which is better? Starving to death, or going down in a revolt against the despicable government that deliberately starved you to death?

[Mick]

The Corporate Nazis that are starving us to death are not going to be deterred by voting. They will only understand bullets and death.

It's going to take war to save this country.

The Corporate Nazis (Republicans, Tea Party, CEOs, billionaires, etc.) are going to turn the US into one giant concentration camp were 99% of the populace is starved to death while they work.

[Mick]

Imagine a future in which the Republican Party and the Tea Party have been wiped out in a revolution. NONE of them have survived.

Do you think we might have a better chance of saving our country?

I say "YES."

[Mick]

On a happier note: maybe Obama should declare a national emergency (as he might if we had suffered a nuclear attack) and find a way to create government jobs (rebuilding infrastructure) for 20 million US citizens. He could immediately withdraw from Iraq and Afghanistan. He could immediately order "disaster aid" to anyone who can't get food or shelter or health care.

He should do this no matter what Congress does and dare the Republicans to fight him. He should send food and trailers and tents to Americans who desperately need it, by executive order. The Republicans would fight him, because they want Americans to starve to death. Republicans hate the idea of Americans getting paid to work.

This would destroy the Republicans in 2012. Starving people are not going to vote for the monsters who took their food away.

The US has one problem at the very core -- not enough jobs.

The entire focus of US policy should be on job creation. The Republicans are 100% wrong about everything.

[cal lash]

I hear Chapo is hiring pharmacists

[pat L]

Yes, Mick, even here in prosperous Seattle, I have several over 50 year old friends who have been laid off from work. Needless to say, they are terrified. One friend, B, tells me she can get a whopping $16 PER MONTH in food stamps,while she tries to figure out how to pay rent. I'm not sure how a frightened population will start this revolution, but we've got lots of terrified citizens - more than enough to go around!
Don't worry about the next election - Diebold voting machines will take care of that, heh, heh!

[azrebel]

Rogue, just finished your column in the Seattle paper.

I'm thinking that with it being October and "revolution" is in the air, we may need to edit Shakespeare's famous line: "The first thing we do, is kill all the BANKERS."

then the lawyers. We mustn't forget the lawyers.

[AWinter]

4-5% is obviously not the net decline. It is currently more or less offset by that wonderful, six times as expensive as in 1995-2004, 'vast', new production that's being brought onstream. Running up an escalator that's going down is a tough sport. At some point they will lose, I believe in this decade.

"This means that economic production in excess of that will need to be driven by other forms of energy or that productivity will need to increase (as indeed, it has historically and continues to), or both."

Here is where we part ways. Just because there will be a gap doesn't mean it will be automatically and completely filled by increased productivity or alternatives. In the long run most of it will be curtailment, i.e. consecutive recessions, transfer of wealth, what have you. With a population set to reach 9-9.5 billion, rapidly industrializing and growing China & India & oil exporting countries, how is that demand not going to clash with a stagnant or declining production rate? For instance the OECD countries now use ~4mb/d less due to the crisis. Those 4mb/d were happily taken up by the emerging players. Are we doing well?

Re the non sequitor. Sure, fair enough. Just wanted to point that out since Yergin harps on about Peak Oilers being wrong all the time and therefore Peak Oil as predicted will not materialize. 99.999% of all predictions are wrong including those sunny predictions by oil companies. But by how much?

[cal lash]

Me thinketh Yergin has confused science with prophesy.

[eclecticdog]

azrebel, you need more water. How many shells you got?

[eclecticdog]

barry, I like your solution to the financial crisis! Any mods necessary for the lawyers?

[Emil Pulsifer]

"A Winter" wrote:

"The tar sands are low flow resources that will never exceed 3.5mb/d. Important but no savior of the world economy if that's lost in a single year."

Nope. The figure of 3.5 mb/d is for 2025 and is not a maximum. See here:

http://www.capp.ca/aboutUs/mediaCentre/NewsReleases/Pages/2010-Oil-Forecast.aspx#fV6oiGOhp8Tx

But the production curve really ramps up from there. By 2078 the U.S. Energy Information Administration (EIA, not to be confused with the IEA) estimates that Canadian tar sands oil ALONE will be 41 billion barrels per year: that's 112 mb/d from that source alone. That doesn't even begin to take into account Venezuela. See p. 16 and the graph titled "Canadia Bitumen: A Potential Path from Resource Base to Production", p. 16 of the following slide show:

http://www.eia.gov/neic/speeches/Caruso061305.pdf

(Incidentally, that's from 2005 so estimates may have changed.)

"azrebel" wrote: "pipeline 500,000 barrels per day"

Actually, the XL pipeline is eventually expected to carry up to 900,000 barrels per day.

http://www.earthworksaction.org/KeystoneXLpipeline.cfm

If this still seems inadequate relative to the 20 mb/d the United States consumes (21 percent of U.S. oil comes from Canada, and 99 percent of Canadian oil exports go to the U.S.), bear in mind that this is a SINGLE pipeline. At the moment tar sands output is only 1.5 mb/d so immediate construction of numerous pipelines (whether to the U.S. or to the Canadian coast where it can be loaded aboard ships bound for China) shouldn't be expected.

Sorry I didn't get this posted yesterday, but I was harried and short of time.

[Emil Pulsifer]

P.S. That should have read 21 percent of U.S. oil imports come from Canada.

[Emil Pulsifer]

Incidentally, I need to point out a problem with my initial post to this thread at top. The graph I gave for "world real GDP growth" was correctly labeled but didn't EXACTLY address the point I intended because it shows annual growth RATES, so the plateau from 2004 to 2007 represents steady growth not steady demand.

A better graph re world demand is here:

http://www.indexmundi.com/g/g.aspx?v=67&c=xx&l=en

This doesn't support my point nearly as well because the plateau doesn't start until 2006. However, it's unclear to me whether the graph points are based on real (inflation adjusted) or nominal dollar values for each year, so it may yet be that my point was correct. Regardless, there are also a number of technical issues with this new graph, because PPP (purchasing power parity) measures of GDP are controversial and subject to a variety of objections, many of which remain obscure to me. So, caveat emptor.

[AWinter]

"A Potential Path from Resource Base to Production". That chart is junk (sorry). First, they assume a recovery factor of 60% out of thin air. Then they assume -for whatever reason- that the 6% growth rate will continue (till 2078). That's not even a prediction that's an arbitrary guess. Actual reserve estimates however are under 200 billion barrels. The title of that chart is ridiculous too. There is no "path" to 112 mb/d. Where is the water and energy going to come from to melt the tar? The natural gas, chemicals to crack it? The light crude oil that still needs to be added to make it transportable by pipelines. Actually, they're thinking of building a pipeline from South to North just to accomodate that need. However, it could be difficult for 112mb/d...

A study estimated the hard physical limit at 6mb/d some time around 2040 if economics are more or less suspended. To achieve that nuclear reactors would have to be built to provide heat and electricity. The actual production curve will be much longer and flatter. That doesn't have to be bad news. It means that resource will be with us for a longer time.
http://www.fysast.uu.se/ges/files/Tarsandsarticle.pdf

[Emil Pulsifer]

"A Winter" wrote:

" 'A Potential Path from Resource Base to Production'. That chart is junk (sorry). First, they assume a recovery factor of 60% out of thin air. Then they assume -for whatever reason- that the 6% growth rate will continue (till 2078). That's not even a prediction that's an arbitrary guess. Actual reserve estimates however are under 200 billion barrels."

First, the Canadian government estimates that there are 1.8 trillion barrels in place. See the table titled "Reserves and production summary, 2010" on page 5 (internal document page number) of this 2011 report:

http://www.ercb.ca/docs/products/STs/st98_current.pdf

The CEO of Shell Canada, Clive Mather, estimates Canada's reserves to be 2 trillion barrels or more. I'm not sure where EIA gets 2.37 trillion (still looking) but it isn't that far off of either the official Canadian or private industry estimates.

As for recoverable reserves, the latest Canadian government figures (see the same table linked to above) show 315 billion barrels in "ultimate recoverable potential". That's a conservative 17 percent recovery rate which assumes conventional methods; but oil companies using the steam assisted gravity drainage (SAGD) method of extracting bitumen report that they can recover over 60% with little effort. "This allows recovery rates of 60% to 70% of oil in place, even in formations with many thin shale barriers" and "production that can be as high as 70% to 80% of oil in place in suitable reservoirs".

http://en.wikipedia.org/wiki/Steam-assisted_gravity_drainage

You may argue (probably will) but that's scarcely out of thin air.

The 6.1 percent annual growth rate is an extrapolation of average historical growth (as the chart makes clear). It seems not unreasonable since future resources will be devoted to tar sands oil production to a far greater extent than historical trends to date (or at the time the EIA chart (slide) was produced in 2005).

I may have more on this when time permits. My current Internet session has almost expired.

[AWinter]

I maintain, to take the 60% empirical factor of SAGD and apply it to the whole resource base is questionable at best. 60% recovery factor of what? Of whatever is accessible and economical under in-situ operation. There is a reason why the official reserves or "ultimate recoverable potential" are under 200b or 315b barrels respectively.

And to extrapolate a hitherto 6% growth rate well into the second half of the century is sheer fantasy. Long before that, tar sands extraction will run into the constraints I mentioned.

[Emil Pulsifer]

OK, "A Winter", I think I managed to discover where the EIA got its "2.37 trillion barrels" figure for Canadian bitumen in place. It wasn't that difficult to figure out, since on p. 10 of the EIA slide show it mentions that the EIA model "Relies on the USGS WPA2000 resource estimates. They reflect the most modern, thorough, and detailed study of world petroleum resources ever made" and elsewhere in the slide show the USGS 2000 is cited:

http://www.eia.gov/neic/speeches/Caruso061305.pdf

Now see table 4.2 "33 natural bitumen basins ranked by volumes of total original natural bitumen in place" in the U.S. Geological Survey report "Heavy Oil and Natural Bitumen Resources in Geological Basins of the World" (2007), which attributes 2.33 trillion barrels "total original natural bitumen in place" to the "Western Canada Sedimentary" province (final page):

http://pubs.usgs.gov/of/2007/1084/OF2007-1084v1.pdf

Even though 2.37 is slightly different from 2.33 it seems clear that USGS is the source for the EIA estimates of tar sands oil in place: also remember that the USGS report linked to above is from 2007 so slight differences from earlier documents originating from its 2000 survey is to be expected.

[Emil Pulsifer]

"A Winter wrote": "There is a reason why the official reserves or 'ultimate recoverable potential' [is 315b barrels]".

But the reason seems to be that the official estimate in question (of recoverable reserves) deliberately assumes conventional methods, not that enhanced methods cannot yield greater recoverable reserves. As the U.S. Geological Survey report linked to above mentions on p. 2:

"Only in Canada are reserves reported separately as recoverable by primary or enhanced methods."

http://pubs.usgs.gov/of/2007/1084/OF2007-1084v1.pdf

I'll see if I can find some "enhanced method" estimates.

[Emil Pulsifer]

P.S. Still looking, but on the face of it, 315 billion recoverable barrels out of 1804 billion (1.8 trillion) barrels of Canadian bitumen in place = a 17 percent recovery rate; that's consistent with primary recovery methods but not with enhanced recovery methods, with the latter ranging from 40 to 80 percent recovery rates.

According to the Canadian government, "approximately 80 percent of oil sands will be recovered through in situ production, with only 20 percent recoverable through mining".

If enhanced methods apply to in situ production, and enhanced methods yield a 40-80 percent recovery rate, then even taking the lower range of this, we have:

In place Canadian oil sands: 1.8 trillion barrels.

80 percent recoverable in situ: 1.44 trillion barrels.

Enhanced methods of in situ production at 40 percent recovery rate: 576 billion barrels.

And that's undoubtedly an understatement since average enhanced recovery rates are actually higher, even at present, and likely will improve with technical refinements over the next 50 years. The results are also higher if we assume instead 2.3 trillion barrels in place.

And, that's just the Canadian bitumen recoverable through in situ production.