Infinite URR?

I posted on this topic awhile back, but it deserves another look because the idea provides a strong talking point to use against the cornucopians who like to play with numbers. In particular, Michael Lynch provides a foil to test the argument against. I pulled the following from disinformation he spouted on DemocracyNow last Friday:

MICHAEL LYNCH: Actually, I think the problem here is that Julian and a lot of the people making these arguments are not that familiar with the technical terms in the oil industry. The estimates that there's about two trillion barrels of oil resource are actually done by some very simplistic models, which have not always failed, but almost always failed on both the national and a global level. The oil conventional oil resource base, the oil in place, is about eight to ten trillion barrels. And right now, most estimates are that about 40% of that will be recovered, in other words, about three, three-and-a-half trillion. But the amount we'll recover will grow over time. So we're not -- we're really not even close to halfway through the conventional oil resource base.

Here, Lynch claims that we have no worries as the global economy has over 3 trillion barrels left in reserves, i.e. a relatively healthy URR.

Well, I can do him one better and claim that we can have an infinite supply left, yet we will still have to face a peak in production.

To create such a scenario, we need only to create a production profile that -- when integrated from now to eternity -- tends to an infinite cumulative value. Simple enough, the following curve¹ does this quite nicely:

Production(Time) = A/(B + C*abs(Time-T0))

The curve, for a T0=2007, looks like the following:

It looks innocent enough on the way up, and then goes through what looks like a precipitous drop, a sure sign that we have entered a doomster realm. Right? Well, not quite. The long tail that this curve contains actually contains a huge bonanza of future returns, why, a veritable cornucopia of oil!

Too bad it completely trashes Lynch's rosy assessment, which he clearly built off a dodgy initial premise. In reality, we have no idea how that purported 3 trillion, or infinite amount, in reserve will play out. On the bright side, we should have lots of time to find an alternative source to keep our productivity and life-style moving forward.

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¹ If you think this curve a bit far-fetched, remember that some reserve growth predictions, by the USGS no less, generate parabolic growth laws. If real, these may even have longer tails than we show above.

Now I understand

It took me awhile, as I could not put two and two together:

That is why the President has never bothered to veto a law -- why bother to veto laws when you have the power to violate them at will?

Everything makes so much sense now.

It's the enzymes, stupid

I saw clownage out in full force on Meet the Press this morning. Thanks to host Tim Russert's well-framed setups on our current energy predicament, Senator Dick Durbin overshadowed everyone on the round-table with his pointed comments. Disregarding his populism, Durbin alone understood that our current problems require real leadership on the order of the Apollo program. I agree and say go after big oil, go after windfall profits, create extra taxes, spread the pain everywhere and make it in your face. The Dems seem to understand this and the Rethugs respond with an energy rebate in the form of $100 checks.

The other panelists:
Energy Secretary Samuel Bodman : A blathering, stuttering little dickweed who started to lay the blame on scientists for not having "the right enzymes" ready for full-scale ethanol production. He claimed that Durbin was "too smart to believe in what he said". All-in-all, a smug prick.

American Petroleum Institute's Red Caveney : A slightly thinner looking version of Lee Raymond, a property required to fit snugly in the back pocket of Exxon-Mobil, he responded to Russert's claim that Exxon only spent $10M on direct alternative energy research by saying that the whole industry spent $400B on research. Those two numbers don't jive, but Russert did not follow up. He also supported Bodman by stating "complicated enzymes" held back progress on renewable fuels.

Cable pundit Jim Cramer: The bug-eyed one started ranting about bringing in ethanol from Brazil. Other than that, he claimed the real problem lay in the lack of refinery capacity. Clearly clueless.

Energy "expert" Daniel Yergin: An audible sound-alike to the somnambulistic Charles Krauthammer, Yergin back-pedalled furiously from his utopian pronouncements of just this last year. This abject wrongness should not prevent him losing his newly annointed position of chief energy analyst for NBC News in the future.

Volatility

We will have to get used to higher volatility of gas prices from here on out. Large fluctuations in the price of a constrained resource fall out naturally from even the simplest analysis of supply/demand curves from Econ 101.

When the resource becomes constrained, the supply curve goes more and more vertical, implying that the price a supplier will offer for a good only depends on demand -- the so-called inelastic regime.

Any sensitivity analysis performed against Quantity will show the largest excursions when we have a vertical supply curve. Investors have known this behavior from markets such as precious metals for some time now.

The other part of the equation, speculation ala the futures market, will further exaggerate the effect. Those familiar with signal processing know that a derivative-based projection will only amplify any noise already inherent in the system.

But since most people have a patience horizon of a few days, they will treat this predictably unpredictable roller coaster as a chicken would a reflection of itself in the mirror every morning. At least the chicken has an excuse for its short term memory loss. Unfortunately, the citizens and politicians of our fine country who rejoice at the next drop in gas prices can only blame their own ignorance.

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Supply/demand curves linked from the wikipedia entry.

Two blocks?

Didn't Bruce Willis put out a movie recently called 16 Blocks?

A rhetorical question I realize, but couldn't Denny Hastert, erstwhile school-bus driver of a young SW, slag off a few pounds by walking two blocks to the Rayburn house office building?

You must work up a sweat after getting a ride in a hydrogen-powered vehicle and before that, doing a grandstanding photo-op.

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PASSING GAS: MAYBE HIGH GASOLINE PRICES AREN'T THE PROBLEM.

The outcry over the price at the pump has politicians scurrying to come up with immediate relief: Republican Senators proposed putting a $100 bill under everybody's pillow. This is direct and simple. In fact, it's the perfect response to every complaint, not just high gas prices. Sen. Menendez (D-NJ) called for a 60- day suspension of the federal tax on fuel. That'll work too, but people will be even happier if we make it permanent. After all, the national debt is so far out of control it no longer matters. Republicans also want to start exploring for oil in wildlife refuges. That won't help much in the short term, but a chance to screw environmentalists doesn't come up every day. In short, American ingenuity will find a way. Or we could just let gas prices rise a little, but that might encourage a change to more fuel efficient cars, public transportation, getting a little exercise, cleaner air, shorter commutes, less traffic...

Reserve Peak Proven!

Stuart Staniford at The Oil Drum suggested looking at peaks in the estimated reserves of oil as another way of predicting future trends. He plotted the reserve estimates on top of the production curves for several geographic regions and noticed that reserves typically lead the production curves, showing, in general, an earlier peak for reserve estimates than for production.

I can't argue with that logic and it does add a new dimension to looking at the data. Typically, we see the famous production curve (i.e. Hubbert curve) published and occasionally see a similarly peaked discovery curve that precedes the production curve by sometimes as much as 40 years. As this relationship usually holds up pretty well, the reserve peak ends up positioning itself somewhere in between the two peaks.

Reserve = Cumulative(Discoveries) - Cumulative(Production)

Interestingly, given the above relationship, we can pinpoint the reserve peak precisely in time, and at the very least just by eyeballing the two original curves. If the reserve peak occurs when the derivative of the above relationship goes to zero, and dCumulative(x(t))/dt = x(t), then:

dReserve/dt = Discoveries - Production = 0

or the striking result that the reserve peak occurs when Discoveries/year = Production/year! We can call it the mobjectivist law for a lack of a better name (or until I can dig up whoever discovered this originally).

As an example, we can look at the Norway data, which has recently hit a peak of sorts.

I previously fit the data to this curve:

And showing the reserve peak overlayed:

Clearly, you can see the reserve peak occurring approximately where the discovery peak on its downward slope meets the production curve on its upward slope (actually you see quite a few intersections corresponding to a number of local maximum). And, like I said, you can actually -- with eyeball accuracy -- pinpoint the comparable reserve peaks occurring at 1987 and 1992.

Kind of neat, eh? ... umm, I mean, Q.E.D.

My Bank Statement

Right-wingers continue to bury their heads in the sand over the oil issue. A while back, I compiled a list of references to "peak oil" at one of the biggest christo-fascist zombie brigade blogs. Rewind to today and they still have ZERO references to peak oil but 32 references to the non-story of "oil for food".

The aforementioned blog features the insufferable Scott "Big Trunk" Johnson, who just today happened to score an interview with Senate Majority Leader Bill Frist. He also happens to work as a vice-president at my former bank. I say "former" because I recently took all my money out of that bank and posted my feelings in a DailyKos diary. I couldn't take the lies and projection, and putting my money on the line makes me feel like I made at least a symbolic gesture. I had a bit of a righteous adrenaline surge when I blamed Johnson for my money withdrawal to the bank's manager.

The wing-nuts will eventually start to choke on their own vomit. They cannot just ignore what goes on during their day-to-day lives, and if they try to take sides, they will realize that everything turns into an explosive wedge issue to their base constituency. Take the case of ethanol. It turns into a wedge issue because every time Bush mentions it, some wing-nut will go crazy claiming some enviro-nazi supports similar ideas, while another one will go ballistic over subsidies, while the bottom line states that ethanol may not cut it as far as EROIE goes. Cognitive dissonance will overwhelm their senses and theoretically they should shrivel up and die.

The same goes for energy taxation, mass transit, and domestic energy reserves; all of these remain wedge issues to the righties, but perfect fodder for progressive discussions. However silly it may seem to hear populist slogans like "the oil companies are gouging us" repeated by the nearly 70% against Bush, that misguided rage seems quaint in comparison to the blinders that most republicans wear.

In comparison to the relative quiet in the right-sided blogosphere, a few right-wing radio talkers have tackled the oil pricing issue. However, bringing in somebody from the American Petroleum Institute does not carry the same weight as speaking with just plain common sense as Mike Malloy of Air America radio has recently. He basically wipes away any hints of populism in callers by always referring to our nation's history of gluttony. Same goes for Marc Maron on his AAR show (a first, I think, as I just heard a commercial for a Noam Chomsky book).

If perchance, the rise in oil prices has something to do with Bush buying oil for the petroleum reserves, at inflated prices, so they can push the price up and then drop it right before the elections, it will just lead to a further deferral of gratification. Whatever the roller-coaster ride shows, the price continues to climb in the long run. The Oil Drum has other explanations for the fluctuations.

As far as I can tell, prices haven't affected commuting behavior in my neighborhood. I haven't noticed any difference in increasing cycling activity at my work, the same couple of bicycles show up year after year at the bike rack. However, I do notice a difference in road rage. I almost got plastered this morning by a left-hand turning pickup and I had a walk signal going for me. I presume that the ragesters basically can't stand the sight of seeing someone not paying $50 a pop at the gas station, and lash out. The downside: the adrenaline rush I felt from almost dying essentially wiped me out for the rest of the ride. I will have to get used to more frequent bouts of righteous indignation. I imagine it will get worse before it gets better.

My new mantra: Let it ride, I say, let it ride.

Update: The editors at The Oil Drum have formulated a comprehensive statement that lays equal blame on both political parties for the way we approach the new "oil crisis". Perhaps true, especially in terms of striking out against big oil, but remember that progressives can change, while conservatoids just fester.

bottle: genie out

To those amongst us who hope against hope that the USA can become more self-reliant in meeting its energy needs comes this sobering insight. First the good news. Mostly through government regulations, the USA has actually maintained some degree of self-reliance in certain niche markets, particularly in high-tech metals. In last months The Hill you can read a good historical overview of the Berry Amendment, which lawmakers first put into place during WWII to ostensibly insure a technological materials reserve in times of crisis. It has worked remarkably well in the last 50+ years, as the US has 3 of the top 4 titanium suppliers.

Now the bad news. Like everything else having to do with globalization, this amendment has sprung huge leaks. Because the amendment really only applied to defense products, the military's move to commercial sourcing of high-tech materials has served to dissolve the distinction between imported and local metals. Defense prime contractors have found themselves suddenly in a position of needing lots of legal help to help them sort things out.

I see this as a microcosmic study for what we have to face in getting energy producers back in the country. As with many issues, we find it easier to keep the genie in the bottle than to force it back in once it escapes. As BOPNews talks about resource extraction-based economies, we have also basically extracted our own economy from underneath us.

No one really knows how to deal with entropy, and the ensuing race to the bottom. The winners in that race actually lose out in the end. Eventually.

The Indians and Chinese are in this huge fight now to see who can get the most oil. We may be at a point of peak oil production. You may see $100 a barrel oil in the next two or three years, but what still is driving this globalization is the idea that is you cannot possibly get rich, stay rich and get richer; if you don’t release more greenhouse gases into the atmosphere. That was true in the industrial era; it is simply factually not true. What is true is that the old energy economy is well organized, financed and connected politically. The new energy economy is underfinanced, under organized, entrepreneurial and in need of the type of research and development work that we routinely did when we were trying to sequence the human genome or go into space. But just with existing technologies for conservation and clean energy, we can more than meet the Kyoto protocols if we were remotely serious about the targets and in the process create jobs in the developed and developing world on a scale that is otherwise unimaginable to me. It is just a question of whether we accept this, but I can only tell you that I have studied this data seriously. I consider it an existential threat to your future. It may be the most remote security threat you face, but the only one who has the chance to change the life of everybody on the plant for the worst. And yet it is a phenomenal opportunity. -- Bill Clinton, March 28

Bedwetting for oil

Since Fox News had a lead radio story on Bill Nelson (D) laying down a call to arms on our energy policy over the weekend, some local bedwetters have countered with their own talking points.

From the soiled ones at SavageRepublican.com these pathetically shameless rationalizations and excuses for our current situation:

• ANWR
• Lack of refinery capacity versus demand.
• Katrina and Rita.
• Regional blends.
• Ethanol.
• Onerous taxes and Windfall profits taxes versus profits.
• Summer driving.
• Increased world demand.
• "Alternative energy resources".

Evidently such factors explain everything and in just a matter of time shall pass as easily as a kidney stone out of Lee F. (FatBastard) Raymond's hindhole.

Read the mix of naivete (ANWR, Katrina) and wedge issues (ethanol, China, taxes) that will eventually blow up the Republican party -- no matter the new investigation Bush and the Republicans order to help cover up the actuality of oil depletion. It amuses me that the blog taints the name of a seminal LA punk band, Savage Republic.

"...The crisis of our country is not caused by external forces... the danger lies within" -- Jeff Long, "Mobilization", 1981

The Republicans will keep trying to circle the wagons -- into a noose that will fit snugly around there neck. The cowboys amongst us can't do the job alone.

The president spent Saturday morning with a small pack of riders in a foggy redwood forest about 90 minutes north of San Francisco. He relished the swampy conditions on parts of the trail in this remote state-owned tract, leading his partners repeatedly through huge puddles and streams running high after weeks of heavy rain.

"I still ride the mountain bike primarily to help settle the soul and to burn off the excess energy one gets when you're living life to its fullest," Bush told an Associated Press reporter who accompanied him on the ride.

"We're able to enjoy the beauty without really disrupting the pristine nature of the place," the mud-splattered president said after the 65-minute ride. "It's a classic way for mankind to enjoy God's gift. Plus, we get some exercise."

The ride started at an elevation of about 1,700 feet above sea level and dropped steeply for several miles, prompting a bit of anxiety in the president. He is not accustomed to the sustained drops and climbs of California's mountains, having ridden mostly in the Washington, D.C., area and on his ranch near Crawford, Texas.

Bush settled into a steady rhythm on the way back up -- an ascent he said pushed him to near his physical limits. His heart rate monitor-wristwatch reported he achieved a maximum heart rate of 176 beats per minute -- just off his maximum, 183.

When a fellow rider spoke up from behind him, Bush said between grunts, "Can't you at least act like you're breathing hard?"

Asked at mid-climb whether he still lifts weights, Bush replied good-naturedly but pointedly, "Don't talk to me." A moment later, he answered in the affirmative.

"I don't spend a lot of time chitchatting," Bush said after the ride. "But I get great pleasure in riding with a group of people, and afterward we shoot the breeze and have fun and laugh and go about our way."

The president set the pace throughout the ride, with four Air Force men, a White House legislative aide and Secret Service agents tightly bunched behind him. Rep. Dan Lungren, R-Calif., began the ride with the president, but he quickly sensed he was not up for the rugged terrain and fast pace. He peeled off and pedaled solo.

"I'm used to riding in the flats," Lungren said later.

A long convoy of SUVs and off-road vehicles rumbled behind the group, carrying medics and security agents with machine guns.

One of the bicycle-borne agents had mapped out the route, and he was the only person who knew where to turn when the road forked. Bush, however, made plain he was in charge. "Drop back," the commander in chief ordered the agent, with a thumb over his shoulder.

The president explained later that he cherishes both the solitude and the social aspect of mountain biking.

"Generally when I ride it is the one time when I feel alone, even though I know people are behind me," he said. "I ask people a lot of times not to be in my line of vision because all I can see straight ahead is, you know, space."

Often, he said, when he is riding with his usual group near Washington he plugs headphones into his ears and cranks up his iPod, "and it's like I'm alone."

Ride'em cowboy. And make sure to stay in broadcast range.

"I tune in to the iPod occasionally," the president said to laughter from the audience.

Media Stuff

I discovered a bittorrent of History of Oil, Rob Newman's BBC comedy show here (or Real). It downloaded OK but I have not gotten around to watch the highly recommended show yet.

Another show that I haven't watched, the recently released global warming movie Too Hot to Handle apparently has scenes with Indy car driver Paul Dana discussing the positive role of ethanol. In a cruel twist of fate, Dana died a few weeks ago in a track accident. He apparently meant it, as memorial funds go to towards renewable energy.

Earth Daze

Because it should occur every day.

Via the Google API, some intrepid developers came up with a simple pedometer. I tried it out on my weekly roller-blade route and came up with the 15 miles that I had earlier swagged.

Bike sales outpaced car sales for the first time ever in Australia. It happened in the USA as well last year, as not since the oil crisis of 1973 have they sold in such big numbers. We just might catch up to the rest of the world at some point, unless China decides to go the reverse route.

Shortly after the first Earth Day, the two oil-price shocks of the 1970s underlined the risks of oil-dependent mobility. Car sales stalled near 30 million from 1973 to 1983. Bicycle sales, meanwhile, jumped from 52 million to 74 million.

Repairing some PVC plumbing that got installed a little over 30 years ago, also close to the first Earth Day, I noticed that the price for a 45^o elbow connector has barely budged. What cost $0.27 then (according to the old price sticker left on the pipe) now costs $0.29 in single item qualities.

Contenders for what causes the price stability in the face of inflation:

1. Automation & productivity advancements
2. All manufacturing moved to China

From PeakOilCrisis:

We use developing countries as Walmart-like leverage to keep prices down -- until they start advancing on their own. At which time, we lose all slack.

Let me just say that I will monitor the price of aforementioned elbow quite closely from now on. As well as that brown curve in the above chart, which looks like one of those parabola curves that Bush recently name checked.

The correct use of the logistic curve

An interesting simulation (via DailyKos) of avian flu pandemic dynamics demonstrates the correct application of the logistic curve. Contrary to what old-school oil depletion analysts will tell you, the logistic curve (aka Hubbert curve) has no place in modeling a depleting resource, yet finds a much better fit in contagion dynamics. I took the following snapshot from a movie of the LANL simulation after the infected population reached a peak and had fully declined.

If you look at the lower left curve and compare it to a generic logistic curve¹, it fits (apart from a weak asymmetry) fairly well.

If you slide the one over the other, you can see the rather minor differences.

Sorry to have to hammer the point home with such an unpleasant scenario, but oil depletion has nothing in common mathematically with the derivation of contagion dynamics, and really nothing to do with the logistic curve. The contagiousness of oil exists only in our simplistic, close-minded imagination.

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¹Thanks to David for pointing out a minor error in the derivation.

Chest Nut Goodie

Mike Malloy occasionally plays this a capella song as bumper music on his radio program:

• "Gulf War Song" aka "Fighters for Texaco", Moxy Fruvous [MP3]

Fighters for Texaco, fighters for power
Fighters for longer turns in the shower
Don't tell me I can't fight 'cause I'll punch out your lights
And history seems to agree that I would fight you for me

It came out during the first Gulf War but still rings true.

Maggot Brain

You doesn't see this in any of the news stories but GW Bush went to a science-centered junior high school and once again embarrassed us all [transcript]. If you can find the audio, he plainly addressed it as "Parkland Maggot Middle School for Aerospace Technology" in front of the likely bewildered students.

Producer Kathy on Mike Malloy's radio show figured that even if Bush had pronounced the school's name correctly, he would have probably thought it referred to those things you stick on your refrigerator door. ("Adhesion is important for a strong Economy")

In the name of edumucation Bush spewed out all sorts of cosmic slop. He talked about advanced technology:

We saw robotics.

and space technology:

We saw people using little devices to look for sun spots. We saw the analysis of a parabola curve for sixth and seventh grade students.

(translating:

• "little devices" = "a hole poked in a piece of cardboard"
• "parabola curve" = "rate at which Bush rises to new heights in incompetence")

And this:

I don't know whether you realize this or not, but the Internet began as a Defense Department project to improve military communications. In other words, that was an area where the federal government spent research money, and out of that research and development came the Internet, which has substantially changed the way we live. The iPod, interestingly enough, was built on years of government-funded research in microdrive storage and electrochemistry and signal compression. Isn't that interesting? I find it interesting.

MP3 signal compression advances courtesy of the Fraunhofer Institute in Germany.

And to think they gave Al Gore grief to rightly claim his important role in steering funding money toward NSFNet.

But did I mention that Bush learned a new exciting word today?

Science is not only cool, it's really important for the future of this country, and it's great to have people we call adjunct professors here, to help lend their real-life experiences to stimulate junior high students to the wonders of science.

Second, we ought to have 30,000 math and science professionals in our classrooms over the next eight years. Today I met two; they're called adjunct professors.

Actually, the transcript doesn't do him justice.

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Krugman

To dismiss this consensus, you have to believe in a vast conspiracy to misinform the public that somehow embraces thousands of scientists around the world. That sort of thing is the stuff of bad novels. Sure enough, the novelist Michael Crichton, whose past work includes warnings about the imminent Japanese takeover of the world economy and murderous talking apes inhabiting the lost city of Zinj, has become perhaps the most prominent global-warming skeptic. (Mr. Crichton was invited to the White House to brief President Bush.)

So how have corporate interests responded? In the early years, when the science was still somewhat in doubt, many companies from the oil industry, the auto industry and other sectors were members of a group called the Global Climate Coalition, whose de facto purpose was to oppose curbs on greenhouse gases. But as the scientific evidence became clearer, many members — including oil companies like BP and Shell — left the organization and conceded the need to do something about global warming.

Exxon, headed by Mr. Raymond, chose a different course of action: it decided to fight the science.

Synopsis: "Fear of a Scientific Planet"

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Crooks & Liars:

MATTHEWS: [W]e've been struck by higher gas prices. That was another promise made, that this war would help us get cheaper gas —

BARTLETT: I don't think...

MATTHEWS: None of these promises come through.

BARTLETT: That's not correct, Chris. The president or no one else ever said that this war was going to result in cheaper gas prices…

MATTHEWS: Ok, so just to make it official, Dan, no one in the administration has ever said that we would have cheaper gas because of war in Iraq, just to make it official?

BARTLETT: I don't recall anybody ever saying that, Chris.

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Funny that after all that nonsense, that the following sounds rather sane. The Marc Maron Show discusses Peak Oil with author Kevin Phillips.

"We lose our infrastructure which is based on oil .. and the entire lifestyle of the country is at risk"

Do you know the way to San Jose?

I kind of knew this behavior occurs, but I did not realize the extreme extent to which a person can adapt to mind-blowing monotony. Monotony, to the extent that electrical engineer Dave Givens will car commute daily from the outskirts of Yosemite National Park all the way to San Jose in far-away silicon valley. That entails a round-trip distance of around 200 miles as the crow flies but over 370 miles following a more circuitous route.

And as the commenters at TOD note, he works for Cisco, a large networking products company, and one that easily could consider setting up a telecommuting arrangement, given that Givens has done this for the past 17 years.

Weird Profile

I have valiantly tried to reverse engineer a particular graph from the EIA with limited success. I spotted it via Dave from LifeAfterTheOilCrash with this rider comment: "Even the Energy Information Administration (EIA), not known for their realism on the subject of Peak Oil, presents us with this graph."

The sharply peaked nature of the oil production curves don't make much sense in a stochastic world view. We should really expect a continuously varying 2^nd derivative and not the discontinuity shown. In practice, the discontinuity could occur due to some severe oil shock, and the aggressive rise right before the shock likely due to an ever increasing extraction rate. This odd scenario would classify the EIA as veritable doom-mongers, no better than the worst of the lot at PeakOil.com. I believe I could reproduce the curve shown with my oil shock model (see sidebar), but it begs for additional deliberation as my preliminary extraction rates would need to track a peculiar arc.

This prompts the question: Does EIA understand something about oil production dynamics that they have kept to themselves?

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As oil price hovers around $70/barrel, Matt Drudge, ranting during his Sunday night radio show, took some callers on the oil situation. Because Drudge followers fancy themselves as budding Clark Kent's, eager to break some news, the show provides some humorous moments. Drudge himself will illogically oscillate between a populist and a reactionary, which makes him squirrelly immune to criticism. His callers, on the other hand, provide sitting targets. For instance, a caller from Valparaiso said that "the companies are awarsh in oil" (yes, that's how they say it in Indiana). He added that the oil company chiefs had to raise prices due to issues with the "contracts". He didn't elaborate too much on the contracts, other than to imply that the oil companies could not easily get out of them. The caller seemed sure of himself, showing confidence in the future, despite the fact that his job consisted of delivering gas-sucking RV's cross-country to buyers. I sincerely hope Mr.Indiana doesn't go Vanishing Point on us when the oil situation starts to turn south -- contracts or no contracts.

Drudge added that the $400-million-richer Exxon Chairman Lee (Jabba) Raymond should at least have commissioned a picture of himself where you could see his chin. (Big Gav from Peak Energy will appreciate that line)

Robert Newman's History of Oil

People in the UK can see this show repeated:

Robert Newman's History of Oil will be repeated on 15 April, at 11.45pm on More4. The 60 minute show, based around Robert's stand up act, explores the role of oil in war and politics.

...

Quirky details such as a bicycle powered street lamp on the stage brings home the pertinent question of just how we are going to survive when the world's oil supplies are finally exhausted.

(via Avedon who gives it a thumbs up )

I will have to wait for the DVD.

EROEI reloaded

TheLastSasquatch (associated with this organization) sent me an update to the graphic in the last post.

Somebody on the PeakOil.com message board asked why would we reinvest everything we extract? Apart from the fact that, yes, indeed no oil company would reinvest their entire stock, this analysis gives the upper bound on what the industry can potentially do. The more you reinvest, the more you can possibly get as payout. So the carrot in front of the horse remains human greed -- pure and simple.

Let's say you found a broken slot machine in Reno. You put in $1.00 and out pops $10.00. It happens three times in a row. Would you keep putting in the coin until someone stopped you? Or would you walk away with only $30.00?

The answer to that question, albeit on a much larger scale, tells you the size of the dice that the energy industry plays with.

EROEI Math

I have noticed a bit of confusion on what Energy Return on Energy Invested (EROEI) means when a fossil fuel extraction process reinvests the recovered energy and how that will serve to aggressively deplete the supply as EROEI approaches 1. Consider the case when the energy needed for extraction arises from a portion of the energy produced:

if E=EROEI
and
if P=Fraction of Energy put to use elsewhere

then
P = (E-1)/E

Notice that when E=2, we waste exactly half the energy in the regeneration process. When E=1, we waste all the energy.

Anything greater than 1 means that the process can sustain itself. The problem occurs with the huge "burn" rate we get as EROEI approaches one.

This has implications for global warming and the tremendous pressure on non-renewable resources, which acts to hasten depletion much more than an energy source with a high EROEI would.

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Alternatively, we can look at this with a more fundamental mathematical approach and cast the energy reinvestment as a geometric series (as you would by hand). This actually converges quite nicely if you can get the math right.

Energy Reinvested = SUM ( Ei ) for i=0..N-1
Energy Produced = EN

ER/EP = SUM ((1/E)i) for i=1..N

The summation term, SUM, converges to the value (1/E)/(1-1/E) for large N (example here).

therefore,
ER/EP = 1/(E-1)

and the fraction "produced" over total energy reduces to:

P = EP/(EP+ER)=1/(1+ER/EP)=(E-1)/E

Update:

    ... a bit more formal and precise

The PeakOil message board contains a recent discussion of this effect and what it means for oil depletion. Somebody came up with the term net oil to refer to the loss due to reinvestment. One thing for certain -- it will only get worse in the future as we use petroleum with lower and lower values of EROEI.

Who is MA Adelman?

An associate and apparent mentor of Peak Oil skeptic Michael Lynch, emeritus professor M.A. (Morris) Adelman has a long track record in the economics of oil. Perhaps best known as a sort of pricing cornucupian, I would characterize Adelman's ideas as representative of another era when we had a historical week oil exploration stimulus in the anticipation of strong negative feedback. This theoretically would result in an "endless" supply of oil as producers only funded new explorations when the need arose. I would further compare it to a "just-in-time" application of maintaining an oil inventory, before that phrase became fashionable in manufacturing circles.

Well, we all know how that turned out. Adelman also didn't have much success in pricing predictions:

Adelman underestimated both the growing demand for oil and the power of OPEC's robber states to police their ranks. His 1972 forecasts remain the most stupendously inaccurate in recent academic history.

And even earlier, a workshop participant said this about Adelman's views on monopolistic practices:

And I have uncovered antecedents much earlier than the 1970s. The following passage I'm going to read, and from which I have just edited out a few words to make it shorter, was written by Morris Adelman in 1953. "In asking, 'What is the market,' we must ask, 'What substitutes exist at what price for the product or service in question. Assuming that a single business concern were the only occupant of the allegedly separated market, would it have the power to raise price?'’ If the answer is yes, then the separate market exists within which competition can be lessened."

I really only included that last passage because I really could not find much else on Adelman's background. Quite the enigma, it appears that he still has an office at MIT (the perk of emeritority) and writes the occasional white paper. He also writes the occasional opinion piece, which reflects his views on oil as a strategic asset and to the benefits of globalization:

In fact, recovery after World War I was slow and incomplete. Trade and investment were stifled. The global economy became ever more fractured. To my generation, which came of age in the great depression and World War II, further breakdown looked all too likely. But the quarter-century after 1945 saw a great expansion, and restoration of world trade.

This puts him in his 80's. Staying at the game this long, I believe he did have the ear of many decision-makers over the years. With books such as "Genie out of the Bottle" and "The Economics of Petroleum Supply (1962-1993)", he has to take at least some responsibility for our long-standing procrastination and naivete.

For a branch of study sometimes known as "the dismal science," economists such as Adelman, Lynch and Odell are remarkably cheerful about the future of oil. Odell even discusses the theory that oil is a renewable resource (Odell 2000, 199). When I asked Michael Lynch about this he wrote: "Oil is effectively a non-renewable resource. (About 3 million barrels a year are created by geological processes, according to current estimates, which is trivial.) But oil reserves are a renewable resource, as they are replenished by drilling. M.A. Adelman often makes this point, but it confuses some not familiar with the nomenclature."

Not to put all of the blame on Adelman, but this caught my google-eye, courtesy of the Warren Commision:

Evidently, no one could track a certain Morris Adelman down at the time, not even a little Birdie.

I don't think we can blame MIT's Morris Adelman for Jack Ruby's demise. Too much of a reach, IMHO. I would just as soon blame his doppleganger, or perhaps the first anonymous doomer among us to spread vicious rumors, circa 1964. So can anyone place King Hubbert's whereabouts at that time? He may just have struck the first blow between the long-running verbal battle between the pessimists and the cornucopians.

Kind of a cheap shot, I know, but what we face now does not classify as a practical joke.

The joke is real and it is on us.

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Check out this informative paper which maintains a neutral viewpoint on Adelman.

Geological Peak vs. Logistical Peak

From The Times, via UK TOD, this bit of wisdom from the chief of Total:

People are failing to deal with the reality of the price, which has nothing to do with speculators or even any lack of reserves, which are ample. "“It is a problem of capacities and of timing," de Margerie says. "This is the real problem of peak oil."

The commenters at UK TOD further deconstructed his statement by separating out the idea of a geological peak versus a logistical peak. We can defer the latter by throttling the production in an optimal fashion -- a very business-centric way of thinking.

I prefer to distinguish the two types of peak as residing on different phases of the oil shock model. Essentially, a geological peak occurs during the discovery process; we hit the peak when we think we have made the most volumetric discoveries per year. On the other hand, the logistical peak only occurs when we start extracting the oil, having to wade through the fallow, construction, and maturation phases prior to that point.

Since each of these phases adds a cumulative lag term to the discovery peak and we can indeed modulate these terms via technology or business decisions, one really can't argue with Christophe de Margerie's pragmatism.

Unfortunately, it really doesn't help matters. An analogy to population dynamics might help here. Consider the case of the decline of the North American passenger pigeon and how it compares to peak oil dynamics. First, relate the geological oil peak to the historical observed peak of the pigeon population. Next, equate the logistical peak with the maximum in the yearly passenger pigeon harvest. Note that the peak bird population preceded the maximum harvest by decades. In the long run it didn't matter that we deferred a semantically-defined peak -- by that time, the pigeon population entered free-fall.

As a sobering reminder, our own geological oil peak occurred around 1960.

Trading Doom for Rapture

monkeygrinder put together a well-reasoned 2^nd-order criticism of a green's (or as Big Gav likes to call them, veridian) opinion of peak oil depletion. In particular, he catches Toby Hemenway in a logical conundrum concerning cause-and-effect relationships. Just because the effect succeeds some event doesn't make it the cause, or as mg notes:

Earth Day had nothing to do with Texas. What a hoot. The off shore supplies are trivial.

As to my own 3^rd-order comments, I say yes to mg and nay to the Toby-ator. I especially notice all of that development in Alaska after the 1970 peak, and which conveniently ignored the public's outcry to limit (in Toby's words) "other sources of domestic oil because they damaged our environment", did nothing to counteract the peak's descent.

But since Pat Robertson has joined the debate on our side, apparently, I guess we have nothing to worry about in getting oil depletion issues heard in the red states. We lost a green but gained a funda'minionist. What a deal.

The apocalypse that the Rapture-ready crowd spouts makes the limited doomerism I admit to look like blowing up an ant-mound with a lady-finger.

I listened to Kevin Phillips, who has read some of the "Left Behind" series in preparation for his latest book, interviewed by musician Ned Sublette (subbing for Laura Flanders on AA Radio [ mp3]) a week ago, and got a taste of what the theocrats want. But leave it to Ned for providing a great line: (paraphrasing) "People were scared when Reagan came into office that he was going to undo the New Deal. But now, we need to worry about George W. Bush wanting to undo The Enlightenment".

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Update: Toby Hemenway's analysis of the Hubbert Curve demonstrates how a little bit of knowledge causes a serious deficiency in insight. He gets the idea correctly that a Hubbert Curve does not have to follow a symmetric profile, but screws it up with this inane non-sequitor closer:

The shape of Hubbert's Curve is a coincidence, but it’s one that through its strong pull on our psyches became very good marketing for Peak Oil doomsayers. Every time you see that nice, symmetrical bell curve in connection with Peak Oil, remember that you are being seduced by a false association with a powerful symbol. A rate is not a statistical distribution. This confusion is a fine example of what Sir Peter Medawar called being "educated beyond the ability to undertake rational thought." We've seen that curve in school, so some will assume, uncritically, that it's being properly used. Don't be fooled. The curve describing the end of the oil era could take any of an infinite number of shapes.

and ... ???


Cause: Hopeless

Oil Cusp

I signed up for a trial version of Google's Page Creator software, and have started to put spillover analysis on my home page, OIL CUSP. I placed a permanent link on the sidebar.

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For the typical frustrating eye-rolling read, Tech Central Station never fails to deliver. Max Schulz from Manhattan Institute rosily recalls how the USA and allies historically benefited from a thriving oil economy to beat back the evil axis time and time again. He gives pretty convincing examples of oil playing a big part during WWI, WWII, and the Cold War. But then he assumes this will continue indefinitely ... for no other other reason that, apparently, it must.

What is clear is that in the event of a "hot" war, primacy of oil supplies is critical. For all the fear about rising American oil imports, we still have little to worry us in 21^st century America. Though we import 60 percent of the oil our economy uses -- and that figure is expected to rise to nearly 70 percent in the next
several decades -- the United States still produces more than 8 million barrels of oil domestically per day. Keep in mind the Department of Energy manages a Strategic Petroleum Reserve holding nearly 700 million barrels, and our country should have enough in the unlikely event a large-scale hot war erupts. Our country holds a great deal of security in the oil we produce at home.

More Oil Net - Enron

Yesterday I posted a directed graph of US oil company mergers and spin-offs. The edges run left to right, showing the transition from the historical little players like Skelly and DX (recalling from my youth) assimilated into the giants of today. I started with a list of about 2500 transitions and way over to the right side of the graph, you can see the top dogs emerging: ExxonMobil (snippet at right), ChevronTexaco, RoyalDutchShell, and BP-Amoco. Although not yet a funnel in shape, if we get a few more mergers, the list of 2500 will transition to one (note to self: I forgot to merge Sohio with BP). Monopolistic practices work that way. Quite telling that the original Standard Oil breakup in the early 1900's barely shows up in the net.

As this exercise served as more of a discovery process than anything else, I did notice an odd straggler in the midst of the network. You will typically find during the process of merging, that enough company tentacles (spin-offs, subsidiaries, etc.) reach out to make it virtually impossible for a large subnet to break out of the pack. Yet that did happen at least once in the layout process. And in retrospect, I find it quite understandable that the largest of the splinter networks, known as Enron Oil&Gas, did not get assimilated.

Why does this make sense? Well, just read Greg Palast or some other Enron watcher, and you find that Enron built itself off of many sham organizations, existing in name only, and then collapsed into nothingness after its descent into bankruptcy.

Take your pick: Corruption or Monopoly. In corporatist America, we don't have a heck of a lot of choices as we reach peak oil. On the backside, if we have more than one big oil company per super-power, I'll merge into a monkey's uncle.

Tangled Web of Oil

I spent some time creating a directed graph network of USA oil and energy company mergers. Although not perfect, the chart will still make your head spin. WARNING: huge file.

Dowload GIF (1 MB) (I had trouble rendering this file unless I used an image viewer on the saved GIF, something like PaintShopPro works for me)

I got much of the data from OilTrash. 

About two years ago

I missed Fossil Fool's day last Saturday, but, in reality, we face the same absurd, running joke every single day of the year. Just like we can't put the water back over the dam by sending back home 11 million illegal immigrants, no way can we stuff the oil genie back in the bottle. On both these issues, we have made absolutely the same mistake of turning our cheeks on the ongoing problem just to achieve short term gains.

Interesting that Michael Rube in the above HuffPo post quotes Kurt Vonnegut, of whose article I linked to in my first official blog posting nearly 2 years ago. Vonnegut talked about going cold turkey on oil. What makes this idea still intriguing -- and counter-intuitive at that -- we probably have a better chance of abruptly cutting back at energy use than fixing the immigration problem any time soon.