402 replies to this topic

[MinDonner]

This has to be an elaborate joke. Why else would you keep posting articles that basically disagree with what you're trying to say? That link says right out that prices in real terms have never been higher than in 1981. Meanwhile, houses have somehow inflated by around 4900% in a similar period. Is this Peak Housing we're looking at?

[paddington]

MinDonner, on 29 June 2012 - 05:48 AM, said:

This has to be an elaborate joke. Why else would you keep posting articles that basically disagree with what you're trying to say? That link says right out that prices in real terms have never been higher than in 1981. Meanwhile, houses have somehow inflated by around 4900% in a similar period. Is this Peak Housing we're looking at?

Wasn't there some form of sanctions against Iran in 81, an general tension in the middle east?

edit:- also seems Iran had broken through Iraq lines in 1981, probably help to push oil prices up

Edited by paddington, 29 June 2012 - 05:59 AM.

[KAH]

Titus Pullo, on 29 June 2012 - 05:19 AM, said:

OK, fair enough.

But, it's not just global demand that has risen along with price. ... U.S. demand is up 30% in 40 years, despite a what.... 800% price increase?

With or without Chindia's growth, U.S. consumption has risen just as price has done the same. Now, surely there's a breaking point on price, which we've obviously reached. Most analysts put the point at $80-85 per barrel before demand begins to be affected - and with great pain.

The overall point is that modern industrial societies can not decouple growth from energy consumption. Societies MUST have their cheap energy, or they contract. You supply-siders can't have it both ways. Triple digit oil price may spur alternative investment (extremely slowly due to obvious limitations), but  great suffering -- in terms of  job loss and credit contraction -- are a given in such a scenario.

That's why oil - the most efficient natural resource we have - is as fundamental to capitalism as water is to the human body. ESPECIALLY our brand of unfettered, barely regulated capitalism.

Quoting US demand increasing 30 % over 40 years???

Seriously?

The US population has increased with one hundred million people since the 1970s. You think that may have something to do with it? Just maybe?

Not to mention that price development over those 40 years haven't exactly been a uniform increase. Your statement is absolutely worthless as an indicator of the nature of oil.



As for the rest - that there will be pain is not in doubt. The question is how much, and that one's difficult to pin down.

[Former Lord of Winterfell]

KAH, on 29 June 2012 - 03:36 AM, said:

However, it is not a given that those sources that are harder to find automatically also are difficult to extract. They may be, but it is not a given.

Not to mention that it is the magnitude of the cost difference that really matters.  If it costs $1000 to extract "x" amount from one location, and $1020 to extract it from another, then yes, assuming both sources are known, a supplier would begin with the cheaper source.  But the incremental cost difference is so small that consumers aren't going to notice much of a change at all when it comes time to shift to the second source.  Additionally, improved extraction techniques and technology may mean that by the time you actually start using the second source, your costs are acutally lower than when you started using that first source.

Absent data regarding the increase in costs for extraction from different sources, the economic argument that subsequent sources will be more expensive is both speculative, and meaningless without data regarding the magnitude of the cost difference.

By way of example, the very first commercial oil well, under felice's argument, would have been the cheapest, and it should all have been downhill from there.  Yet, despite that happening way back in the 1800's, we saw a huge economic boom as the secondary, tertiary, etc., sources were discovered and brought into production throughout the 1900's.

Edited by Former Lord of Winterfell, 29 June 2012 - 07:29 AM.

[Former Lord of Winterfell]

Titus Pullo, on 29 June 2012 - 03:56 AM, said:

You clearly are unable to separate peak of "PRODUCTION RATE" from overall resource volume.

To the contrary, I understood very well the conceptual point you were making.  It's just that in the context of the article, it is a completely specious argument.  Dr. Vance said that supplies would be sufficient to meet demand.  But if supplies were unable to be extracted/produced at a sufficient rate -- your concern -- then they would by definition not be able to meet demand.

In other words, the "production rate" distinction you draw is frivolous, and implictly addressed by his conclusions.  If there were sufficient supplies in the ground, but we lacked the ability to extract them at the rate necessary, then Vance surely would have mentioned that distinction rather than simply stating that supply will be sufficient to meet demand, and leaving it at that.

Quote

Many scientists, including OECD energy analyist Robert Vance, assert that  uranium production peaked 30 years ago

Now, if you actually read the article instead of racing to the conclusion section for anything that soothes your "no problem" approach to resource limits, you'd have seen that ... yup, Vance confirmed that world production PEAKED in 1980:

Wow.  Are you deliberately overlooking the difference between actual production and maximum production capacity, or do you just not understand it? Producers are not going to produce uranium at a rate faster than they know it is going to be consumed, even if they have the ability to produce it faster.  That would be a waste of capital resources, and you'd be stuck with a bunch of shit that you'd now have to pay to store for years.  Just because production happened to peak in 1980 does not mean that we lack the capacity to increase production beyond that if demand requires it.  You can open up more mines, hire more workers, etc., and there is nothing in Vance's article stating that our maximum production capacity was reached in 1980.  Those are words you're shoving odwn his throat, not something he actually stated.  And in the context of his conclusion that supply is sufficient to meet demand even if demand increases significantly, your concern about production peaking in 1980 is meaningless.

Quote

So, 23 years later, uranium production is half what it was at the peak in 1980. Gee, I guess if we half that down to 17,800 tU, people like you can pretend there's "adequate" reserves to get us into the 22nd century! ... See, I didn't cite Vance to support my claim about overblown abundance, I cited Jan Willem Storm van Leeuwen for that. ...  I used Vance to support my claim that the industry hasn't grown. That would be you not reading very clearly, trying to make a link between two metrics that don't follow one another, and then concluding that I'm the one spewing "gibberish."

No, that is you failing to prove that there has been unmet demand.  Producers are producing at the current rates because that's all that demand has required.  If demand increases, they'll open up more mines and hire more workers.  You are assuming that production of uranium has dropped because of an inability to produce it any faster, rather than a lack of demand.  Newer reactors are more efficient, breeder technology has reduced the need for new production, etc., and very few net new reactors have been opened.   So production of uranium peaked because demand hasn't risen.  But there isn't a shred of evidence that production couldn't be ramped up to meet the significantly increased demand described by Vance.

Edited by Former Lord of Winterfell, 29 June 2012 - 11:23 AM.

[Nukelavee]

I know quite a few towns based on uranium mining in Northern Ontario were shut down because there was no demand.  So, we do have teh potential to produce more from existing areas already.

Difficulty of location/extraction and value of a deposit aren't teh same thing, anyways.  Some of the earliest production wells in the world are very close to me..but they were pretty minor deposits.

Simply (lol) moving from a suburb lifestyle with cars, to a mass transit system with cities that are more centralized would be win/win, anyway.

With mass transit, you have the option for electric power, from any source, without worry about how the vehicle will carry it.

[Ser Greguh]

This thread in a nutshell: Titus claims that oil is magical, the rest of the thread corrects him on that.  When called on this to any degree, he gets extremely hostile, and will outright accuse you of not reading the links to articles that he has drastically misread in order to conform to his confirmation bias.  His argumentative style is highly reminiscent of 9/11 conspiracy theorists and Creationists in that regard.

Want evidence of a confirmation bias?  This motherfucker actually tried to pass oil as a fucking Giffin Good.  For those interested, a Giffen Good is a sort of good where, in very specific scenarios, an increase in price can lead directly to an increase in consumption.  The common example cited is certain foodstuffs.  Here's a simplified example with some completely made-up numbers.  Say a poor person consumes $1 of Ramen on six days of the week, but on the seventh day splurges on a decent meal that costs him $4, which fits perfectly with his $10/week food budget.  If there aren't any meals that he'll eat that cost between the Ramen and the Decent meal, and he only budgets for food on a weekly basis, then let's say the cost of the Ramen rises to $1.25 / day instead of $1.  In this case the Ramen costs him $7.50 for the 6 days, and he can no longer afford his $4 decent meal, but still has to eat, and so he winds up eating Ramen again on Day #7 because that's the only thing he can afford, and so he just lowers his food budget to $8.75 a week and actually winds up purchasing a higher quantity of Ramen as a direct result of its price increase.

It's not a terribly important economic principle, just an illustration that when you zoom very close in on certain economic situations it's not quite as fluid as the equations always predict.  It's never something that anyone with an even remotely accurate understanding of economics would attempt to categorize oil as; the thought is ludicrous, and the empirical evidence shoots it down time and time again.  When gas prices rise, consumption lowers.  People take fewer vacations, they fly less, they carpool, etc.  This is obvious.  The only reason a person would attempt to pass oil off as a Giffen Good is to flail in support of a hypothesis that one has already psychologically determined is unassailable, and hope that nobody knows enough about economics (or Wikipedia) to call you on it.

Oil is important, but it's just one of many sources of energy, but it's really only popular because it's a nice efficient form of potential energy that's readily accessible: the low-hanging fruit.  We know where other fruit exists, and know that it exists in massive quantities, but are still on oil because it's the cheapest and easiest form of energy that we have at the moment.  As it runs out, it will by definition not be so cheap or easy, and the economic incentive to develop the other sources of potential energy that we know are available - to go after the higher-hanging fruit.  What Titus is essentially claiming is that this won't happen because Oil is a magic substance to which the laws of supply and demand simply don't apply.  It's insanity.

[Former Lord of Winterfell]

Ser Greguh, on 29 June 2012 - 10:12 AM, said:

The only reason a person would attempt to pass oil off as a Giffen Good is to flail in support of a hypothesis that one has already psychologically determined is unassailable, and hope that nobody knows enough about economics (or Wikipedia) to call you on it.

I disagree.  I think another reason a person would attempt to pass oil off as a Giffen good is that most people likely hadn't heard the term before (I hadn't), he assumes others will believe they are dealing with someone of superior intellect and knowledge, and therefore be intimidated into silence.  However, wikipedia is a nice thing for combatting those who love to argue via jargon, and a quick read of the concept and a few links confirms your point that calling oil a Giffen good tells you a lot about the desperation of the person making the argument.

Quote

Oil is important, but it's just one of many sources of energy, but it's really only popular because it's a nice efficient form of potential energy that's readily accessible: the low-hanging fruit.  We know where other fruit exists, and know that it exists in massive quantities, but are still on oil because it's the cheapest and easiest form of energy that we have at the moment.  As it runs out, it will by definition not be so cheap or easy, and the economic incentive to develop the other sources of potential energy that we know are available - to go after the higher-hanging fruit.  What Titus is essentially claiming is that this won't happen because Oil is a magic substance to which the laws of supply and demand simply don't apply.  It's insanity.

Except even that was disproven by him reluctantly acknowledging that the substitutes of natural gas (especially via fracking), shale oil, etc., were, in fact, being brought to market.  Wereupon he completely shifted his argument that oil was a unique good in terms of supply and demand, and attacked those substitutes on the grounds they were just "dirty hydrocarbons."

He has been successful in getting the rest of us to join in his game of pseudo-intellectual Whack-A-Mole, though.

Edited by Former Lord of Winterfell, 29 June 2012 - 11:33 AM.

[Titus Pullo]

KAH, on 29 June 2012 - 05:58 AM, said:

Quoting US demand increasing 30 % over 40 years???

Seriously?

The US population has increased with one hundred million people since the 1970s. You think that may have something to do with it? Just maybe?

Of course it does. That's why growth is essential to absorb population surge. What's your point?

Nothing I said contradicts that.  My point stands. You can not have growth without increased energy consumption.

Do you think that rate of population gain is even possible without cheap, abundant energy?

KAH, on 29 June 2012 - 05:58 AM, said:

Not to mention that price development over those 40 years haven't exactly been a uniform increase. Your statement is absolutely worthless as an indicator of the nature of oil.

Of course, there've been some surges and corrections due to war and the mere threat of oil  delivery being hampered. But I'd say real price increase has been pretty steady overall.

KAH, on 29 June 2012 - 05:58 AM, said:

As for the rest - that there will be pain is not in doubt. The question is how much, and that one's difficult to pin down.

Unprecedented pain. Some here believe the transition to alternatives will be seamless.

Edited by Titus Pullo, 29 June 2012 - 02:19 PM.

[Titus Pullo]

Ser Greguh, on 29 June 2012 - 10:12 AM, said:

Oil is important, but it's just one of many sources of energy, but it's really only popular because it's a nice efficient form of potential energy that's readily accessible: the low-hanging fruit.  We know where other fruit exists, and know that it exists in massive quantities, but are still on oil because it's the cheapest and easiest form of energy that we have at the moment.  As it runs out, it will by definition not be so cheap or easy, and the economic incentive to develop the other sources of potential energy that we know are available - to go after the higher-hanging fruit.  What Titus is essentially claiming is that this won't happen because Oil is a magic substance to which the laws of supply and demand simply don't apply.  It's insanity.

I never said oil was a "magic substance," you pretentious fraud.  I simply said it does not adhere the same to the "laws" of supply and demand because it is so absolutely fundamental to growth. Sure, mankind can (and has) hindered conventional crude demand a bit with price volatility. But he does so with great pain. .... and we're not even into overall decline yet. That's within the next 5 years.

The "economic incentive" to develop other sources will not return remotely the same EROEI, stalling necessary growth needed to keep everyone fed and happy. (oh, I'm sorry, ... is EROEI fancy jargon. a "flail in support of a hypothesis"?) ... By your "no probelm" analogy, the situation is akin to having to trudge 50 miles past a lion's den every day to pick the same amount of fruit. Obviously, that won't be possible every day.

This planet is undergoing a massive re-correction due to that basic premise. All you guys can focus on is the CRA, dumb borrowers, and shady bankers.

If price increase spurred necessary investment elsewhere, why on Earth would we continue to spend trillions abroad occupying foreign nations and maintaining the entire edifice required to keep the cheap oil flowing for the global economy? Demand hasn't waned THAT much. ....  Wait, I forgot. It's not about conventional oil extraction at all. We spend that much capital to "spread democracy" and "maintain our freedom." My bad.

As for "getting hostile," well, no... I simply respond in a language that those who address me seem to prefer. Perfect example? I'd never call you a "motherfucker" in my first attempt to address you. ... But  you have revealed yourself to be a profound dick. I can play that game also, not a problem.

Edited by Titus Pullo, 29 June 2012 - 01:53 PM.

[Triskele]

Titus Pullo, on 29 June 2012 - 01:37 PM, said:

I never said oil was a "magic substance," you pretentious fraud.

As for "getting hostile," well, no... I simply respond in a language that those who address me seem to prefer. Perfect example? I'd never call you a "motherfucker" in my first attempt to address you. ... But  you have revealed yourself to be a profound dick. I can play that game also, not a problem.

Gold.  Absolute gold.

This is turning into what Sullivan's blog calls a "Hathos alert."  It's difficult to look away.

[Greywolf2375]

This thread reminds me that we need a running-around-in-circles-with-hair-on-fire emoticon.

[Hereward]

It's admirable in a way.  The pig-headed refusal to recognise humiliation and intellectual mismatching, that is. I do like an underdog.

[Chaldanya]

I preferred this kind of schtick when Hammer used to do it!

N

[Former Lord of Winterfell]

Some people just can't admit it when they're wrong.

http://www.youtube.c...h?v=4vuW6tQ0218

[paddington]

I'd never seen the complete sketch before.

[Titus Pullo]

Former Lord of Winterfell, on 29 June 2012 - 02:43 PM, said:

Some people just can't admit it when they're wrong.

LOL.... Uh-huh....   So what am I wrong about?

Or are you referring to yourself regarding "non-petrol alternatives?"

Edited by Titus Pullo, 29 June 2012 - 04:42 PM.

[Titus Pullo]

Look, I give this forum enormous credit. ... Usually the debate never gets past accepting the reserve/production data in the first place. Often, it stays mired in the assertion that oil is abiotic, and thus seeps up from the mantle of the Earth. At least this place accepts that peak is very real... just that it's "not a problem" due to the "markets."

[Former Lord of Winterfell]

Titus Pullo, on 29 June 2012 - 04:20 PM, said:

What am I wrong about?

Or are you referring to yourself regarding "non-petrol alternatives?"

I'll get to that in a bit.  But first....

There is, somewhere buried beneath your alarmism, a legitimate point about the economic effects of having to transition to a more expensive energy source.  Nobody here would dispute that.  The problem is that you have exaggerated that effect, both in terms of costs, and the rapidity with which those changes will happen.  You have done that repeatedly by falsely equating actual production with maximum production capacity.  You have misrepresented the supply of petroleum alternatives, and greatly shortened the reasonably expected transition period to support your sky is falling, we are all doomed mentality.  And you've done that because of two fundamentally wrong assumptions.

The first thing you got wrong is that oil is a unique good that does not follow the laws of supply and demand.  It absolutely does.  What occasionally throws off the analysis is the existence of a cartel that deliberately manipulates production levels so as to maximize profits.  So, you mistakenly equate drops in production with the inability to produce more, when the reality is that the cartel deliberately reduces production during economic downturns so as to keep the price from collapsing.  Likewise, when the economy booms, they increase production because they can sell more volume while still maintaining the desired price.  What has happened, though, is that you misintepret economic booms or busts as being caused by the levels of production, when the reality is that the economic cycles are what causes OPEC to adjust production.  Oil is not a unique good.  It just looks like one sometimes because of OPEC.

The second thing you've gotten wrong is to fail to take technological improvements into account in your analysis.  In essence, you assume a completely static system, adjust one variable, and then conclude that the system is screwed because it can't adjust.  That's compounded by your flawed assumption regarding supply and demand, because that lets you ignore how the dimunition of known reserves changes the incentives to invest in technology that makes alternatives more economically viable.

One example of that is the nuclear issue.  You equated a drop in production with a drop in productive capacity, and that's because you failed to consider the possibility that better technology made existing plants more efficient, and therefore reduced the demand for uranium.  So, improved technology can make energy use more efficient, thus reducing demand and thereby extending the life of non-renewable sources.  It can also open up new reserves that previously were not recoverable.  It also makes substitutes more economically viable, which means there will be incrementally less use of petroeum as well.

All of which means that the transition away from petroleum will take longer than you think, because supplies will last longer due to these technological advances.  It also means that the prices of alternatives will come down as research and better technology make them more economically viable.  And, technological improvements unrelated to energy consumption can make economies more efficient otherwise, thereby offsetting any negative impact from any baseline energy cost increase due to losing out on the cheapest source of energy.

In other words, yes, losing out on the cheapest energy source will have costs.  But there are plenty of other factors that can mitigate/offset that cost, and as economies find equilibrium with whatever higher prices that may result, they'll start growing again.

It's a problem, but nothing like you're making it out to be.

[felice]

Former Lord of Winterfell, on 29 June 2012 - 07:24 AM, said:

By way of example, the very first commercial oil well, under felice's argument, would have been the cheapest, and it should all have been downhill from there.  Yet, despite that happening way back in the 1800's, we saw a huge economic boom as the secondary, tertiary, etc., sources were discovered and brought into production throughout the 1900's.

No, my argument is that the rate of uranium discoveries can reasonably be expected to follow the same pattern as oil discoveries, ie starting off going up, peaking, and tailing off, well in advance of the equivalent peak for extraction. I can't find data on what the annual rate of discovery has been so far - anyone?

Ser Greguh, on 29 June 2012 - 10:12 AM, said:

Oil is important, but it's just one of many sources of energy, but it's really only popular because it's a nice efficient form of potential energy that's readily accessible: the low-hanging fruit.  We know where other fruit exists, and know that it exists in massive quantities, but are still on oil because it's the cheapest and easiest form of energy that we have at the moment.

But we really should be thinking about building some more ladders!