The slippery slope of shale oil

December 22, 2014 9:47 PM

Oil is getting cheaper. The price of a barrel of Brent crude is approaching $60, down from around $140 in 2008. The price drop is largely attributed to American shale oil, also called tight oil, production of which has increased from a few thousand barrels/day a decade ago to over 5 million barrels/day today, mainly coming from the Bakken, Permian and Eagle Ford shales. By the end of 2013, American tight oil accounted for 4.1% of global crude oil production. The International Energy Agency calls it a "supply shock", and according to the World Energy Council, the notion of "peak oil" has almost been forgotten [PDF, page 24]. While speculation continues over the motives behind OPEC's refusal to curb production, others worry that the drop in oil prices distorts economic and political decision making, discourages the development of renewable energy sources [may require registration], and may induce deflation. The BBC tallies up the winners and losers.
posted by dmh (83 comments total)

I have many conflicting emotions surrounding this, but the one that seems to be floating to the top is BAHAHA, SEE YOU IN HELL, TAR SANDS.
posted by mrjohnmuller at 9:59 PM on December 22, 2014 [10 favorites]

Another big loser - the state of Alaska. We are being hit by the double whammy of dropping oil prices and the fallout of huge tax breaks the ousted governor gave the oil companies. The state budget, which relies almost completely on oil, is shrinking by the day. Capital projects have been slashed from an already spartan budget by the incoming political team, elected partially on their declared distaste for the current tax structure. Alaskans can expect some big reforms to bring in more oil tax revenue but until that painful process can begin, we are probably going to have to dig in to our precious reserve funds.
posted by Foam Pants at 10:03 PM on December 22, 2014 [5 favorites]

RE:deflation scare link:
Since when do junk bonds = resource extraction research?
posted by daq at 10:04 PM on December 22, 2014

The best illustration of this has been http://zenrus.ru/

From left to right: Rubles to dollars exchange rate, rubles to euros exchange rate, price of a barrel of oil (in dollars).
posted by fifteen schnitzengruben is my limit at 10:12 PM on December 22, 2014 [7 favorites]

It's going to be interesting times in Canada in 2015. Alberta oil sands will be/are taking a giant hit, real estate bubble is popping, dollar is dropping and interest rates will be heading north. On a brighter note, there's a federal election in '15 and Harper will be gone at long last.
posted by Klaxon Aoooogah at 10:12 PM on December 22, 2014 [2 favorites]

While I'm thrilled about gas for less than $2.50 a gallon (seriously, I'm thrilled about this. I've become rather poor and affording gas was always a hardship when it hovered in the $4 range.)

But, as much as I love it, it has more than a few negative consequences for those who are willfully short-sighted. I've already heard people laughing and saying "so this is peak oil" much as they do when they say "so this is global warming" on a sub-zero day in Wisconsin. It demonstrates a fundamental failure to understand what peak oil actually is, and how this doesn't disprove it in any way.

It has also been encouraging people to go back to low mileage vehicles; your big SUVs and the like. There is this stupid perception that the value at the pump they see today, will still be with them in five years when they are still very much in debt over their giant guzzler, but gas has spiked again.

We will still be able to pull oil from the earth for the next hundred or more years. That isn't really in dispute. The question is, how much harder will it be, and how much more awful consequences will the environment have to suffer to make this happen.

But then, I don't have kids, so it's all milk and honey for me. But the children of these blind fools will be paying the price, the same as those who fought so hard against it.
posted by quin at 10:20 PM on December 22, 2014 [41 favorites]

I really, really wish that the world would wait to come apart at the seams until after I'm dead.
posted by ob1quixote at 10:32 PM on December 22, 2014 [9 favorites]

On the bright side, if it does come apart at the seams, you'll be dead anyway, so the end result will be the same.
posted by maxwelton at 10:42 PM on December 22, 2014 [4 favorites]

Talk about mixed blessings. On one hand, it takes the wind out of the sails of renewables; on the other, it's taking them out of Russia and Saudi Arabia. It feels a little like we're buying geopolitical sanity with inches of sea level rise, though.
posted by Kadin2048 at 10:47 PM on December 22, 2014 [5 favorites]

It's going to be interesting times in Canada in 2015. Alberta oil sands will be/are taking a giant hit, real estate bubble is popping, dollar is dropping and interest rates will be heading north. On a brighter note, there's a federal election in '15 and Harper will be gone at long last.

The relatively weak Canadian dollar is supposed to be a bonus... if you are an exporter (I am - I have clients in the US and Japan). You're going to see the low dollar kickstart the Ontario and Quebec economies. Growth in Alberta has been scaled back to... 3%.

So you could argue the combination of a weak dollar and cheap oil is, in the short/medium term (next 3 years) a great thing for Canada. We learn not to depend on commodities for economic growth.

Inflation is a problem, but then again cheaper gas prices can (theoretically) offset higher food prices.

While it's hard to tell if it's bravado, everyone is saying cheap oil will not have much effect on existing Tar Sands projects. And cheap oil is acting as a break on a wildly distorted labour market, where Alberta projects are sucking up trades from across the country.

I must admit it is nice to make 15 cents on the dollar when I get paid :)
posted by Nevin at 10:57 PM on December 22, 2014 [1 favorite]

A few things to think about which I can't be bothered to develop:
- how is the situation affected by relations between the U.S.,the Saudis and Russia?
- how will Putin react to a sharply curtailed budget?
- what does this all mean for Syria? ISIS?
- fracking and oil sands will cease to be profitable at a price closer to $60 than the producers would like. Might this lead to a downturn in North American production? Low prices may lead to a downturn in North American production before long.
- near term low prices seem like they should help the incoming Republican congress. Coincidence?
- will high prices return before or after the next US presidential elections? Who benefits?
- whither China?
posted by wotsac at 11:00 PM on December 22, 2014

Oh yeah, it's likely that with 32% of the popular vote Harper et al will squeak back in, perhaps in a minority government. It's going to be a close one. But I think the Cons will do it.
posted by Nevin at 11:00 PM on December 22, 2014

It feels a little like we're buying geopolitical sanity with inches of sea level rise, though.

Really wish we could just go all in on nukes instead, but I feel like maybe it really is just 20 years late to do anything. If the American energy sector keep going strong there is a proposal that could have a major impact on the economy in Philadelphia which would probably be pretty cool for the city. But, as the issues with Russia show right now, an energy economy can be trashed by global forces.
posted by Drinky Die at 11:03 PM on December 22, 2014

And we save money doing it!
posted by clavdivs at 11:07 PM on December 22, 2014 [1 favorite]

It is unutterably stupid that we burn this resource when instead we could use it for chemistry, ie. plastics, fertilizers, pharmaceuticals.
posted by five fresh fish at 11:15 PM on December 22, 2014 [17 favorites]

But I think the Cons will do it.

Actively engaging in electoral fraud does give one's party a solid leg up on the competition. Prepare to be awed by their cajones and disgusted that our checks and balances are toothless. Again.
posted by five fresh fish at 11:18 PM on December 22, 2014 [7 favorites]

Oh yeah, it's likely that with 32% of the popular vote Harper et al will squeak back in, perhaps in a minority government.

Well, I hope you're wrong but you may be right. I guess we'll see. Stranger things have happened.

It is unutterably stupid that we burn this resource when instead we could use it for chemistry, ie. plastics, fertilizers, pharmaceuticals.

Yeah, I wonder how many more decades into the 21st century it will be before we wean ourselves off oil as energy for once and for all. Not in my lifetime, I don't think.
posted by Klaxon Aoooogah at 11:28 PM on December 22, 2014

If we don't wean ourselves off it for energy, we will lose its use as energy at the same time we lose plastics, fertilizers, and a lot of other chemical proccesses upon which our modern lives rely. It will brutal.
posted by five fresh fish at 11:32 PM on December 22, 2014 [8 favorites]

Joseph Heath had a pretty good post on what might be driving this, the 'stranded asset' concept:

The “stranded assets” concept has to do with the fact that, right now, proven fossil fuel reserves are about four times larger than what we can safely burn (i.e. without causing dangerous climate change). So roughly 3/4 of the world’s current, proven oil reserve are “unburnable carbon.” As a result, oil extraction has now become something like a giant game of musical chairs, where everyone wants to get as much out of the ground as they can before the music stops

...

All that having been said, the current federal government’s relentless efforts to subordinate all other interests in the country to those of the Alberta tar sands is starting to look more and more foolish.

This is all predicated on there being meaningful solutions to the climate collective action problem, on which my pessimistic nature sees very little hope.
posted by rider at 11:33 PM on December 22, 2014 [12 favorites]

The "bumpy plateau" of oil production could go on for a few decades, and price fluctuations for even longer as demand destruction does its thing. Large wars, financial collapse, extension and intensification of the current gilded age, and pandemics could stretch out the timeline too. We'll absolutely be on the downslope this century, though, which is nothing even in terms of human history.
posted by MillMan at 11:35 PM on December 22, 2014 [4 favorites]

for all the talk of shale, this piece on oil prices as a diplomatic weapon arranged between the saudis & the US against russia and iran/syria is worth considering as well
posted by p3on at 11:53 PM on December 22, 2014 [10 favorites]

Cheap gas is personally welcome but is predictably driving vehicle buying decisions that people may end up regretting a few years down the road. It's funny how immediate the factors are for choosing between a Honda Fit and a Suburban, and yet that seems to be the case. Nor, I suspect, will people do much about retrofitting all those houses equipped with old oil-burning furnaces until the next time oil prices rise.
posted by Dip Flash at 12:00 AM on December 23, 2014

One Major Oil Company is already getting skittish. I'd watch Nigeria, if they go into the tank...
posted by Cyrano at 12:22 AM on December 23, 2014

My impression is that people are optimistic about the bind this puts both Putin and Syria in and that Saudi Arabia is willing to take the economic hit to try and put the kibosh on shale and tar sands and such. Is there any value to this or do I need to find better rumor mongers?
posted by Ray Walston, Luck Dragon at 12:39 AM on December 23, 2014 [3 favorites]

It's buying time/siege mentality.
posted by clavdivs at 12:49 AM on December 23, 2014

I was amused at how much impact gas prices had on tesla stock, so then I bought more while it was lower.
posted by flaterik at 12:50 AM on December 23, 2014 [2 favorites]

Bet No. 1: Tesla will achieve a gross profit margin of 29%
I predicted that on the strength of continued pricing power, further economies of scale, and production improvements, Tesla would boost its third-quarter 2013 automotive gross profit margin of 21% to 29% by the end of 2014. While it's still too early to see where Tesla's automotive gross profit margin finishes the year, the company predicted in its 2014 Q3 letter to shareholders that its non-GAAP automotive gross margin will exceed 28% "in late Q4." Importantly, this non-GAAP figure excludes the benefit of zero-emission vehicle credits.

-Fool.com
posted by clavdivs at 1:06 AM on December 23, 2014 [2 favorites]

I think Saudi Arabia may be aiming at Iran more than Syria, but they're probably also thinking of the harmful effect this will have on oil's competitors, particularly natural gas. From an environmental perspective it's horrible, but from a short-term political perspective it will probably make the world a safer place: Iran and Russia, the two world's most destabilising countries, are heavily dependant on oil revenue.
posted by Joe in Australia at 1:27 AM on December 23, 2014

for all the talk of shale, this piece on oil prices as a diplomatic weapon arranged between the saudis & the US against russia and iran/syria is worth considering as well

Sshhhh! You're ruining the cover story.
posted by fairmettle at 2:27 AM on December 23, 2014 [1 favorite]

Iran is fine, just stop poking it with that stick.
posted by Meatbomb at 2:31 AM on December 23, 2014

The odd thing about peak oil is that it's obviously inevitable. If you have a finite resource and demand which is growing exponentially - or if not exponentially then with tremendous cumulative acceleration - that is what is going to happen. It won't so much run out as become very expensive to extract and no longer economic. The curve that maps production may alter along the time axis depending on what oil fields are discovered and what extraction methods are developed, but the shape - up , along a bit, down again - stays the same. It can't keep going up forever, for example. Any other outcome demands an alternative source of oil than the planet Earth (it's definitely not going to come from outer space based on what we know, but perhaps an another dimension. Or Narnia). There's not even the minuscule space for debate that the Human Global Warming subject offers: it's inevitable.

I'm lazily cynical enough to think that peak oil explains a lot about political and economic policy over the last thirty years: if western civilisation is a game of musical chairs, it makes a lot of sense that the people with the most power want to make sure that they control all the chairs when the music stops, despite the fact that it makes a lot more sense to allocate chair space in a much more egalitarian way.

One good thing about the subject coming up at Christmas is that it lends a bit of variation to my tedious drunken ranting: usually my line on oil is that the human race won the lottery and basically spent it all on chocolate and pornography on the assumption that when it runs out we just have to win another lottery. At Christmas, I can dredge the table for a misshapen plastic thing that might be an approximation of a cartoon cat that's just fallen out of a cracker and hold it up. "Look," I can say, "We discovered that oil was not only an astonishingly powerful source of energy but could be used to make wonderfully flexible and malleable materials, so that huge amounts of it could be dedicated to the design, manufacture and transportation half-way round the world of things like this." Focus on distorted cat thing. Throw cat thing over shoulder and shrug.

Bit melodramatic, but not bad for a drunken rant.
posted by Grangousier at 3:10 AM on December 23, 2014 [18 favorites]

The thing is, the doom is nigh crowd has a lot of concepts which are clearly inevitable, but practically irrelevant because of human ingenuity. The meta concept is that on a finite planet, growth cannot continue indefinitely. If the population increases, eventually we will run out of food. At some point we will start being able to extract less and less oil . In all the cases, what the statement implies is that we are already at - or close to the tipping point of human ingenuity (Or AI ingenuity in the long run). But, everyone who has made that argument in the past from Malthus onwards has been embarrassing and harmfully wrong. So if you want to make it again, you need good evidence. The world is vastly, inconceivably better for continuing to use fossil fuels over the last 30-40 years rather than listening to peak oil alarmists from the 70's - go to shanghai or mumbai and you will see the benefits of fossil fuel use walking and talking. That is not to say we can't do better or that renewable energy (and fusion & particularly nuclear, which is already competitive with fossils fuels and saving 10's of thousands of lives a year) is not important - it clearly is because global warming - but there is not much evidence that peak oil is going to come before GW crunch time.
posted by Another Fine Product From The Nonsense Factory at 4:15 AM on December 23, 2014 [2 favorites]

proven fossil fuel reserves are about four times larger than what we can safely burn. So roughly 3/4 of the world’s current, proven oil reserve are “unburnable carbon.”

Fossil fuel reserves are not quite the same thing as oil reserves. There's more than 3 times as much coal as there is oil. Oil is harder to do without, so if we want to burn 1/4 of it all, it would be much better to burn all the oil and none of the coal. You know, if the world were collectively rational. Personally I'm happy to get a few years' reprieve on peak oil, wasn't really ready for it yet.

how is the situation affected by relations between the U.S.,the Saudis and Russia?

Well, the rumour is that the US has put pressure on Saudi Arabia to exert their influence over OPEC to prevent a production quota cut, in order to drive down the price of oil to punish Russia.
posted by sfenders at 4:17 AM on December 23, 2014 [1 favorite]

Oil is getting cheaper.

"cheaper" in the sense of using paper or 1's and 0's?

If Hollywood was to be believed there was a time you could shoot at a rabbit and strike oil.

Needing to drill in dirt 5000+ feet below the surface of the ocean doesn't SOUND "cheaper".

In all the cases, what the statement implies is that we are already at - or close to the tipping point of human ingenuity

Right. Smart people that think of clever things like splitting atoms. Then Humans can be even MORE clever and place 'em on fault lines, near lava flows and below historical tidal wave levels.

There is a "great game" being played and a few posters here are groking the 2nd go at the Russians via oil pricing.
posted by rough ashlar at 5:17 AM on December 23, 2014 [2 favorites]

Well, the rumour is that the US has put pressure on Saudi Arabia to exert their influence over OPEC to prevent a production quota cut, in order to drive down the price of oil to punish Russia.

And in the 1990s during Regan/Bush I (VS Bush II and future Bush III) the people who made such claims were called conspiracy theorists. These nattering nabobs of falsities have gone so far as to claim the large gas explosion in Russia was somehow planned.
posted by rough ashlar at 5:25 AM on December 23, 2014

Ali Naimi's view: Opec leader vows not to cut oil output even if price hits $20
posted by chavenet at 5:54 AM on December 23, 2014

When making these calculations, keep in mind that the US military consumes the most petro. Their needs factor into this pricing drop.
posted by five fresh fish at 5:55 AM on December 23, 2014

The thing is, the doom is nigh crowd has a lot of concepts which are clearly inevitable, but practically irrelevant because of human ingenuity.

"Now faith is the substance of things hoped for, the evidence of things not seen. For by it the elders obtained a good report. Through faith we understand that the worlds were framed by the word of God human ingenuity, so that things which are seen were not made of things which do appear." (Hebrews 11:1-3)
posted by Pyrogenesis at 5:58 AM on December 23, 2014 [6 favorites]

Cheap gas is personally welcome but is predictably driving vehicle buying decisions that people may end up regretting a few years down the road.

My father is a premillennial dispensationalist who is big into the end times being nigh. He even had a date around 2012 or 2013; now it's just imminent. Whenever he tried to convince me that I had to get ready for the coming of Jesus I'd explain it to him like this: "'He's coming like a thief in the night.' The reason He says that is because you're supposed to live your life properly ALL THE TIME. The world - YOUR world - could end any minute from some freak accident. Even if you know the exact date of the End you shouldn't have to change your behavior."

I feel the same argument is valid for environmental issues like peak oil. Maybe you know the exact date of the catastrophe, maybe you don't. Either way you should be doing what you can like it could come any minute because at some point it IS coming.

Unfortunately my dad never listened to me and I doubt the general public would, either.
posted by charred husk at 6:08 AM on December 23, 2014 [9 favorites]

The entire POINT of OPEC not curbing production is that the drop in oil prices hurts the economies of ethanol production and "tight oil" production. This includes not only national economies, like Russia, Venezuela and Iran, but companies' economies: One example: Continental Oil (Harold Hamm) stock has dropped from approx. $80/share in early September to less than $40 today. That represents a loss in value of approximately $10 billion.

All of that loss in value is going to have a downstream effect on funds that invest in "tight oil" and ethanol. And the world's economies are linked. You don't want to see what happens if big dominos start to fall. OPEC is betting that if they can shutter some of those competing operations they can be back in control again. By forcing the price down as they are right now, they are showing that they are in control right now. They just have the deepest pockets and so can play this strategy to a successful conclusion.

Frankly the $15 or $20 you are saving a week on gas isn't going to make up for the global economic downturn this has the potential to cause.
posted by spock at 6:10 AM on December 23, 2014 [7 favorites]

Inflation [in Canada] is a problem, but then again cheaper gas prices can (theoretically) offset higher food prices.

Unless you don't drive on a regular basis. And Canadian groceries are vastly overpriced to begin with.
posted by one more dead town's last parade at 6:23 AM on December 23, 2014 [1 favorite]

The entire POINT of OPEC not curbing production is that the drop in oil prices hurts the economies of ethanol production and "tight oil" production.

What then is the point of al-Naimi additionally going out of his way to talk down prices by vowing that they will never be so daft as to cut back on oil production ever again, speaking directly against his nation's self-interest?
posted by sfenders at 6:45 AM on December 23, 2014

Deflation does seem to be stalking. Bond investor Bill Gross is saying "deflation remains a growing possibility, not the kind that creates prosperity but the kind that’s trouble for prosperity."

Deflation is characterized by a strong dollar, low commodity prices, low bond yields, and low stock prices. All of those are in place except the last one. Which leaves me very concerned the current all time high stock market may be a bubble. How long it lasts could be years.

My personal theory is that 2017 could likely see a crash. That's because it's exactly 80 years from the recession of 1937–38. And that was 80 years from the Panic of 1857. Why 80 years? See generational theory (The Fourth Turning) which has shown predictable ~80-year sequences of events. For example the 1929 crash was almost exactly 80 years from the 2008-2009 crisis. There's some sort of generation memory (or forgetfulness) in people and institutions that causes echos as generations die off and are replaced.
posted by stbalbach at 6:54 AM on December 23, 2014 [9 favorites]

Either way you should be doing what you can like it could come any minute because at some point it IS coming.

I truly believe it is coming, however this particular downturn in prices means that my family can tuck away money toward investing in alternate ways of heating our home vs. where we were last winter, which was pouring every cent we had into buying home heating oil, leaving nothing left over to put toward saving for a new furnace.

In casual conversation and FB, nobody I know seems to think this will last, and ours is not the only family I know using this respite as a way to prepare for the future, when the prices climb again.
posted by anastasiav at 7:09 AM on December 23, 2014 [1 favorite]

Unless you don't drive on a regular basis. And Canadian groceries are vastly overpriced to begin with.

No kidding. And I live on an island.

Theoretically at least, cheaper fuel means cheaper transportation costs, which means cheaper groceries.

We drive a Honda Fit, but we also live downtown and rarely drive anywhere.
posted by Nevin at 7:32 AM on December 23, 2014

The good news is that unsubsidized wind and solar are now cost competitive with fossil fuels.
posted by Ham Snadwich at 7:38 AM on December 23, 2014 [1 favorite]

the human race won the lottery and basically spent it all on chocolate and pornography on the assumption that when it runs out we just have to win another lottery

Exactly--the greatest misallocation of resources in history.

he world is vastly, inconceivably better for continuing to use fossil fuels over the last 30-40 years rather than listening to peak oil alarmists from the 70's - go to shanghai or mumbai and you will see the benefits of fossil fuel use walking and talking.

I know, right?
posted by entropicamericana at 7:54 AM on December 23, 2014 [3 favorites]

Say what you want about the evils of domestic oil exploration: It very well may be the lesser evil. The past several years have demonstrated that America can tolerate higher oil prices without cratering the economy. In fact, it's arguably been a driver of innovation and economic activity, which has had several rather positive effects. We're driving less; we're polluting less; we're building better cars; etc...

If OPEC wants to play a game of chicken, the government certainly has the power to slap a tariff on foreign oil imports, or subsidize domestic production.

Taxes and high gas prices are extremely unpopular with the American public, but you actually might be able to sell it under the guise of protecting American industry, while standing up against foreign bullying. I don't think you would find too many Americans who are opposed to reducing our dependence on foreign oil.
posted by schmod at 7:55 AM on December 23, 2014

Yeah, Canada is going to be an interesting place in 2015. I suspect that the Tories will start flailing about with even more cutbacks to ensure their predicted balanced budget and tax cuts before the next election. I also suspect we will have an earlier rather than a later election call to try to get it over with before things get too grim back in their prairie stronghold.

Diesel fuel is still running about 30c a liter higher than gas in Ottawa right now, so it is actually cheaper to drive our van than our diesel golf right now. Insane.
posted by fimbulvetr at 7:58 AM on December 23, 2014 [1 favorite]

The thing is shale oil is only really being exploited in the US as I understand it. They are finding huge shale reserves in Europe and elsewhere, and if they go after them it could keep oil and gas prices down for a long time. As natural gas is used to manufacture nitrate fertilizers I wonder if it could help food prices as well.

Long term this will probably feed massive economic growth, sustain overpopulation, and accelerate global warming, mass extinctions, etc.
posted by Golden Eternity at 8:09 AM on December 23, 2014

the world is vastly, inconceivably better for continuing to use fossil fuels

Stanford biologist warns of early stages of Earth's 6th mass extinction event

It may be dumb to talk about peak oil happening in less than a hundred years or two, but we must have already passed peak biodiversity.

Meh, I think it will be another century or two before the shit hits the fan. Millions of years of ecosystem development and tens of thousands of years of human development down the drain after a few millenia of civilization. What do we care, we won't be here? And we can always convince ourselves that our electronic devices are conscious living beings that will live on after we die.
posted by Golden Eternity at 8:23 AM on December 23, 2014 [5 favorites]

One of the things that is worth paying attention to with Alberta's economy is that because tar sands oil is such crap, when the price of a barrel of oil hits 60 dollars, the Albertan crude is considerably less.
So yeah, Alberta, already being hit hard by this which in some perfect way serves Stephen and His Magical Hair right.

That is all.
posted by Phlegmco(tm) at 8:24 AM on December 23, 2014 [1 favorite]

If we can just transition to a different form of energy, oil will continue to play a key role in our civilization. Our entire civilization, from medicine to shelter, food, clothing, you name it depends on petroleum. We cannot live without it.
posted by Nevin at 8:25 AM on December 23, 2014

Golden Eternity, a drop in corn prices due to falling ethanol prices could result in lower food costs, too, by driving a shift away from ethanol acreage and towards livestock feed. It would also be nice if my son's beloved Doritos dropped in price a little. I'm not sure, though, how the blend requirements for ethanol might play into this. Since this is happening as we head into winter we'll know more in the spring when farmers start planting.
posted by wintermind at 8:25 AM on December 23, 2014

It is unutterably stupid that we burn this resource when instead we could use it for chemistry, ie. plastics, fertilizers, pharmaceuticals.

Oh yeah, and worse yet, we burn it in cars, which can go on any number of alternates; jet aircraft not so much.
posted by Gelatin at 8:28 AM on December 23, 2014 [2 favorites]

Frankly the $15 or $20 you are saving a week on gas isn't going to make up for the global economic downturn this has the potential to cause.

This doesn't make much sense. Cheap energy is a boost to all sorts of energy-intensive industries. It hurts some very particular niche sectors (alternative energy, tight oil, ethanol, etc.) but helps basically everyone else, from concrete production to aluminum refining.

The DJIA and S&P500 just hit record highs based in part on cheap energy. The modern economy's lifeblood is energy, largely in the form of petroleum. I don't see that being problematic to growth.

It's problematic for a lot of other reasons, but not because the economy is going to tank. At least, not the US or industrialized Western Europe's economy; Russia's... sucks for them.
posted by Kadin2048 at 8:43 AM on December 23, 2014 [1 favorite]

Oh yeah, and worse yet, we burn it in cars, which can go on any number of alternates; jet aircraft not so much.

I'm going to hazard a guess and say it has something to do with the automobile union job sociopolitical complex that's still around, as ICE's tend to be a bit more complex than some of the leading alternates out there (meaning alternates' builds require fewer jobs). Figuring out a way to responsibly replace that complex would be really really great.

So in that sense, the price drop buys some time (outside of climate change) and brings some mercy. Really really hoping we can get some coalitions together to push public transit development BEFORE we ~need it.
posted by JoeXIII007 at 8:49 AM on December 23, 2014

The best thing about Peak Oil is that its not falsifiable. It's like the answer to that riddle, what's always coming but never arrives? The Freidman Unit of Peak Oilers is "the next decade". A trip down the Metafilter memory lane...

Hubbert's Peak: the impending oil shortage
Hubbert's Peak: the impending oil shortage Is this the REAL reason behind the push to invade Iraq? In 1956. M. King Hubbert, a respected petroleum geologist, predicted - to within a year! - the peak in US oil production: 1970. US oil production has declined every year since. Using the same statistical methods, others now predict a world peak in oil production within a decade or even as early as ...
posted to MeFi by troutfishing at 1:38 PM on October 18, 2002

Forecast of Rising Oil Demand Challenges Tired Saudi Fields
Saudi Arabia, the leading exporter for three decades, is not running out of oil. Industry officials are finding, however, that it is becoming more difficult or expensive to extract it (weblog safe NYT link). A very readable article that, without even mentioning it, does a good job of explaining what is "the peak of oil". Cornucopians, that should sent shivers down your spine!
posted to MeFi by samelborp at 12:31 PM on February 24, 2004


Another Note On Peak Oil in the mainstream press
Another Note On Peak Oil... That last question is at the center of a fierce debate. Adherents of the "peak oil" theory warn of a permanent oil shortage. In the next five or 10 years, they maintain, the world's capacity to produce oil will reach its geological limit and fall behind growing demand.

April 22: Earth Day or Peak Oil Day?
Today the Saudi Oil Minister announced that they are setting aside OPEC production quotas. Is the end for OPEC? More importantly, when the Texas Railroad Commission did the same thing in 1971, it signaled the peaking of US oil production. Oil prices keep rising, and the Main Stream Media blames it on tight refinery capacity. But simple economics tells us that this should actually cause crude ...
posted to MeFi by DAJ at 5:34 PM on April 22, 2005 - 81 comments


Peak oil is fun for everyone!
Even as oil prices hit record highs, the Saudi’s are now warning that they do not have the oil supply to keep up with future demand. With news like this it’s time to start taking peak oil seriously. Matthew R. Simmons, a former bush advisor, recently wrote a book that examines the future prospects of Saudi oil reserves and the implications for global oil production. He finds that the amount of oil ...


time stock up on leather jackets.
Has oil already peaked? Princeton University geology Professor Kenneth Deffeyes argues that it has, based on the fact that oil production should peak when half the worlds oil has been produced. According to him, that happened in December of 2005, at 1.0065 trillion barrels. critics claim that new methods and economic effects should prevent peak oil from happening, although global oil discovery ...
posted to MeFi by delmoi at 7:31 AM on February 16, 2006 - 75 comments


Post Peak Oil Post
"The world is at the beginning of a structural change of its economic system. This change will be triggered by declining fossil fuel supplies and will influence almost all aspects of our daily life." The new Oil Report from Energy Watch Group makes a strong case that we have now passed peak oil. It identifes 2006 as the year of global peak oil, with a 7% annual fall in production ...
posted to MeFi by roofus at 5:58 AM on October 22, 2007 - 87 comments


Energy Independence and Peak Oil
A Saudi Prince tells America to give up futile dreams of energy independence. Op-Ed in the NYT says Peak Oil is a waste of energy and an illusion. Meanwhile, the OECD's energy advisors, the IEA are saying cheap oil will run out in ten years, a decade sooner than estimates made as recently as 2007.
posted to MeFi by bystander at 2:57 PM on August 26, 2009 - 88 comments
posted by euphorb at 9:00 AM on December 23, 2014 [3 favorites]

The best thing about Peak Oil is that its not falsifiable. It's like the answer to that riddle, what's always coming but never arrives? The Freidman Unit of Peak Oilers is "the next decade".

Substitute "climate change" for "peak oil" to see what you sound like to people who haven't buried their heads in the tar sands. (You kind of sound like the guy falling off the Empire State Building who passes the 40th floor and says, "So far, so good!")
posted by entropicamericana at 9:10 AM on December 23, 2014 [6 favorites]

I'm not sure that I would characterize the decades of observation, analysis and modelling that scientists have worked through to understand the origins and future of Climate Change as similar to the amount of effort put towards understanding Peak Oil. In other words, the two are not interchangeable, or substitutable in any way, except by semantic sleight of hand.
posted by euphorb at 9:24 AM on December 23, 2014

It would be the most delicious irony if oil prices wound up being the cause of the fall of the Harper government. My prediction, though, is that through a combination of electoral trickery, tax cut giveaways and relentless attack ads, they squeak through and win another minority. Then the Liberals and NDP will, for one reason or another, cave on the idea of a coalition.
posted by The Card Cheat at 9:43 AM on December 23, 2014

I'm not sure that I would characterize the decades of observation, analysis and modelling that scientists have worked through to understand the origins and future of Climate Change as similar to the amount of effort put towards understanding Peak Oil.


The IEA does long term modelling; as do the major energy companies I'm sure. This is interesting:

Peak Oil becomes an Issue Again after the IEA Revised its Predictions

While not exactly reinstalling peak oil on its throne, it did make clear that much of the talk of a perpetual gusher of American shale oil is greatly exaggerated.  The exploitation of those shale reserves may delay the onset of peak oil for a year or so, the agency’s experts noted, but the long-term picture “has not changed much with the arrival of [shale oil].”

I saw an article recently saying the last time oil traded at its market price in the 70's or 80's it was in the $20 range. The current price drop may have more to do with the failure of OPEC's control of the market than the actual significance of shale oil.
posted by Golden Eternity at 9:43 AM on December 23, 2014 [2 favorites]

Another Fine Product From The Nonsense Factory: The world is vastly, inconceivably better for continuing to use fossil fuels over the last 30-40 years rather than listening to peak oil alarmists from the 70's - go to shanghai or mumbai and you will see the benefits of fossil fuel use walking and talking

What exactly would the world have been like during those 3-4 decades if things had been different? Show your work. Some things are clear: fewer global climate change-caused extinctions and fewer childhood deaths from emphysema. Would those be compensated by deaths from nuclear accidents, or wind farm turbines falling on people suddenly? We can't know.

Regardless, you sound like a grasshopper on a warm September afternoon, munching on a freshly dropped apple. "My life is vastly better for having lain around all these weeks, instead of wasting time storing food like that silly old ant."
posted by IAmBroom at 9:59 AM on December 23, 2014 [4 favorites]

It would be the most delicious irony if oil prices wound up being the cause of the fall of the Harper government. My prediction, though, is that through a combination of electoral trickery, tax cut giveaways and relentless attack ads, they squeak through and win another minority. Then the Liberals and NDP will, for one reason or another, cave on the idea of a coalition.

I don't think the price of oil has much to do with it, since the provinces that are being hurt by the slump in oil prices (with the exception of Nfld & Labrador) traditionally vote Conservative anyway. The slump is good news for Ontario and Quebec anyway, neither of which are inclined to vote Conservative, and BC which does vote Conservative.

At the end of the day it's seat-count, not share of the popular vote. A few swing ridings will allow them to hang onto a minority government.

Putting it another way, I can't see either NDP or the Liberals getting enough seats to form a minority government. While the NDP will lose seats, the Liberals will not somehow take their place. If the Cons' seats erode, and the NDP's seats erode, and the Libs increase their number of seats, the Cons still have the best chance of forming a minority government:

Cons 166 seats, 39.62%
NDP 103 seats, 30.63%
Libs 34 seats, 18.91%
posted by Nevin at 10:25 AM on December 23, 2014

Gas is a huge moral dilemma for me. Not just from an environmental point of view - but particularly that every time I fill up I send monies to some of the most awful women hating, gay killing regimes in the world.

If I could - I would pay a huge premium for North Sea or Light Texas Crude rather than Middle Eastern oil at the pumps. I get it though - I am a lucky minority where the price of gas is not a huge financial burden. But I have taken steps to reduce my energy footprint however I can - selling my house, moving into a smaller place and be closer to work... etc.

The Saudi's see the long game of the current oil situation - flood the market and strangle your competition in their cradles. For me - the cost of gas has gotten uncomfortably high, regardless of the price at the pump,
posted by helmutdog at 10:44 AM on December 23, 2014 [4 favorites]

I remember OPEC panicking in the late 70s and 80s, dropping oil prices to cut out the alternative energy scene that was just then getting started. Worked pretty well, so I'm guessing they're trying to kill off the solar, wind, EV, and similar alternatives that promise to reduce the world's need for their oil. Either that, or they really need some cash for some big project and are selling oil to get it, but that seems less likely than the "kill the competitiion" idea.
posted by Blackanvil at 11:07 AM on December 23, 2014

Tight gas reserves in NA can be found here.

Keep in mind that around half of the Bakken field is in Saskatchewan, and is relatively undeveloped compared to the ND side. A huge boom is coming to south Saskatchewan very soon---already started in some places, in fact. Regina is going to grow tremendously in the next few years. Indications are that there may be more in the Bakken than previously thought too, so the industry may be in the north central region (ND and SK) for a decade or longer more than originally thought.

There's also a huge potential tight oil and gas "play" running through most of Alberta. That's less well understood and developed, but the infrastructure is much better developed to handle that. Alberta's energy sector still has lots of room left.

The big problems for the unconventional tight oil folks right now is two-fold: transportation and volatiles management. Following the Lac Mégantic disaster of 2013, the levels of dissolved propanes and butanes in the crude have been under very close scrutiny. Following two derailments and fires (though no one hurt there, thank ghu), the Governor of ND has just required removal of these VOCs from oil prior to shipment. This has created a huge problem for producers: what to do with the volatiles?

There are three answers: flare off, transport to a refinery or upgrade to a liquid. Flaring off is the worst. It's publicly unpopular, environmentally irresponsible, and it's literally burning a good chunk of the oil's value. Transport add even more burden on a rail system that's already under heavy strain. Upgrading in place to a gasoline is probably the best idea, but building the mini refineries in place is expensive, and worse, takes a lot of time. They need these now, not six months or two years from now.

That's just production and transportation. We still don't know a huge amount about the environmental effects of tight oil production, especially in the longer term. There are questions on water use too in an quite arid environment, which is only getting more dry as climate change happens. It's going to be an interesting next decade in central North America.
posted by bonehead at 11:23 AM on December 23, 2014 [2 favorites]

The best thing about Peak Oil is that its not falsifiable.

Peak Oilers are like the cults predicting the imminent apocalypse and second coming, complete with date. And then when Jesus doesn't show up on the predicted date the cult only doubles down even harder. I don't get it.

And don't give me that "well, peak oil is inevitable and will obviously happen sometime 'cause peak oilers have clearly and definitively been stating we were either already in peak oil or it was absolutely imminent. Complete with graphs and charts.
posted by Justinian at 11:27 AM on December 23, 2014

The IEA has published charts showing peaks in oil production. The IEA is a cult?
posted by Golden Eternity at 11:37 AM on December 23, 2014 [1 favorite]

Peak Oil isn't a particularly crazy concept, but you have to realize it isn't a fixed endpoint. Improved technology consequently new abilities to exploit oil reserves keep moving the goal posts. these have included: deepwater, tight oil, upgrading bitumen, Arctic, etc... in just the past couple of decade or so.

Hubert was right for conventional reserves, but we've moved past just conventional sources ages ago. Oil is still a limited resource, but the technology to access and process oil has improved enormously since the seventies. That's pushed the peak into the future.
posted by bonehead at 11:38 AM on December 23, 2014 [4 favorites]

Well the river of headlights ran for 20 miles up the grapevine, and the red tail lights a bright ruby bracelet, going the other way. I asked the driver if this highway were always so full of vehicles on a Monday night, and he said no, he thought the price of gas, being so low, is why everyone is out driving. On the better side of the equation I saw a lot of energy efficient cars on the LA freeway, even Toyota Prius's were outfitted as taxis. This whole episode just shows how easy it is for some to pull the strings. It seems a sudden, coordinated effort. (I can't figure out the Prius plural so I am going with what the text editor doesn't red line.)
posted by Oyéah at 11:39 AM on December 23, 2014

fewer global climate change-caused extinctions and fewer childhood deaths from emphysema. Would those be compensated by deaths from nuclear accidents, or wind farm turbines falling on people suddenly? We can't know.

Well, the comparison is also about the energy sources preceding petroleum, such as animals (how about all the rotting corpses, manure and other animal caused diseases that mankind was much more prone too when we lived, literally, cheek to jowl with the livestock?) as well as the shear amount of food that went to feeding those animals (pre ICE animal power ate up something like 40% of ALL farm production in US).

We almost killed off all the whales using their oil for lighting and other products before kerosene and natural gas became a thing.

Nuclear power has proven track record of being the LOWEST cost (in terms of life) power production available currently (especially if you include the cost of the miners lives and installers lives as well) although wind and hydro aren't too bad in this category, solar is pretty bad really (falling off a roof isn't good for you) It isn't too bad in terms of monetary cost either.
posted by bartonlong at 11:45 AM on December 23, 2014 [1 favorite]

Regardless, you sound like a grasshopper on a warm September afternoon, munching on a freshly dropped apple. "My life is vastly better for having lain around all these weeks, instead of wasting time storing food like that silly old ant."

Except we humans weren't just sitting around until nature coughed up its bounty of easy fuel. The industrial revolution was already well under way and searching for every possible way to feed its explosive growth. Nor did we just simply consume it all and stop afterwards. We channeled our growth into build a society that was more egalitarian and productive than ever before. Whereas the creation and transmission of knowledge used to be the domain of an elite few, it is now done by an increasingly greater proportion of humanity with each passing year.

We've created a lot of problems for ourselves along the way, but with that we have also expanded our capacity for solving them. It wasn't all smooth and there are many other less self-defeating and self-destructive routes we could have taken, I grant you that. However, I'd like to think that blasting ever greater amounts of our collective natural wealth into the upper atmosphere isn't entirely as moronic as I just made it sound :)
posted by Seiten Taisei at 11:47 AM on December 23, 2014 [2 favorites]

Peak oil may be forgotten, but it remains a straightfoward conclusion from 1. assuming there are no trolls under the earth making more of the stuff and 2. the fundamental theorem of calculus.
posted by ocschwar at 11:50 AM on December 23, 2014 [2 favorites]

and, the thing people keep forgetting: 3. geological exploration, petroleum extraction engineering and refining chemistries haven't stood still for the past 40 years either.

You need to keep adding terms to your PDE. If your model, and graphs and charts continue to just have conventional sources in them, they're wrong. If you're arguing against that, then you're setting up a strawman.

The IEA redoes their peak models every six months or so for exactly this reason.
posted by bonehead at 11:54 AM on December 23, 2014

Nuclear power has proven track record of being the LOWEST cost (in terms of life) power production available currently

Peak Uranium.

Anyway, what's this nonsense about cheap gas? Get us back to under a dollar a gallon and we can talk about cheap.
posted by IndigoJones at 12:01 PM on December 23, 2014

It is unutterably stupid that we burn this resource when instead we could use it for chemistry, ie. plastics, fertilizers, pharmaceuticals.

Those things are by-products of refining crude oil into Petroleum.
This is why plastics are so cheap - we have more of them than we know what to do with.
posted by Lanark at 12:09 PM on December 23, 2014 [2 favorites]

Hubert was right for conventional reserves, but we've moved past just conventional sources ages ago. Oil is still a limited resource, but the technology to access and process oil has improved enormously since the seventies. That's pushed the peak into the future.

And there is probably a huge amount of undisclosed or undiscovered unconventional reserves globally. The price of oil is not being determined by true supply and demand curves. If it were the price would be much lower. Nevertheless, demand is growing and could continue to grow for a long time depending on emerging markets. Whenever conventional sources do dry up production costs should start to drive the price higher once again, if there is no other market intervention making alternatives more attractive, and ultimately leading to a peak in oil production. If the international community ever took global warming seriously and were effective enough to do something about, it we would be putting taxes on oil to drive prices higher and fund alternative energy.
posted by Golden Eternity at 12:11 PM on December 23, 2014 [1 favorite]

Every time gas prices at the pump drop, I always thing of this Bloom County comic from 1986.

I love the line "dump the milk, the cat drinks unleaded from now on!"

This is why we can't have nice things.
posted by daq at 12:42 PM on December 23, 2014 [5 favorites]

L.H. PUTTGRASS SIGNING OFF AND HEADING FOR THE TUB.
posted by entropicamericana at 1:12 PM on December 23, 2014 [2 favorites]

Not to worry folks, the price of regular will be back up to $3.99 this summer!

Feckin' oil companies gotta make their $$$

(I want out from under the controlling thumbs of oil companies to both enjoy a clean environment and to dance the schadenfreude waltz when they crumple.)
posted by BlueHorse at 6:02 PM on December 23, 2014

Iran and Russia, the two world's most destabilising countries, are heavily dependant on oil revenue.

I'd rate things differently. The U.S. would be on top followed closely by the Saudi Arabia.

Millions of years of ecosystem development and tens of thousands of years of human development down the drain after a few millennia of civilization. What do we care, we won't be here? And we can always convince ourselves that our electronic devices are conscious living beings that will live on after we die.

I just saw that film tonight.
posted by juiceCake at 11:29 PM on December 24, 2014

Cheap gas is personally welcome but is predictably driving vehicle buying decisions that people may end up regretting a few years down the road. It's funny how immediate the factors are for choosing between a Honda Fit and a Suburban, and yet that seems to be the case.

I used to sell new cars for a living and I bet you would be absolutely appalled by how often car-buying decisions are totally irrational. I've seen people trying to decide between two different cars talking to themselves debating between the two and spout off all of the reasons why car 1 fits all of their needs in every way, shape, and form better than car 2 but then they end up talking themselves into car 2 with a justification that basically comes down to, "But I want it."

It was especially sickening for me because, as a sales person, it's not in my interest to scream at them, "What the fuck are you thinking?!!!! Clearly you're not thinking or there is no way you would possibly have thought that." as I'd like to but instead, sell them the car that they want to buy.
posted by VTX at 8:19 AM on December 26, 2014 [1 favorite]