Tuesday, September 1 , 2015, 12:25 pm | Overcast 73.0º




Tam Hunt: The Future of Energy, Part I — Why Official Oil Production Forecasts Are Probably Wrong

By Tam Hunt |

Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!
— Lewis Carroll, Through the Looking Glass

2012 was both the hottest year on record for the contiguous United States and the most expensive year for gasoline in U.S. history. What gives?

Superstorm Sandy, which devastated the New Jersey and New York areas in October raised awareness about climate change substantially because of a growing awareness that the numerous major storms and hurricanes hitting the East and the South are far beyond normal averages. But concerns about fossil fuel depletion (“peak oil”) seem to be on the downswing as we hear more and more news about booming production of oil and gas in the United States. This essay will look at what I call the “twin crises” of climate change and peak oil and attempt to make sense of the hubbub of news surrounding these issues.

Whether human emissions of greenhouse gases are behind recent extreme weather events or broader climate trends are debatable now only in terms of the degree to which human causes are trumping any natural variation. There is obviously much natural variation in the record — and this variation has taken place historically before any human influence. The differences today are the speed with which such changes are occurring.

Popular concern about climate change diminished dramatically in the last few years, however, for a variety of reasons, and President Barack Obama decided not to push comprehensive solutions to climate change through Congress in his first term — and, to be fair, he couldn’t have even if he wanted to after Republicans took back control of the House of Representatives in 2010. To his credit, Obama did complete a major update to fuel economy (Corporate Average Fuel Economy, or CAFE) requirements for cars and light trucks, which now must achieve 54 miles per gallon by 2025 (with some major loopholes that bring the actual number down to about 36-42 mpg, still a major improvement). He is also pushing for major new emissions limits on coal power, now the largest source of carbon dioxide in the United States.

With the wakeup call of Superstorm Sandy and a new four-year term, Obama has indicated that he will make climate change and energy solutions a major priority, as I wrote recently.

Concerns about the second of the twin crises, peak oil, have similarly diminished. I haven’t seen polls on this issue, but it’s clear that the attitude among the public and pundits alike is far more complacent on this key problem than it was just a few years ago, as oil prices reached record highs in a precipitous run up from 2008 to mid-2008.

Many experts are now downright bullish on the prospects of American fossil fuels, due to new fracking technologies, with many commentators talking of a new economic era for the United States ushered in by plentiful new cheap fossil fuels. This attitude is strange for a number of reasons, not least of which is that 2012 was, as mentioned, the year of our most expensive gasoline ever and most expensive oil ever, when prices are adjusted to 2012 dollars — in the midst of a so-called boom in natural gas and oil production. There are many experts who see major problems with oil on the horizon. A recent research article in Nature, a major scientific journal, stated: “The economic pain of a flattening (oil) supply will trump the environment as a reason to curb the use of fossil fuels.”

This two-part series of essays will attempt to show why concerns about climate change and peak oil should be at the very top of our political agenda, from the local to the international level. This essay focuses on oil production forecasts and the next will focus on natural gas projection forecasts.

The World Energy Outlook

The International Energy Agency (IEA) made headlines late last year with its World Energy Outlook 2012 and its conclusion that the United States may in fact become the world’s largest producer of oil by 2020 and possibly even energy independent for all practical purposes by 2035. There had previously been a lot of talk about the boom in U.S. production, but this report from the western nations’ official energy watchdog seemed about the most powerful support possible for the “U.S. energy production is booming” school of thought.

What got buried under the headlines, however, is the second paragraph of the report’s Executive Summary:

“Taking all new developments and policies into account, the world is still failing to put the global energy system onto a more sustainable path. Global energy demand grows by more than one-third over the period to 2035 in the ... central scenario, with China, India and the Middle East accounting for 60 percent of the increase. ... Emissions in the New Policies Scenario correspond to a long-term average global temperature increase of 3.6 °C.”

Emissions in the business-as-usual scenario (policies we have in place today) correspond to a 6° C (11° Fahrenheit) rise by 2100 — which would be “catastrophic” for much of the globe, according to IEA’s chief economist, Fatih Birol.

So the mainstream media’s treatment of this major report from the IEA misses what is clearly the most important point: We are on track for a climate catastrophe under current policies. It is certainly a good thing from a purely economic perspective that U.S. energy production is up. But from the broader climate perspective it’s the opposite of good. The paradox, of course, is that we need fossil fuels to run our economy today. The solution to the paradox, as the IEA itself points out, is to rapidly move away from fossil fuels to a more efficient economy that runs almost entirely on renewable energy.

The IEA is far from infallible, however, and their recent statements on U.S. oil and gas production are strangely out of step with their own pronouncements just a few years ago. The IEA now projects that natural gas and oil fracking will lead to a dramatic increase in both natural gas and oil production in the United States through 2020. I’m going to explore various objections to these forecasts in this essay, focusing on oil.

(The real good news is that the United States and the world are undergoing a less-publicized revolution in energy: the transformation of our electricity infrastructure away from fossil fuels and nuclear to renewables like solar, wind and biomass. More on these positive solutions in Part II of this series).

WEO 2012 forecasts the following for U.S. oil and gas production, with the key conclusion for present purposes being a projection of more than 50 percent of U.S. oil production coming from unconventional sources by 2020 or so — up from about 25 percent today.

World Energy Outlook 2012 forecast for oil and natural gas production.
World Energy Outlook 2012 forecast for oil and natural gas production.

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It is helpful to compare WEO 2012 with WEO 2008. The latter report was important because it was the first time that the IEA had conducted a supply-side analysis of global oil production. Previously, IEA had literally assumed that oil production would match whatever demand the global economy required, with no constraints on production. WEO 2008 found that the decline rate for the largest 800 oil fields, which constitute the vast majority of global oil production, is about 6 percent annually, and will rise to almost 9 percent by 2030. This was big news because the industry’s widely held assumption till that time was about 3 percent.

A 6 percent decline rate leads to 83 percent depletion after 30 years. An 8.6 percent decline rate leads to a 50 percent decline within about eight years and 93 percent depletion after 30 years.

In terms of the United States, our current 6 million barrel per day average annual production will, all else being equal, with a 6 percent decline rate fall to three mbpd in just 12 years. At an 8.6 percent decline it reduces to three mbpd in just a little more than eight years. This means that the United States will have to replace literally half of its current production in eight years just to stay even.

The bottom line: The higher depletion rate of 8.6 percent, or even higher, is very likely applicable to the United States because we are now getting so much of our oil from unconventional sources and these sources have far higher decline rates than conventional sources. (I am currently in dialogue with the U.S. Energy Information Administration to gain more insight into their data used for projecting U.S. oil production and will write more on this when I obtain the data I’m seeking).

Rune Likvern, an independent oil analyst, wrote a widely read article on the Bakken formation in North Dakota, in 2012. The Bakken formation is one of the key new areas for oil production in the United States and it is currently producing about 0.7 mpbd (about 9 percent of the U.S. total). The IEA’s WEO 2012 relies on experience with the Bakken formation in making its very optimistic projections about unconventional oil production in the United States. However, it’s not clear that this dog will hunt because the decline rates are so high for these new oil shale wells. Likvern shows that Bakken formation oil production from existing wells declined by more than one-third in just one year from mid-2011 to mid-2012. The total production continued to increase, however, because of new wells being added at a torrid rate.

Oil analyst Rune Likvern on Bakken formation oil production.
Oil analyst Rune Likvern on Bakken formation oil production.

The open question is: can this rate of depletion continue to mitigated by adding new wells?

Likvern’s key conclusion is: “Shale plays do not get a pass on the laws of physics or the history of play and basin developments. ... It is challenging to find support for the idea that total production of shale oil from the Bakken formation will move much above present levels of 0.6 - 0.7 Mb/d on an annual basis.” Production has already started to fall from the Bakken formation, as rigs are pulled out of the region, so it seems that Likvern’s analysis may turn out to be very accurate.

This is the Red Queen in action: we are running faster and faster just to stay in the same place. Or, to be fair, we’re running faster and faster to increase production in the short term, before a seemingly inexorable plateau and later decline sets in.

Another very skeptical take on the shale oil revolution comes from G. Allen Brooks, managing director of PPHB LP, an energy investment company, highlighting exactly the same issue: the huge decline rates of shale oil and natural gas wells. Brooks cites the 44 percent annual decline rate for Bakken natural gas wells, which is even higher than Likvern shows for Bakken oil wells, and suggests that this may ultimately be applicable to oil wells, too. Brooks states:

“Fatih Birol, the IEA’s chief economist, said his agency’s forecasts to 2017 were based on data about existing reserves and production. He warned that the geology and reservoir performance of the oil shales were ‘poorly known,’ and he said it was unclear whether new reserves would be found to sustain production levels, let alone grow them. This is a critical consideration that underlies all the bullish forecasts for a new petroleum age for North America.”

Brooks concludes:

“The IEA has conducted extensive research into oilfield decline rates in the past (referencing the 2008 oil field decline study), but we sense little of that research was brought to bear in this study. ... At this point, we plan to use the (WEO) study as just one possible scenario for how the industry might evolve in the future. We are less inclined to embrace it than many others.”

It seems likely, based on the very high decline rates seen in new tight oil formations in the United States, that U.S. oil production will struggle to meet the levels that IEA forecasts, leaving the nation with continued reliance on oil imports and an increasing price problem when it comes to oil and gasoline.

This result wouldn’t be terribly bad, all else being equal, because we can probably get by with a lot less oil than we currently use, simply through conservation and efficiency improvements. However, all else is not equal: global oil exports have been in decline since 2005 and the United States is and will remain a major importer of oil. Even though oil imports have declined substantially in the last few years, primarily due to declining consumption, we still import about 11 million barrels per day — equivalent to the entire output of Saudi Arabia and Iran combined. And it seems almost certain that global oil exports will continue to decline. I discuss the issue of “peak oil exports” further below, after focusing first on global oil projections.

Global Oil Projections Likely Off-Base

Looking at global oil production forecasts, it appears that IEA is also unduly optimistic with respect to its oil projections. A detailed review by a researcher at the University of Barcelona, analyst Antonio Turiel, casts serious doubt on the accuracy of WEO 2012’s global oil forecasts due to their failure to take into account the declining energy content of unconventional oil.

Turiel shows the IEA’s projections for global oil production: a fairly steady uptick in overall production despite an inexorable decline in conventional oil production. Then he shows what this curve should look like after accounting for lower energy content in unconventional oil and the increased energy required to extract unconventional oil. This leads to a profound difference, taking global oil production down from almost 100 mbpd by 2035 to under 70 mbpd. And this assumes that the IEA’s underlying projections about unconventional oil production are correct — which is far from established.

This 30 mbpd difference will, if accurate, have a profound impact and will lead to far higher prices for oil, as well as shortages in very parts of the world, all else being equal.

The Triple Whammy

But there’s more bad news on oil availability. The issue of declining global oil exports, or “peak oil exports,” is probably the most important of the trends that I’ll discus in this essay. Citigroup recently projected that Saudi Arabia’s oil exports will, under current trends, decline to zero by 2032 because of increasing consumption by the Saudis themselves. The Saudis recently became their own biggest customer.

Citigroup’s projection came on the heels of a similar report from Chatham House, a British think tank, finding that Saudi oil exports will fall to zero by 2038, for exactly the same reasons as Citigroup cites. This decline in oil exports will occur due to the dramatic growth in consumption by Saudi Arabia’s rapidly growing population and increases in per capita energy consumption. Saudi domestic consumption of oil is growing at about 7 percent per year, which leads to a doubling of consumption every 10 years.

Saudi Arabia’s problem is not, of course, unique to Saudi Arabia. It is a global problem that afflicts most oil-producing countries. Jeffrey Brown and Samuel Foucher have developed an “Export Land Model” to predict how the global net oil export situation will unfold in coming years. They found that the top five exporters of oil (Saudi Arabia, Russia, Iran, United Arab Emirates and Norway) decline from about 24 mbpd in 2008 to about 7.5 mbpd in 2020 and go to almost zero by 2030. Global net oil exports are currently about 40 mbpd, so these producers comprise more than half of the global export market.

These net oil export projection declines are due to the demographic explosion that the Chatham House report focuses but also to declines in oil production in these countries. Chatham House chose not to discuss the role of declining oil production, choosing instead to believe Saudi projections of steady oil production, but this is a real and extremely serious corollary to the demographic explosion in oil-producing nations. It’s also the reason why Brown and Foucher project Saudi Arabia and other oil exporters going to zero faster than the Chatham House report. The nearby chart illustrates (with generic numbers) how these two trends work together to cause net oil exports to decline very quickly. The second chart shows the result of Brown and Foucher’s modeling for the top five producers.

Jeffrey Brown and Samuel Foucher’s Export Land Model.
Jeffrey Brown and Samuel Foucher’s Export Land Model.

Jeffrey Brown and Samuel Foucher’s 2008 projections for the top five global exporters of oil.
Jeffrey Brown and Samuel Foucher’s 2008 projections for the top five global exporters of oil.

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At the same time that global net oil exports are likely to decline quickly, China and India’s oil consumption is growing equally rapidly. A recent forecast by Jeffrey Brown found that under current trends China and India will consume literally all global net oil exports by about 2028. Will this actually happen? Probably not, because powerful nations like the United States will likely use their economic and even military power to ensure their energy needs — a recipe for heightened conflict in a world that is already facing numerous other sources of conflict.

The Future of Energy

What do these trends add up to? It’s very likely, in my view, that the United States will, in just a decade or two, have to find a way to manage with about half the oil we currently consume. We could achieve this through conservation and energy efficiency, or through a dramatic and war-time like expansion of drilling, or a combination of all three. But it seems highly unlikely that increased production will be able to get us much beyond where we are today due to the very high decline rates for oil shale fields discussed above.

What, then, is the future of energy? It seems pretty clear to me that the future of energy, at least insofar as oil is concerned, will be a story of necessary and dramatic conservation and energy efficiency improvements — led by far higher prices and declining availability of oil. An International Monetary Fund working paper from mid-2012 supports this view and projects “a near doubling of the real price of oil over the coming decade.” The paper takes peak oil seriously, based on the decline rates observed in oil fields around the world.

The IEA also released an excellent report in 2005 called “Saving Oil in a Hurry.” The report shows the following options for rapidly reducing oil consumption:

The International Energy Agency’s recommendations for saving oil in a hurry.
The International Energy Agency’s recommendations for saving oil in a hurry.

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My feeling is that the United States and other advanced nations could get by with half of the oil they currently use, largely through improved efficiency in transportation but primarily through conservation measures. This means things like walking or biking instead of driving, using more freight trains instead of trucks, carpooling or simply not driving as much when not necessary.

Now, there is a possibility that the oil shale revolution will spread to other countries in coming years and we’ll see a temporary boost in production like we’ve seen here. But it’s unlikely that this increase will do more than provide a few extra years of time to make the transition away from oil. Those extra years will be very helpful, but we shouldn’t lose sight of the bigger picture of dramatically declining oil availability for massive oil importing countries like the United States. Now is not the time to be complacent about our massive looming energy problems.

— Tam Hunt is a Santa Barbara lawyer and writer, and blogs at Thought, Spirit, Politik. Click here to read previous columns. The opinions expressed are his own.




comments powered by Disqus

» on 02.07.13 @ 06:24 AM

Now that you read this long-winded, meandering, unsupported and totally contradicted diatribe against fracking, you can now hand over your tax dollars to the author who profits handsomely from the generous govt subsidies and fat-cat tax breaks he receives as a SOLAR BROKER. You got to love the chutzpah.

» on 02.07.13 @ 12:03 PM

It will be interesting to see how all of this pans out. China and India will not consume as much oil, gas, and coal if they develop and implement new alternative energy technologies.

» on 02.07.13 @ 12:36 PM

Thanks for an excellent commentary deconstructing the wishful thinking behind the popular fossil fuel independence myth.

» on 02.07.13 @ 02:50 PM

I thought Tam was in the wind power game Lou. Same thing I guess. First it’s good to see Tam backing down from the hysterical zealotry over “climate change”. I really hate that term because it is so deceptive. People, climates always change. Sometimes the change is slow and steady, sometimes very fast. Since the earth has entered this radical ice age oscillation the last 2 million years we have seen radical climate change across the globe. Most of this oscillation can be attributed to plate tectonics coupled with natural solar and orbital swings. The biosphere has had a lot to cope with, but gee it has survived and without Al Gore or Tam Hunt telling the masses to stop driving and live like they did 200 years ago.

Does man contribute? You bet. So do termites and their GHG, methane is in much larger quantities, a stronger GHG than human contribution of CO2 and they get a pass. What gives? Anyway there is a raging debate about what if any human contribution will effect global warming, but what is an absolute certainty is that the policies being proposed to stop AGW will impoverish the human population and starve millions or perhaps billions of humans to death.

As for the fossil fuel “myth” the actual amounts of hydrocarbons trapped in these “unconventional” deposits is somewhere around 5 times what we have already exploited and still have yet to exploit in “conventional” deposits. The real debate is whether it can be economically extracted. The current technology would give Tam some credence. I believe we can get at most 3% right now which is substantially less than the hype has advertised. However, it has been shown time and time again that applying newer, better and more efficient technologies at the problem, we actually get further ahead than the predictions base on “current” technology. The fact that we are now exploiting hydrocarbon deposits that 10 years ago were thought to be unattainable speaks to that. Who is to say that in another 10 year we are able to economically extract 10% or 25% or maybe even 50% of these known hydrocarbon deposits?

Yes, I’m sure that sounds bad for the wind mill and solar cell people, but as Tam so adamantly points out these technologies are becoming cheaper. They will never compete with high density carbon fuels, nuclear or my favorite, geothermal, but they will all help. What I am very disturbed with though is this continuing trend of having China make our stuff for us. What Tam, and frankly most everyone else fails to understand, is that the act of making things is where real wealth is made in an economy. If China is going to make our solar cells then we are back to importing our energy again and we lose the value added manufacturing that making those cells here adds to our economy.

» on 02.07.13 @ 04:01 PM

I’ll only correct statements from the first few paragraphs, it would take too long to correct them all.
First, 2012 didn’t even crack the top 10 hottest years in the continental U.S., the 1930’s were hotter. What Tam failed to check is that NOAA used weather stations that only recently existed to claim the hottest year on record, even NOAA conceded the error after the headline grabbing claim, but the retraction must not have made it into the Huffington Post, hence Tam missed it. Besides, the average global temperatures haven’t increased since 1996, so now Tam is trying to argue that its the US continental temperature only that’s important?  If Russia has a record cold year, does that mean we’re entering a Global Cooling cycle? Alaska actually almost broke a cold weather record for 2012, but they don’t count for the US I guess. What’s next, when Kansas breaks a temperature record, it’ll be the Kansas Climate Change record? As for Hurricane Sandy being extreme? It hit the most densely populated US coastline as barely a Category 1 hurricane- so now human-caused Climate Change can make storms hit the densest population centers? Tam called a category 1 hurricane that happened to collide with another storm, “beyond normal storms”,Tam? Category 3-5 hurricanes have hit the US most decades in the last 100 years and are far stronger than Category 1 storms like Sandy. If you have a theory as to how human caused Climate Change can occur without average global temperatures rising, and also make storms hit population centers, lets hear it- you may then might deserve a Nobel Peace Prize for your efforts. For the record, Global Warming was changed to Climate Change because the earth stopped warming 17 years ago and you can’t keep calling it GW if it ain’t warming any longer, but you knew that didn’t you, Tam. That’s why you don’t hear Global Warming any longer. Think about it, if the earth was still warming, they wouldn’t have needed to coin a new phrase, and Obama would actually give the State of the Union and call it Global Warming, but he can’t because they’d tell him, “Sorry Mr. President, but it hasn’t warmed in 17 years, so you really can’t use the phrase Global Warming any longer. Technology will reduce and replace the need for carbon fuels, but what society doesn’t need is all the phony Climate Change mumbo-jumbo and 100s of thousands of bureaucrats slurping at the taxpayers trough trying to micromanage everyone’s life while blaming every weather event on human caused Climate Change. Technology works for fossil fuels too, Tam, not just other energy technologies. Remember Tam, in 1920 the United States started to ration gasoline because the government estimated there was only 10 years of oil remaining for global supplies. How did that prediction work out? At least your starting to hedge your bets on how real “Climate Change” is, so that’s some progress for you at least.

» on 02.08.13 @ 12:40 AM

Good grief, will this guy ever give it up.  Still touting all these “renewables” without adequately disclosing he’s financially invested in having the government continue to mandate and subsidize use of these intermittent and inefficient forms of energy.

It would take forever to debunk all the nonsense spouted in here but here are a few bits of things that contradict Tam’s assertions we are running out of hydrocarbons anytime in the foreseeable future:

Peak Oil?  There is tons of stuff out there if you bother to look somewhere other than green blogs.  Note we’ve discovered more accessible oil and gas in the last few years than we’ve consumed to date.  It is highly likely that as technology continues to improve we will find even more.  The earth produces it naturally after all.

We were already supposed to past peak oil and now we have way more proven reserves than we had when the whole peak oil theory was postulated.

http://www.businessweek.com/magazine/everything-you-know-about-peak-oil-is-wrong-01262012.html

http://reason.com/archives/2012/06/01/why-well-never-run-out-of-oil

http://www.instituteforenergyresearch.org/2012/05/07/drill-no-spill-high-tech/

http://www.chron.com/business/article/U-S-oil-gusher-blows-out-projections-3341919.php#photo-2518555

http://www.redstate.com/vladimir/2012/01/28/whats-wrong-with-peak-oil-theory-consider-peak-gas/

http://energyforamerica.org/inventory/

Here is another Tam favorite, Carbon taxes to “encourage” “green” energy use:

So what has happened here in CA since our own idiotic carbon scheme was put in place in 2006 and just now really sinking its teeth into businesses (AB-32).  In case you haven’t noticed the CA economy is lagging and we continue to see business leave the state.  We’ve gone from the largest net new company creator to the last place, we are losing companies.  Its not a coincidence.  These renewable energy mandates come with a huge cost:

http://www.ab32ig.com/documents/AB 32 IG Econ Analysis Backgrounder 9-28.pdf

http://www.manhattan-institute.org/pdf/eper_10.pdf

http://www.calchamber.com/headlines/pages/08072012-calchamberurgeslegislaturetofixinequityinmitigationofelectricitycosts.aspx

http://cmta.net/page/AB32.php

AB-32 is the ultimate self-inflicted wound, it is simply driving businesses out of this state, hurting our economy and raising our costs while accomplishing next to nothing.

Carbon taxes lead to malinvestment into costly green boondoggles.  Europe is killing themselves for no reason:

http://online.wsj.com/article/SB10001424052702304203604577398541135969380.html?mod=WSJ_Opinion_LEFTTopOpinion

http://www.forbes.com/sites/patrickmichaels/2011/10/21/the-great-green-energy-crack-up/

I could go on and on.  It is tiresome that Tam continually references stuff he’s written in these slanted green energy blogs and the like.  Don’t buy this nonsense, this is self-serving deluded junk science.

» on 02.08.13 @ 01:08 AM

Just for fun let’s deal with CAFE standards and another Tam favorite electric cars.

We are told that, despite Solyndra, that all these green energy investments were really great.  Hmmm.  We poured over $1B into battery companies to power these wonderful electric cars and they all went bankrupt.  That doesn’t count what we poured into electric car companies themselves.

http://online.wsj.com/article/SB10001424052702304791704577420350163856824.html?&grcc=99999&mod=WSJ_hps_sections_business

Electric cars, doubling down on dumb:

http://www.realclearmarkets.com/articles/2012/02/01/electric_cars_doubling_down_on_dumb_99493.html

California’s clown car mandate:
http://news.investors.com/Article.aspx?id=599405&p=1&ibdbot=1


Regarding CAFÉ standards, perhaps a little education is in order as to the consequences of making cars lighter and lighter to make fuel efficiency standards:

http://www.nationalreview.com/articles/296998/cafe-standards-kill-deroy-murdock

http://www.nationalcenter.org/NPA546CAFEStandards.html

http://heartland.org/sites/all/modules/custom/heartland_migration/files/pdfs/10631.pdf

They are also economically destructive.  The Center for Automotive Research says that 264K jobs could be lost by these absurd CAFÉ standards due to the hugely increased costs of vehicles meaning fewer will be sold:

http://blog.heritage.org/2011/06/16/why-does-obama-want-to-destroy-265000-jobs/

All these dreaded right wing websites!  I’m sure you lefties will have a problem with it but it is what it is. The statistics from the government are what they are.  You can’t insert these uneconomic mandates into the economy without significant economic consequences.

If you want to spend your money on EVs and solar panels knock yourself out, just stop trying to use the government to force the rest of us to pay for your green dreams.

BTW, here is a nice little article in that right wing rag in Germany known as Der Spiegal that talks about the costs of Germany’s green dreams:

http://www.spiegel.de/international/germany/0,1518,718951,00.html

Speaking of Der Spiegal, America’s energy boom:

http://www.noozhawk.com/?URL=http://www.spiegel.de/international/world/new-gas-extraction-methods-alter-global-balance-of-power-a-880546.html


I’m beginning to wonder if Tam is capable of learning anything or is he just so dogmatic he’s blinded by his eco-marxist leanings.

» on 02.08.13 @ 01:22 AM

Tam, being a typically misinformed liberal, apparently isn’t aware of the consequences of a devalued dollar.  That is primarily why the cost of gasoline has risen in the face of tepid demand.  The dollar is devaluing because the Federal Reserve is increasing the money supply at a rate not commensurate with the economic growth.  Printing more dollars makes them worth less.  Perhaps a little education on the relationship of commodities prices to a falling dollar is in order:

http://www.forbes.com/sites/louiswoodhill/2012/02/22/gasoline-prices-are-not-rising-the-dollar-is-falling/

So, yet another one of Tam’s flimsy assertions is debunked.  Always implying connections and relationships where there are none.  This is getting embarrassing. 

Those of you on the left that are buying this nonsense, if you have any intellectual honesty at all, should really try educating yourself with some of the information from the other side of the aisle.  This transparent opinion piece from Tam is yet another in a long line of self-serving propaganda.  If you buy this nonsense you are willingly ignorant.

» on 02.08.13 @ 01:46 AM

SBCommonSense did a nice service by pointing out the incorrect assertions Tam makes regarding climate change.  The group below is a non-governmental group made up of climate scientists, physics pHds, and other scientists that don’t buy into the UN IPCC politicized nonsense on climate change.  You remember the climategate folks.  Your UN at work.

In any event, they publish various academic articles on climate related topics that are peer reviewed and well sourced.  Here is a link to one of their latest reports on the subject.

http://www.nipccreport.org/reports/2011/pdf/2011NIPCCinterimreport.pdf

Any assertion that there is “consensus” on man-made global warming is complete and unmitigated nonsense.  The fact of the matter is we don’t understand climate science well enough to conclude anything with any degree of certainty that would justify the extreme economic hardships people like Tam would have us endure.  Relax and enjoy the sunsets.  We’ll be fine.  At least from global warming.

» on 02.08.13 @ 01:23 PM

Wow. This has turned into a Convocation of the Holey See, aka the blabbering wing-nuts. And an endless Cardinal Witless blog. I wonder if Pope Bogus will attend?

Well Tam, you must have really frightened them! Shameless Heretic!

» on 02.08.13 @ 01:47 PM

The new sure thing. Hot- Global Warming. Cold- Global Warming. Drought- Global Warming. Floods- Global Warming. Blizzards- Global Warming. Thanks for helping to politicize the weather, Tam. As long as its green, stupid is as stupid does?

http://www.mrc.org/articles/jersey-news-outlet-cries-global-warming-blizzard-approaches

Jersey News Outlet Cries ‘Global Warming’ as Blizzard Approaches
As northeast braces for a winter storm, eco-nut worries about a hotter planet.

» on 02.08.13 @ 01:54 PM

Wireless it will take some time to wade through the NIPCC report, but a cursory look backs what I have been saying. Global warming is real, man’s contribution is debatable and the AGW zealots are more interested in politics than science.

Still, though I disagree with Tam on the timing of oil’s demise, it will run out and we should, if we want to make sure we have a cheap replacement, plan for that. Fracking, in my opinion, is a great way to plan since it develops drilling technology that will make abundant geothermal cheap. But that’s my little soap box. Tam is still driving wind and solar hard and I believe solar will be a great conservation source, but they will never do what petroleum has and if we ever want to elevate the bottom 90% of the world’s population to a higher standard of living we will need far more cheap energy than wind and solar will ever provide.

» on 02.08.13 @ 01:59 PM

Wireless, again ignoring your silliness, let me ask you to address the key points I raise in my piece: 1) extremely high decline rates for unconventional oil fields and the fact that we’re relying increasingly on unconventional oil to replace the disappearing conventional oil; 2) reduced energy content of unconventional, making comparisons of barrel for barrel highly inaccurate when comparing conventional vs. unconventional oil production forecasts; 3) declining global net oil exports b/c exporters are increasingly using their own product while their production is declining? In particular, what is your response to the Citigroup and Chatham House reports on Saudi Arabia’s exports going to zero before 2030 under current consumption and production trends?

AN50, feel free to chime in.

» on 02.08.13 @ 01:59 PM

SB Common Sense, we continue to confuse weather with climate. The NIPCC report wireless linked to addresses this without the hyperbole. Ramjet, nice to see you visit with a thought provoking comment.

» on 02.08.13 @ 02:51 PM

AN50,

I suggest you read through all the links on peak oil.  The Reason one makes the correct point that we won’t run out of oil because as it becomes scarcer the cost will simply rise to balance supply with demand.

But there is no denying that current reserves, be they more difficult to get or not, exceed known reserves back when the whole peak oil theory was postulated and we have consumed tons of oil since then.  The rate that we are discovering new large reserves is accelerating as our technology improves.

The problem with all this blather from Tam and the anti-carbon zealots is they look at everything in a static sense and act like we won’t find anymore.  Yes, oil fields eventually run out but new ones are found at a rate greater than we are exhausting the known ones.  We have plenty of time to sort out replacements for hydrocarbons.  We could extend the life of hydrocarbons massively by producing electricity primarily with nuclear but they won’t let us do that.  Hydrocarbons should be used for transportation primarily.  The old energy density thing.

The market and technical innovations will solve the problem all by themselves without a corrupt and inept government trying to pick losers like they have been.  Picking losers with money stolen from our children.  New technologies are constantly being developed to satisfy a market need.  I remember that just 5 years ago all the naysayers were pooh-poohing the Bakken formation and look what’s happened in a few short years.  On private land.

» on 02.08.13 @ 03:16 PM

Tam,

What exactly is it that is so “silly”?  How about you address whatever it is you think is so “silly”?  Like I said before, what is silly is your constant drumbeat of mostly discredited nonsense.

But, to address your lame points.  Decline rates in current fields is natural, they will eventually run out.  My point is we keep finding more and more and more and will continue to do so as technology improves.  If there is an economic incentive to explore and produce it will happen.  In case you haven’t noticed, there is a huge economic incentive to produce energy.  You know that of course, which is why you eco-marxists push carbon taxes so much, you want to reduce the incentive to use hydrocarbons.

Regarding energy density, refining improvements can improve the quality of the product but even if it doesn’t cars will simply get fewer miles per tankful or planes can’t fly as far.  That is the case now by the way, depending on the grade of jet fuel the military uses the range and endurance changes.  Cars running on natural gas don’t perform as well as cars using conventional gasoline.  Ethanol gasoline blends are not as efficient as 100% gasoline.  So what?

This is rich, a lefty quoting an evil Wall Street bank.  I’m not sure I would put a lot of faith from a bank that required a massive infusion of taxpayer money to cover for their incompetence.  Remember TARP?  If Saudi Arabia runs out of oil, that is their problem.  We have plenty of our own if leftist busybodies like you would get out of the way. 

I tell you what, how about you actually address some of these stories I provided that directly contradict these lame arguments you make.  Why don’t you start with the ones from the left wing Der Spiegal magazine.

» on 02.08.13 @ 03:32 PM

Here is a piece on Obama’s new cabinet member.  Another environmental radical.  I sure Tam approves:

http://online.wsj.com/article/SB10001424127887324590904578290402197980818.html?mod=rss_mobile_uber_feed

This admin is going full bore lefty.  Stand by for a regulatory rush, including more EPA abuse.  Dodd Frank, Obamacare, EPA, and on and on and on.  This is going to a great place to try and do business.

http://freebeacon.com/riding-the-tsunami/

They’re coming after fracking, I guarantee it.

» on 02.08.13 @ 03:40 PM

Wireless, you clearly don’t understand my main points, based on your responses. I highly recommend you read again what I wrote and really think deeply about what these trends mean for our energy system and the viability of our national and global economy. Seriously.

» on 02.08.13 @ 05:11 PM

Tam,

Actually I understand you perfectly well.  All your missives follow the same pattern.  Conventional energy bad and renewable energy good.  You pick and chose information to make your case and ignore the legions of easily findable stuff you don’t like.  All solutions need government intervention, be it through mandates or subsidies or taxes or regulation or more of that wonderfully wasteful government “investment”.  Its always the same and its always misguided.

Perhaps readers will recall your brilliant and well-timed call to green arms by pointing to Portugal and Spain and how wonderful their renewables programs were, as the wheels were totally coming off:

http://www.noozhawk.com/article/020811_tam_hunt_spain_portugal_lead_the_way_on_renewable_energy/

As the countries are circling the drain in large measure due to their huge malinvestments in green energy and your advocating we do the same thing while lamenting how far behind we were. 

Look, you seem like a nice enough guy but you are quite simply a statist.  And apparently economically clueless.  You see the government as supreme and tool to accomplish your leftist goals.  You continue to vocally advocate policies that have failed elsewhere and are failing here.  CA is a mess and we are chasing business out of this state, mostly due to the cost of doing business.  High electricity costs are a large part of that.  Your precious renewables mandates are big contributors to this sorry state of affairs.  But that’s OK with you, its for a good cause.

So Tam, trust me, I understand you better than you know.

» on 02.08.13 @ 05:18 PM

Notice how when the Left changed the name from GW to Climate Change, Tam jumped right onboard- didn’t miss a beat. I doubt he even understands what forces are driving the issue at the IPCC leadership level. Its kind of disappointing. If you repeat Climate Change 1000 times, it doesn’t make it any more real that humans have changed the Climate in any meaningful way.

http://www.forbes.com/sites/larrybell/2013/02/05/in-their-own-words-climate-alarmists-debunk-their-science/2/

“…one has to free oneself from the illusion that international climate policy is environmental policy.  Instead, climate change policy is about how we redistribute de facto the world’s wealth…” IPCC official Ottmar Edenhofer

» on 02.08.13 @ 05:59 PM

Wireless, b/c you didn’t get my key points in my article, I’ll take on more stab at explaining why these trends are so important.

1) Decline rates for oil fields are of course natural, as you write. But as I point out in my article the decline rates from the world’s largest oil fields are far higher than previously believed (headed toward 9% per year rather than 3%) and far higher still for unconventional oil fields, at 30-50% per year. This means we’ve got to find more and more oil and drill more and more wells just to stay even, let alone go higher. This is largely why the world has been pretty much on a plateau for oil production the last 8 years. The point: we can’t continue this indefinitely b/c new fields aren’t infinite. The impact: far higher prices.

2) Energy content of unconventional oil is lower than conventional oil, with one analyst adjusting official forecasts for oil production down by 30% in order to account for lower energy content. This is an enormous difference and it means that we’ll have to produce far more oil just to stay even re energy content, let alone actually get more work out of the oil we produce. The impact: far higher prices.

3) Saudi Arabian oil exports, and exports from all oil-exporting countries, going to zero will be, all else equal, catastrophic. You dismiss this as “their problem,” revealing your deep misunderstanding of how important this problem may be. If global oil exports decline to zero in the next two decades, as current trends suggest they will, we’ll see not only radically higher oil prices here in the US and around the world, but also very serious military conflicts.

I’ll make a prediction: by the end of 2013, we’ll be in recession again, prompted by high oil prices (again, since 10 of the last 11 recessions were preceded by oil price spikes).

Last, my point has always been that weaning ourselves from oil and other fossil fuels is a net economic winner, which you haven’t internalized. My next essay will focus on the net cost impacts of transitioning away from fossil fuels.

» on 02.08.13 @ 06:39 PM

Did Tam also predict Spain’s 26 % unemployment rate when he said Spain was leading the way in creating green jobs a few years back. Good call!

» on 02.08.13 @ 07:11 PM

Tam,

This piece is more of the same.  Its still oil bad renewables good.  In this case, because of all the recent discoveries and the success of fracking and horizontal drilling, we now have much larger global reserves and North America is now sitting on massive hydrocarbon reserves - including our very own Monterey Shale hear in CA.  As you lament in your piece, this newfound good fortune has made the push for alternative energy lose steam and when coupled with the fact that most people now realize the man-made global warming hype was just that, hype, nobody is listening you greens anymore.

So, in this piece you are trying to convince us what we are seeing with our own eyes isn’t actually occurring.  All this newfound energy isn’t really all its cracked up to be and there are all these issues and because the decline rate in some old fields is higher than predicted we need to panic and run back to inefficient and intermittent renewables.  In the end, you are once again making the case we need to be using government coercion to force us to use your pet energy sources.

I’ll put my money on the ingenuity and resourcefulness of our scientists and engineers in pursuit of profits to find ways to supply us the cost effective energy we need.  They have a much better record than our government or any of these crony Obama green energy “investments”.

We may well have a recession this year.  Who knows we may already be in one.  If we do, it won’t be because of oil prices it will be because of dumb monetary policy, tax increases, regulatory abuse and an increased cost of doing business due to other dumb laws like Dodd Frank and Obamacare. 

Perhaps you didn’t read the piece about the cost of oil rising isn’t due to oil rising but the dollar falling.  Real inflation is much higher than the headline rate the government uses, anyone who shops for groceries can tell you that.  Median take home income is down like $5K/yr since Obama was elected and when you throw in real inflation of probably 8% for stuff people actually buy, they have less money for other things.  So yes, I would not be surprised to see another recession.

Regarding your final point, we need to let market forces decide when and how we “wean” ourselves from hydrocarbons.  You advocate forcing it through market distorting taxes, mandates, subsidies and regulation.  That is surefire way to damage your economy unnecessarily, ask the Europeans how that’s worked out for them.  We already have enough problems without loading on more economically unnecessary and destructive government driven solutions trying to engineer some outcome that is politically driven.

If your renewables ever make economic sense, they will be adopted voluntarily and eagerly by the market.  They don’t make economic sense now and so you are trying to force the issue.  Knock it off.

» on 02.08.13 @ 08:32 PM

Tam, as Wireless points out we continue to improve extraction, distribution and refinement. Unfortunately it’s very difficult to quantify what these improvements will yield and so projections, like yours must be based on what we do now and can quantify. That’s why predictions mostly fail. That doesn’t mean we will be able to get all the hydrocarbons locked away out, but I’ll bet we do better than your predictions.

What I continue to have considerable heart burn with is the costs. Guys, we can have all the colorful discussions we want about “predictions” of doom, catastrophe and what not, but in the end the bottom line is still the bottom line. Cheap abundant oil bought and paid for our middleclass. It raised the living standard of the poor globally. But it really did little for the world’s top 1% whose living standard is better but compared to the rest of us only marginally.

The very wealthy always had plenty of food, lighting, heat, clothing and most of all the freedom to travel about. The middleclass has only recently existed and the poor, particularly here in the US have all the above. Ok, so the young don’t have the same perspective as those of us growing up without or our parents who weathered the great depression or their great, great grandparents who never new what traveling about in a car was like. But it is important, that youngsters like Tam, learn how the world they are inheriting was built, how it got here. How it was paid for.

Developing massive amounts of cheap energy is a liberator for the poor and an expander for the middle class. Any scheme, method, technology, source that does not deliver abundant and cheap energy means the vast majority of the planets human population will suffer a decline in living standards, period. That means you Tam and the rest of us unless we make it to the top 1%. The world’s top 1%, eh, they might have to do with a little less but nothing like the decline the rest of us will see.

Energy is the key to everything. It built the vast industrial civilization we have today staring with coal and hydro and petroleum made us leap forward supporting the vast technological revolution. But make no mistake, all other factors considered, energy cost is by and large the top determining factor in global living standards. Higher costs equal lower standards and lower costs equal higher standards. Fancy graphs and internet links cannot allow you to escape that fundamental equation.

That said, Tam all alternatives are not equal, let the market, free from politically motivated government interference, sort out the abundance/cost factor. All you need to do really is figure out how to make your pet source, what ever it is, competitive, while keeping in mind that fundamental equation relating to cost versus living standards. My pet is obviously geothermal and only because I believe it will satisfy that bottom line fundamental equation for cost versus living standards. I dare all, regardless of energy type or source, to do the same.

» on 02.09.13 @ 02:31 AM

AN50 has raised an important point (repeatedly :-)).  That is reliable and relatively inexpensive energy is a fundamental input to every level of production and is absolutely critical to improving the living standards of more people.  He is absolutely correct that abundant and cheap energy has enabled a massive amount of people to move from poverty to the middle class.

Tam’s preferred solutions all increase the cost of energy to achieve the goal of using energy that isn’t what we predominately rely on now.  To what end?  Being green?  What everyone needs to understand is that as technology currently exists, being “green” means more people being poor.

Paying more for energy disadvantages us on the competitive stage.  As I have pointed out repeatedly and other articles I link to confirm, paying more for energy than you need to is a game for fools.  Self-destructive fools.

Europeans have bought into this green energy nonsense for years and imposed huge costs on themselves and achieved nothing, other than they accelerated their decline to bankruptcy.  They have had a 30% lower standard of living than Americans for some time and it is even lower now, despite our own struggles.  Why on earth would we want to emulate policies that deliver inferior results?

» on 02.09.13 @ 04:37 AM

Wireless, he is not concerned about providing cheap, abundant energy to improve the economic condition of the American people. He has much more important concerns: like saving the planet. Do you expect him to deal with such trivial matters, such as raising the standard of living for poor people, when the survival of the planet is at stake. It’s also not his fault if he is handsomely profiting from his heroic efforts to save us from armageddon.

» on 02.09.13 @ 04:05 PM

Wireless and AN50, you haven’t addressed the hard facts of my article. Again, the triple whammy: 1) far higher decline rates for existing and new unconventional oil fields equals an increasingly desperate red queen’s treadmill; 2) far lower energy content of unconventional oil accelerates the treadmill; 3) declining net oil exports b/c exporters are growing fast and using their own oil such that global net oil exports are headed to zero in just a couple of decades.

if these facts are accurate, the treadmill of the US and global economy is turning faster and faster and we’re going to fall off before too long.

Your responses are faith-based invocations that the market will handle things. I don’t work on faith. I work on data.

Rebut the data and you might be a little more convincing. I’m genuinely interested in what you gentlemen can find to rebut these points. I hope you can, because if you can’t we’re in for a world of hurt.

Until you can rebut the data, point for point, crocodile tears for the poor are both wrongheaded and misguided. If my points are correct (and I’m always open to new data and open to being proven wrong), then we are in for a world of hurt, rich, middle class, and poor. The best hope for all of us is to transition quickly away from fossil fuels.

I come from very humble beginnings - on welfare all of my childhood. My concerns are as much about ensuring a decent future for human beings as they are about ensuring a planet that can function while humans earning their living.

If you don’t buy climate change, just ignore everything I write about climate change. The points stand entirely independent of any concern about climate change. If you really do care about cheap energy, my arguments become stronger b/c I’m talking about the bottomline and having available energy that doesn’t bankrupt us.

» on 02.09.13 @ 06:09 PM

Tam,

I did address your points, just because you don’t like the answer doesn’t mean they weren’t addressed.  Did you bother to read any of the links I supplied on the peak oil post?  Apparently not, because they directly conflict with your analysis.  Let me give you a few highlights of just the North American inventory:

OIL
Total Recoverable oil Resources in North America: 1.79 trillion barrels.

-Enough oil to fuel every passenger car in the United States for 430 years
-Almost twice as much as the combined proved reserves of all OPEC nations
-More than six times the proved reserves of Saudi Arabia

NATURAL GAS

Total Recoverable Resources: 4.244 quadrillion cubic feet.

-Enough natural gas to provide the United States with electricity for 575 years at current natural gas generation levels
-Enough natural gas to fuel homes heated by natural gas in the United States for 857 years
-More natural gas than all of the next five largest national proved reserves (more than Russia, Iran, Qatar, Saudi Arabia, and Turkmenistan)

COAL

Total Recoverable Resources: 497 billion short tons.

-Provide enough electricity for approximately 500 years at coal’s current level of consumption for electricity generation
-More coal than any other country in the world
-More than the combined total of the top five non-North American countries’ reserves. (Russia, China, Australia, India, and Ukraine)
-Almost three times as much coal as Russia, which has the world’s second largest reserves.

So this is just North America which occupies a mere 4% of the total area of the globe.  This doesn’t include the rest of the world that also has expanded resources.  So even if everything you say is correct, we still have more than enough known inventory today, without finding anymore, to be fine for quite some time.  Relax, we’ll be fine.  You can go find something else to put your busybody do-gooder mind to work on.  Your sky-is-falling chicken little whining doesn’t hold up with these numbers, sorry.

» on 02.09.13 @ 07:23 PM

Here is the actual report from the International Energy Agency referenced in the piece:

http://iea.org/publications/freepublications/publication/English.pdf

That radical right wing international group based in France.  This NY Times piece summarizes the report:

U.S. to Be World’s Top Oil Producer in 5 Years, Report Says:

http://www.nytimes.com/2012/11/13/business/energy-environment/report-sees-us-as-top-oil-producer-in-5-years.html?_r=0

So, who do we believe, Tam or the International Energy Agency, and the Institute for Energy Research and the oil companies themselves, and several government agencies?  You say a researcher at University of Barcelona says its optimistic and therefore we throw it out and run back to inefficient, intermittent and expensive renewables?  Nice try. 

So let me summarize your lame case for everyone:  A couple of researchers who nobody has ever heard of, and may well have political motivations that run contrary to what is occurring, issue a report contrary to every other report issued by the industry itself, international agencies, several governments and other research groups and we are supposed believe them?  We’re supposed to buy your chicken little warnings when vast majority of the evidence before our eyes tells us the opposite?  Particularly when you have financial interests in moving off of hydrocarbons.  Give me a break Tam.

» on 02.09.13 @ 09:46 PM

I will be the first to admit that I am no expert in this area, but I have done a lot of reading about shale oil and gas and am convinced that Tam’s assertions are way off the mark.

There is a very small group of people (no more than 2 or 3 people) who are the authors of research papers claiming the decline rates for shale oil are far greater than for conventional oil drills. However, almost every reputable geologist in the field thinks otherwise. One problem with Tam’s thesis is that shale drilling is a recent phenomenon and there is not sufficient history to validate anyone’s claims with respect to decline rates. Most geologists would tell you that decline rates vary based on the drilling site just like it does for conventional oil drilling.

The real problem today is not below the ground; it is above ground. We currently don’t have the pipeline infrastructure to transport the shale oil to the East or West Coast refineries. We also don’t have enough refinery capacity to convert the oil to a finished product. The predominant reason for this is that it takes forever to comply with the myriad of regulations to build a pipeline or refinery. California has gasoline prices at least 50 cents more than the rest of the country because it is impossible to build refineries or pipelines in the state. Therefore, all that shale oil is not going to California.

There are billions of dollars being raised from MLP’s which are being used to build the country’s pipelines. Smart money is being invested in shale piplines (all private) because of the incredibly promising future of fracking. I would place my bets on these very smart investors and money managers who are willing to risk their considerable assets on this technology as opposed to the freely dispensed opinions of Tam.

» on 02.10.13 @ 01:31 PM

Tam, the points were addressed. Your fall off rates are based on “current” technology which is evolving very rapidly right now. As the technology improves more extraction at a lower cost can be expected. Much of what is being done today was considered impossible 20 years ago.

Tam, this is not unlike the argument you have been making for your alternatives, better manufacturing, more efficient means of production are making wind and solar more competitive. As they are marketed on a larger and larger scale, economies of scale play in. Did you think that traditional energy sources would sit on the side lines and allow alternative to over take them?

Its not faith based, its reality. Remember in the 90’s how optical drives were going to make magnetic hard drives obsolete? Well the hard drive guys knuckled down and squeezed more capacity and aerial density out of those rotating magnetic disks using quantum effects like magneto resistive spin valves to read ever smaller magnetic transitions and narrower track widths. They remain competitive to this day 20 years later.

The point is every time some one sets the death date for a technology some clever engineers and scientists find a way to get more out of it. Yes Tam I do realize that eventually we hit the wall. That’s why I said we may never recover all the hydrocarbons trapped in deposits. But the theoretic limit of extraction is a moving target. In the end the laws of physics will limit our ability at recovery. But that may be a bit further down the road than current technology can do.

What we should be doing, as Lou suggests, is building up our refining and distribution infrastructure. Our current situation is appalling and a result of 3 decades of punitive action by environmentalists high jacked by anti capitalists Marxist. I know that sounds cliché, but 30 years ago it’s why I left main stream environmentalism.

Tam, these idiots fixed nothing and cost us decades of advancement while enriching lawyers. I spend a considerable amount of time helping manufacturers become more efficient and better, making more stuff, with less energy and material at a lower cost. It’s far more environmental than punitive fees, fines, restrictions and regulations which have mostly moved pollution off shore with a cataclysmic effect on our GDP and zero benefit to the environment. In fact we have probably made things far worse having the greatest consumer country offshore most of its manufacturing at a huge expense in transportation fuel.

Now we have scientists finally coming out and saying what many of us have been ridiculed for a decade, that CO2 is not our enemy it is our friend, that much of the AGW hype was just that.

Tam, I believe you are a smart guy and you will come around. I know as Wireless and Lou and many others pound you the hair rises up on the back of your neck and you want to fight back. Don’t, instead do what I did and find that energy source that satisfies abundance and cost. Look at its distribution and as you have discovered with energy density in hydrocarbons, look at that part of the equation with alternatives.

High density fuel makes transportation cost effective. Cheap petroleum not only fueled our love affair with the automobile but is responsible for the huge build up in the airline industry. As fuel gets cheaper more transportation becomes available to a greater portion of the population. That helps the poor Tam, like those of us who grew up without.

As for the environment, building things better is synergistic with impacting the environment less. If environmentalists were really serious about that they would drop the Marxist crap and join forces with industry. I did and the both have benifited.

» on 02.16.13 @ 08:54 PM

Here you go sports fans, another few examples of the folly of Tam’s obsession with renewables and electric cars. 

http://online.wsj.com/article/SB10001424127887324162304578306150070640438.html?mod=rss_mobile_uber_feed

It won’t matter, no matter how many real life examples are shown the eco-Marxists cling to their failed ideas.  Its all about carbon.

» on 02.18.13 @ 12:20 PM

Hmmm.  Doesn’t sound like production in TX is dropping off like Tam claims.

http://fuelfix.com/blog/2013/02/17/oil’s-new-reign-in-texas-draws-comparisons-to-the-kingdom/

Sounds like it keeps increasing…...

» on 02.18.13 @ 03:28 PM

Gents, a belated response. Re your direct responses to my three main points, let me just say this: you’re barely scratching the surface of the appropriate analysis. It’s not about gauzy projections of total resources in the ground re oil, gas or coal. It’s about what can be produced, when and at what cost. These are the issues that my essays address.

If you don’t find my arguments convincing, you may find Robert Hirsch more so. Hirsch produced a detailed report for the DoE a few years ago now, with a key take home: oil will peak abruptly at some point and we’ll need at least 20 years before that peak to prepare in a way that avoids radical disruptions. We haven’t prepared in this way and all the evidence suggests that we’re at or near a peak right now, globally.

You may also find it convincing that Hirsch is not a climate change believer; to the contrary, he thinks we should be producing all the energy we can now, fossil fuel or not, b/c the peak oil issue is that important. He and his colleagues have also analyzed the IPCC projections of ultimately recoverable fossil fuels in their various scenarios (in a separate analysis) and they think that the IPCC projections are probably far too optimistic re fossil fuel resources. They think that we’ll start to peak in all fossil fuel consumption by around 2017, which will lead to a global peak in emissions and then a steady decline.

Here’s the wiki report on the Hirsch Report, but I urge you to also read the report itself:

http://en.wikipedia.org/wiki/Hirsch_report

» on 02.18.13 @ 03:55 PM

As I said in another post, there are a few people who think we are going to run out of oil, including shale oil, but 99% of the petroleum geologists think shale oil and gas will be a significant source of fossil fuel for many years. Thanks Tam for finding the one of the 2 or 3 people who are “shouting fire in a crowded theater”.

» on 02.18.13 @ 04:31 PM

Germany and Spain throw green energy under the bus:

http://blogs.the-american-interest.com/wrm/2013/02/17/germany-and-spain-throw-green-energy-under-the-bus/

Noted energy analyst predicts US and Canada will achieve oil independence in 5 years:

http://blogs.the-american-interest.com/wrm/2013/02/13/energy-oracle-says-u-s-canada-oil-independence-five-years-off/


Gee. Doesn’t seem to be much consensus out there supporting Tam’s assertions. 

How about some comments on the TX article?  Directly contradicts with actual production numbers what you insist.  Production is increasing and reserves are also increasing.

» on 02.18.13 @ 05:39 PM

Tam,

That Hirsch report you reference was published in 2005 according to your link.  Which means it was researched prior to that.  The 2005 and the 2007 revision was before the massive scale up in horizontal drilling and fracking increased our reserves so massively.  That has really ramped up fairly recently. 

Good grief, is that the best you can do?

» on 02.18.13 @ 06:36 PM

Like I said Tam, projections are moving targets. Risk assessors for drilling companies always take a conservative approach, they have to. They do not want capital drained away for overly risky investments. Geologists on the other hand do better with rosy predictions hence the dichotomy. What is certain is that as methods of extraction improve yields increase and costs go down.

None of this addresses your data or points directly, it doesn’t have to, it’s just a statement on how things generally work and can be applied across all industries.

As to the Hirsch report, he affirms everything I have been screaming about. Its LIQUIDE fuel that is the killer, which is something you can not replace with a battery. Conservation energy sources are good but we need a regime change to a new paradigm and wind mills and solar panels ain’t it. Yes they’ll help conserve but they cannot replace LIQUIDE fuel for transportation. Because they are relatively low density and dependent on reliable input, they cannot be extrapolated out to be a replacement for petroleum. Cost is a huge factor in all this. Our very way of life will be eliminated and replaced with subsistence poverty unless new abundant energy sources at sufficient density are done and now.

That is why I keep pounding on the obvious. We have more energy in our planet’s latent heat than we could ever possibly use. We just have to stop chasing wind mills and go after it, in a big way and NOW, not tomorrow, not next decade, now. Our puny efforts are laughable, meanwhile significant energy, capital and resources are instead used up on other alternatives that will never fulfill the goal of abundance and cost.

You can continue to promote your pet sources, I don’t argue that, but they are not the long term answer and they will delay that which is.

» on 02.19.13 @ 02:05 AM

Although I agree with much of what some of you are saying, I also believe that the conservative approach would be to embrace the fact that petroleum reserves are finite.

Another consideration is that as the USA produces more energy, India and China will suck up our increased production. 

In Tam’s link to the Hirsch report, the 20 year planning timetable after we reach peak oil production seems like a red flag that common sense cannot ignore. It doesn’t matter whether the peak is in 2017 or 2030.  That the Hirsch report is 5 years old is immaterial, as well.

Getting back to the big picture - How many years do we have before the USA needs to get serious about our plans for replacing oil and gas?

» on 02.20.13 @ 12:40 AM

Nobody is arguing hydrocarbons aren’t finite.  The issue is how finite.  My point is that they are a whole lot less finite than they were only a couple of years ago.  Take a look at the energy forecasts I posted a few responses back.  Even if we halve those numbers we are in good shape for many, many years.  We are finding new large reserves at a faster rate than we are consuming them.  Tam would have us believe its all BS and not to believe what we see with our own eyes and that we need to run off back into the waiting arms of crony green energy scams.

There is no need to panic and rush off and blow a bunch of money we don’t have and damage our struggling economy by forcing a round peg into a square hole like Tam and the radical environmentalists would have us do.  Every one of Tam’s articles and Obama’s speeches all argue for a government centric/driven conversion to renewables.  Renewables that are massively cost ineffective relative to plentiful conventional energy.  Read the links I provided about how Europe has suffered economically chasing these green fairy tales. 

When technologies mature and they become cost competitive we will be able to transition to other forms of energy, at the moment and for the foreseeable future they make no economic sense and are in fact destructive.  We simply can’t afford a higher cost basis for our energy if we want to be globally competitive.  In the meantime, we are insane not to take advantage of this newly acquired bonanza of plentiful and cost effective energy.

The free market, as it always does, will find a way to deliver the energy we need at competitive prices.  For many decades to come we are in good shape for hydrocarbons.  Relax.  Let the markets work without all of this idiotic government driven nonsense.  We can’t afford it.

» on 02.20.13 @ 12:51 AM

You might have noticed that gas prices have risen recently.  Tam tried to make much of it, albeit for the wrong reason.  In the short term it is impacted heavily by a limit in refining capacity as some refineries are out of service for planned maintenance ahead of the spring driving season.  But the biggest reason is the decline of the dollar. 

Here is a chart from the Fed that tracks gold prices and oil prices, you will see it correlates pretty well.  Supply shocks, wars, politics can make oil fluctuate more but in general it stabilizes out historically at about 8-10 barrels of oil per ounce of gold.  Its a commodity after all.

Our dollar has hugely devalued, that is primarily why oil costs more, along with every commodity.

» on 02.20.13 @ 12:54 AM

Obama (and Tam) must drop Green Energy for real energy:

http://www.realclearmarkets.com/articles/2013/02/12/obama_must_drop_green_for_real_energy_100141.html

» on 02.20.13 @ 02:14 AM

Lou, the data I cite re Bakken formation decline rates are ACTUAL decline rates, not estimates or projections. So that’s not really debatable. What is debatable is the degree to which these extremely high decline rates will lead to overall declines in the Bakken - and the degree to which other shale oil fields can make up for Bakken declines. EIA data shows that Bakken may already be in decline.

Here’s some more actual data, and accompanying analysis, re shale oil, showing even higher decline rates than the Likvern analysis:

http://www.slate.com/articles/health_and_science/science/2013/02/u_s_shale_oil_are_we_headed_to_a_new_era_of_oil_abundance.html

» on 02.20.13 @ 02:30 AM

AN50, I guess I have to repeat things about ten times with you before you get it. So here we go one more time before I sign off this thread:

1) I’ve always acknowledged that the problem is primarily a liquid fuels problem. Here are my two key pieces on these issues:

Arguing that the future is very bright for renewables and increased efficiency, based on the fact that we are clearly in the elbow of the exponential growth curve for wind and solar: http://www.renewableenergyworld.com/rea/news/article/2011/05/the-good-news-climate-change-doesnt-matter-anymore

Arguing that while there are bright spots the transportation energy nut is a whole lot tougher to crack:
http://www.renewableenergyworld.com/rea/news/article/2011/12/the-decline-and-fall-of-the-oil-age

2) And as I write about in the second article linked to, energy efficiency and price-induced conservation will lead the way in transportation energy. Renewable energy IS, however, a substitute for petroleum through electric cars. Renewable energy is here at scale already - wind power was more than half of the installed capacity in 2012 and we’re on our way to about 20% renewable energy in the US by 2020 (and far higher in California). Electric vehicles are still too expensive but we’re well on our way to bringing costs down to the point where they’re quite affordable on a lifecycle cost basis.

3) As I’ve written numerous times before, energy density is not the key determinant. The key determinants are performance and cost. If we can get EVs to where they’re affordable and have decent range (my feeling is 150-200 miles per charge is good enough to convince a lot of people to go electric, or go for a plug-in hybrid gas option like the Volt), energy density of the batteries is a secondary issue.

4) Cost is always a factor and that’s why I always discuss costs in my articles. Transitioning away from fossil fuels will certainly be a cost saver in the long-term b/c fossil fuels are finite. The debate should be over how quickly costs rise to the point where renewables are a cost saver across the board in the near and mid-term. We’re already there for wind power, biomass and easily accessible geothermal (which is rare). We’re also there for solar for peak power. And we’ll likely be there in just a couple of years for solar for almost all applications as prices continue to fall dramatically. So renewables ARE the low cost option you keep on yammering about, while ignoring what I demonstrate. And they come with almost zero pollution, create numerous local jobs when done right and can help the US in global trade IF we invest appropriately in domestic industries.

5) You keep on writing as though I don’t support geothermal and it’s really tiresome. I’ve always supported geothermal. But, AGAIN, geothermal is very limited in its application. You talk about costs and yet you ignore the plain economics of today’s energy sources. Geothermal is expensive unless there is easily accessible heat. Why do you think CA’s geothermal development stalled years ago??? In CA, the renewables mandates generally come with a cost-effectiveness criterion (with some exceptions in the last couple of years). I’m all for geothermal, but it’s not ready for prime time until we can figure out how to drill much deeper wells reliably and cheaply. Wind power has been cost-effective for years. Solar power is cost-effective as a peak resource and is increasingly cost-effective even as a non-peak resource. And they’re both growing at exponential rates world-wide, allowing economies of scale to further reduce prices.

» on 02.20.13 @ 03:30 AM

I checked out Tam’s Slate post and looked around and within 30 seconds found several stories that said that the most of decline rate was caused by fewer drilling rigs due to moving rigs to more fertile turf, like Texas.  The free market at work.  That doesn’t mean the wells are dry, they just seek the lowest cost of production.  When it makes economic sense they will be back.  The product is still there.

I did find some other interesting stuff about decline rates and the like and there is broad agreement that all wells do decline as time goes on.  Not a surprise to anyone.  So, here is an article addressing a number of topics including the Bakken geology and the shear size of it.  This looks at the number of wells vs. daily production over time with decline factored in.  This is from an industry publication but they have no reason to delude themselves, they, like all businesses, need to operate in the real world and earn real money (unlike Obama’s green energy fiascos).

http://www.ogj.com/articles/print/vol-110/issue-4/exploration-development/bakken-s-maximum.html

This is only North Dakota, you’ll note the field goes well into Canada.  TX and CA have similar if not bigger formations.  CO and UT have similar geology.  And this is just the US.  Maybe 2% of the surface landmass of the globe. 

This is also with today’s technology, which will surely improve as time goes on giving us more ability to extract resources.  This also doesn’t account that we will likely find more places with resources.

So, the moral of the story is don’t panic.  Enjoy some rare good news for a change.  Who knows, maybe in 30-40 years some of these renewables might actually pan out.

» on 02.20.13 @ 03:46 AM

Here are two quotes from this NY Times (not exactly a conservative paper) article last month.

http://www.nytimes.com/2013/02/03/magazine/north-dakota-went-boom.html?hp&_r=1&pagewanted=all&

“Just how much oil is in the Bakken is still unknown. Estimates have been continuously revised upward since a 1974 figure of 10 billion barrels. Leigh Price, a United States Geological Survey geochemist, was initially greeted with skepticism when, about 13 years ago, he came to the conclusion that the Bakken might hold as much as 503 billion barrels of oil. Now people don’t think that number is as crazy as it seemed.”


“As long as prices stay above $60 a barrel or so, oil will be a mainstay of the North Dakota economy for a generation or more. After drilling companies finish securing leased acreage, it will take 20 years to develop the 35,000 to 40,000 production wells needed to fully exploit the “thermally mature” part of the Bakken shale, an area about the size of West Virginia. Production from a typical Bakken well declines rapidly but on average produces modest amounts of oil for 45 years and earns a profit of $20 million. But as the volume of oil in the Bakken shale is still a moving target, and recovery techniques are increasingly sophisticated, some estimates put the life of the Bakken play, and the attendant upheaval it is causing in North Dakota, at upward of a HUNDRED YEARS.”

Because of increasingly sophisticated recovery techniques and the massive amount of barrels of oil underground, the article concludes that the life of the Bakken could be upward of 100 years.

» on 02.22.13 @ 01:40 PM

Tam, to answer your response,

1)You acknowledged high energy density liquid fuel when I brought it up. Your explanations were refuted. An airplane cannot take advantage of the electrical grid. Lowering the distance a car can travel so it runs on batteries increases the cost to the user, there is no way around that. Life itself capitalizes on the high energy density of carbon fuels making mobility possible. If stored electrical charge were viable, we would all be walking around with batteries, not a carbon based food/energy system.

2)Price induced conservation is another word for screw the poor. Again, and again and again you fail miserably to understand the economic impact of your proposals on the weakest in our economy. Let them eat cake, huh? I agree efficiency is good, price induced conservation is bad, not for a well paid white liberal elites like you with loads of disposable income, but for those at the bottom you left behind and now have your boot heal on.

3)Energy density is everything because it is the cost driver. Why you cannot understand this is really beyond me. The further you go without a charge the more economical, the less the more costly, it’s that simple. You if we can make them more affordable. If Tam? The market determines affordability, not government CAFE standards.

4)You say cost is a factor but only because everything keeps climbing in cost. What I keep telling you is we need cost REDUCTION, not cost rate reduction. Again, it’s the damned poor that are suffering here, not white, wealthy elite liberal lawyers. The more energy costs the less wealth there is to spread around for other uses Tam.

5)If you think I am hammering you with Geothermal my apologies, I am not and I know you support it. It is my pet source so it gets more air time from me like your wind mills and solar panels for you. BTW - I am a big fan of solar PV, highly distributed for industrial applications. It makes the most economic sense since they output peak power when industry is at peak demand. Its one of the best conservation tools we have to reduce fossil fuel consumption without screwing the poor.

Yes I understand, painfully so, that geothermal is still expensive and not nearly distributed enough to be an economical source. But like it or not, it is the most abundant source of energy we have. Once we figure out how to tap it economically it really could solve all our current energy problems, from chronic dependence on finite supplies, the need for liquid transportation fuels, the recycling of CO2, the fouling of our biosphere with pollutants and most of all cost.

Wind is finite, solar is finite, nuclear is finite, hydro is finite, bio is finite and yes petroleum is very finite. Of all the sources of energy we have available to us right now only one has more joules over more time than all the rest and at sufficient rates to be cost effective to raise the living standards of the planets poorest humans. That is geothermal. But it will take a massive investment of research and development for it to become the energy of choice. Fortunately our thirst for petroleum in harder to reach places is funding a lot of that research. But for that investment to become a reality we need two things to happen, one, we need robust economies around the world and that will only happen if current energy sources become cheaper not more expensive and two, a human population willing to make that investment.

As a free market capitalist who recognizes the role of government as an incentive driver (think NASA, not green energy) I believe our best chance at securing a bountiful energy future begins with us, Tam. We need to direct government and our markets toward the best reward.

So again, I applaud your efforts at alternatives, but my eyes are on the final prize, the one with staying power, the one that won’t run out of room, joules, air or anything else. The one source that satisfies abundance and cost and doesn’t require we shove the poor back to subsistence, and that’s geothermal. Cheers!

» on 02.26.13 @ 02:45 PM

Memories of Peak Oil:

http://www.american.com/archive/2013/february/memories-of-peak-oil

The beat goes on.  Here is a piece from CATO about free market solutions to electricity.

http://www.cato.org/sites/cato.org/files/serials/files/cato-journal/2013/1/cj33n1-2.pdf

Touches on issues of capital misallocation, otherwise known as malinvestment.

» on 02.27.13 @ 12:21 AM

Wireless, a recent response to Smil’s article that I wrote for a friend of mine (I’ll try and respond further to your and AN50’s substantive points this weekend):

it seems pretty clear that Smil is not very deep in the peak oil discussion, based on his points in his article. My recent article addressed his points (http://www.greentechmedia.com/articles/read/guest-post-the-future-of-ene...), and EIA and IEA projections, specifically, and I suggest that they might all be wrong for the following key reasons: 1) decline rates for unconventional fields are extremely high, suggesting that there simply isn’t enough resource available to make up for these declines (the Red Queen Effect); 2) energy content of unconventional oil is far lower than conventional oil, and Smil’s numbers don’t reflect this at all (the EROEI problem); 3) net global oil exports is the real issue for massive importers like the US and current trends suggest that exports may decline to zero or near zero in a couple of decades (the net exports problem). Once he and others address these issues, I’ll feel a bit more comfortable.

Smil also fails to discuss prices at all in his article. While he accurately touts an increase in production from 2001 to 2011 that is fairly impressive, and contra many Peak Oil claims, he fails to acknowledge that we’ve been on a fairly narrow plateau since 2004 (within about 6%) and that prices have skyrocketed since that time. It’s very hard, in light of these facts, not to acknowledge that we’re in a totally new era for oil: the easy oil is gone. That’s very clear, and he acknowledges this, but then suggests that conventional and unconventional categories are artificial. Yes… but, the point of this distinction is cost - it’s way more expensive to produce unconventional. Which is why we’re at record prices for oil and gasoline prices, even in a bad global economy.

All in all, I don’t find his article very convincing or comforting.

- See more at: http://www.theoildrum.com/node/9850#sthash.r15vOqbv.dpuf

» on 02.27.13 @ 02:46 AM

Tam,

This is rich.  You don’t find his article very convincing?  News flash:  I and many others don’t find your articles very convincing.  IMHO, they border on the preposterous.  Its so easy to contradict and disprove your assertions its becoming embarrassing. 

I will give you credit though, you are persistent in peddling your eco-babble.  Know-nothing, flat-earth, no-growth, environmental nut jobs like Rambler eat it up.

But, back on topic.  You brought up price again.  I’ve made this point a couple of times already in this thread but it doesn’t seem to be sinking in with you.  Let’s review briefly:  Oil isn’t getting relatively more expensive on a historically constant commodity basis (barrels per ounce of gold), the dollar is becoming less valuable.  Please go back and read my previous posts on the issue.  Its really not that complicated.

If you want to keep spitting into the headwinds of the recent hydrocarbon energy revolution you are free to do so.  Just recognize you are in fact, spitting into the wind.

Love,
Wireless

» on 02.28.13 @ 02:19 PM

Like clockwork here is another detailed article talking about the gas boom.  Projected to grow for decades and then steady out.

http://online.wsj.com/article/SB10001424127887323293704578330700203397128.html?mod=rss_mobile_uber_feed

The eco-marxists are living in denial, unable to accept our newfound good fortune.  Its all about the carbon, its evil.  That’s all you need to know.

» on 03.01.13 @ 12:56 AM

yet another one:

California’s Green Energy Bust:

http://washingtonexaminer.com/day-4-californias-green-jobs-bust/article/2522728

» on 03.01.13 @ 01:01 AM

California’s eco-Marxists at work.  Killing jobs, increasing energy costs and driving business out of the state:

http://washingtonexaminer.com/day-5-green-state-chokes-off-its-middle-class/article/2522861

» on 03.01.13 @ 01:20 AM

If you ever wonder why CA is underperforming so badly, one of the big reasons is CalPERS.  This is a long read but an eye opener.  Note one of their many bad investment decisions we all get to pay for was to go into “social” investing which largely was into loser green investments:

http://www.capoliticalreview.com/top-stories/how-calpers-gobbled-up-california/

As much as I love the weather and scenery here its getting harder and harder to justify staying in CA.  There is a limit to what I’m willing to pay for good weather.

» on 03.01.13 @ 02:35 AM

I come from Ma and I thought that state was dysfunctional until I moved here and witnessed the antics of the Sacramento politicians, the left-wing environmental fanatics and our local politicos who don’t have a clue. Ma. is a model of efficiency and sanity compared to this wacko state. The only good thing about what is happening in Ca is it provides a road map for the rest of the country as to what not to do. I started a business in 1992; there is no way I would attempt to do so today in Ca.

» on 03.01.13 @ 09:15 PM

California is lost. I don’t see any mechanism for its recovery and since the rest of the country has decided to follow this state down the toilet, there will be no place for the rats to go when the flood of sewage creeps up.

Guys, this is a cultural malaise 2 generations old now. Barack Obama, perhaps the worst president this country ever produced, was reelected by a majority. Academia has sold its soul to the political devil. Science, truth and integrity are not revered but instead cajoled. Being successful is now ridiculed and getting rich by any means possible is now acceptable.

Hollywood, that bastion of entertainment gave up on being a motivator for good an instead decided to pander for gold. Teachers openly politicize in the classroom and political correctness, the tool of tyrants, is now doctrine.

Read history. This is the point in all civilizations that marks the decline. The only salvation is utter destruction and rebirth. We have done it time and time again and never learn. The left, academia, liberals all think they have the answer, that the problems we suffer from are a result of attachment to the past. What they have not realized is that we suffer from a detachment from the past and thus are doing the same stupid crap yet again.

» on 03.03.13 @ 12:12 AM

A little more salt in the CA wound.  This time CalSTRS:

http://online.wsj.com/article/SB10001424127887324590904578292333185982210.html?mod=rss_mobile_uber_feed

» on 03.03.13 @ 12:25 AM

CA is a mess.  Nationally there are still some bright spots.  Despite the GOP’s serial electoral incompetence they do hold 30 Governships and hold full control over 25 states.  Dems are much less effective on a state and local level nationally.

We can survive Obama, he’s just a temporary politician.  What is more worrying is a population, knowingly or not, votes for decline.  Which is exactly what they did in this last election.

Anyway, where did all the lefties go?  Note whenever the discussions get past name calling they fold like cheap deck chairs.

» on 03.03.13 @ 03:58 AM

“What is more worrying is a population, knowingly or not, votes for decline.  Which is exactly what they did in this last election.”

They are called low-information voters. They are the product of a failing educational system and a breakdown of the family. Of course, even our educated voters have been indoctrinated in our universities by professors who think like Tam and his ilk.

This person from Forbes magazine has a solution to fix Obamacare to address the additional 30 million insured without any corresponding increase in providers:

http://www.forbes.com/sites/billfrezza/2013/02/13/doctor-shortage-let-idled-postal-workers-fill-in/

» on 03.03.13 @ 01:10 PM

Another tome on CA’s self-inflicted woes and phony “balanced” budget:

http://www.weeklystandard.com/articles/paradise-lost_704954.html?nopager=1

» on 03.03.13 @ 02:05 PM

Guys, we are a dwindling breed. Why work hard when you can get by not working at all? Why try to succeed when if you do you get punished?

Getting rich in this country used to be a worth while goal and was largely done building: industries, technologies, cities, energy, farms and transportation. Now it’s largely done transferring wealth from others to yourself and mostly at the expense of the above methods.

On the right, our failure to see that banking, finance, brokering and money managing is no different economically than taxing and spending from the government is our greatest failure. We were once the champions of industrial might, now we champion Wall Street fat cats, the very people our political opponents court as well.

That is perhaps why I am less hostile to Tam than you gents; at least the poor bastard is trying to build a productive value adding industry even if his dopy ideology prevents him from seeing the failure in it. Tam is not a bad guy; he is a lawyer and as such suffers from legal blindness, the perception that societies are controlled by law. He is also hopelessly lost in the AGW religion. But he is a smart guy and sooner or later smart people figure out the difference between belief systems and real science, even lawyers. They also come to realize laws don’t control, values do.

» on 03.03.13 @ 02:38 PM

CA is becoming a feudal society:

http://washingtonexaminer.com/conn-carroll-california-becoming-a-feudal-society/article/2522998

» on 03.03.13 @ 04:29 PM

“Tam is not a bad guy; he is a lawyer”

AN50, what did Shakespeare say about lawyers:

“Let’s kill all the lawyers”

America’s tort system imposes a total cost on the U.S. economy of $865 billion per year. This constitutes an annual “tort tax” of $9,827 on a family of four. Most economists know that our tort system acts as a serious drag on our economy, increasing the costs of products and services, hampering innovation and changing behavior in often very unproductive ways.

I would say that being a lawyer doesn’t excuse Tam’s orientation, rather it explains it.

» on 03.04.13 @ 05:49 PM

As one who has ripped the legal industry for that very reason (a trillion dollar parasite that produces at best obstruction and a worst down right social destruction, its amazing how lawyers are so revered by Hollywood) I guess I was a little out of character. Still I’m trying to appeal to Tam’s intellectual side.

All in all though I share much of your distain for parasitic industries, not because I think they shouldn’t exist or that you shouldn’t profit from them but that they don’t realize they exist because other economic sectors are more productive.

» on 03.05.13 @ 01:16 AM

Another article full of depressing statistics about CA’s suicide march:

http://online.wsj.com/article/SB10001424127887324338604578326402863024028.html?mod=ITP_opinion_0

» on 03.11.13 @ 11:40 PM

Hey Tam,

Care to comment on this article on electric cars.  We know you are a big fan:

http://online.wsj.com/article/SB10001424127887324128504578346913994914472.html?mod=rss_mobile_uber_feed

» on 03.12.13 @ 03:44 PM

Tam,

OPEC reducing output due to shale oil expansion.  What is that thing Homer Simpson always does when he screws up:  ooouuuggghhh:

http://online.wsj.com/article/SB10001424127887323826704578356160577328022.html

» on 03.12.13 @ 07:44 PM

Wireless, this is a huge mistake made by electric car proponents. I tried telling Tam that once but he was un-phased. I am lover of electric motors for their efficiency and adaptability to start stop driving (and don’t forget that 100% torque at 0 RPM! Yee Haw), not to mention their ability to recapture energy used to accelerate with dynamic braking.

But the love ends there. Batteries just don’t cut it, if they did, life on earth would look very different than our carbon based life forms we have. No, to make better use of electric motors as the drive/brake system in a car, truck, bus or big rig, we would have to emulate the diesel electric train system. That might, for efficiency reasons, morph into turbine powered generator/motor sets. Batteries would take on a minor secondary role as brake energy storage and may even be replaced with high efficiency capacitors.

The reason this idea has not gotten any traction is you have this harebrained cadre of AGW alarmists and environmental whacka-doodles insisting on zero emission cars. No living entity on earth has zero emissions why pray tell are we insisting life born machines being different? The hybrid system mentioned above with a turbine generator/motor set would be very efficient and reduce emissions to that of plants, CO2 and water vapor.

But instead we are wasting incredible amounts of energy, time, intellect and money pursuing nonsense, based on fear, hysteria and religion. What a shame.

» on 03.13.13 @ 03:54 PM

As I discussed earlier in this thread the energy industry will adapt and improve.  Here is yet another article talking about fracking and how the industry is spending significant money on improving the technology to improve the yield they get out of the shale.  Its only in 30% range now.  I guarantee you that will improve dramatically as time goes on because there is a huge economic incentive to do so.

http://online.wsj.com/article/SB10001424127887324096404578356403053024648.html

Tam, care to make any bets on this?

» on 03.21.13 @ 01:37 AM

In case Tam may have missed it, the biggest solar company in China filed for bankruptcy.

“Suntech Power Holdings, which was until recently the world’s largest producer of solar panels, has said its main subsidiary in China is bankrupt, in a further stark illustration of the declining fortunes of the global solar industry.”

“China is the world’s biggest producer of solar panels, but the sector is suffering from overcapacity after rapid expansion fuelled by cheap loans and preferential government policies. US-listed Suntech was the posterchild of the country’s swift entry into, and then dominance of, the market.”

Sorry Tam, solar isn’t taking over the world.


http://www.ft.com/intl/cms/s/0/c4164d20-916a-11e2-b839-00144feabdc0.html#axzz2O94PJUr3

» on 03.21.13 @ 02:49 AM

Solar is a sideshow for the time being.  Until they can improve the efficiency of converting a photon to an electron and finding cost effective materials that have a bandgap that works, solar panels will require government subsidies.  Otherwise, nobody would buy them.

Tax preferences and renewables mandates are the reason the industry hasn’t totally collapsed.  The cost per KWH is still too high.  That is the bottom line.  That will be the case for the foreseeable future.  This is why Tam and his ilk want to stop fracking and the conventional energy revolution, there is no chance his pet renewables will be competitive.  None.  Zero.  All those green energy investments up in smoke.  Just like most of the Obama solar and battery investments are kaput.  Gone. Done. Wasted $$.

China tried to corner an unprofitable market.  Tam wanted to chase them.  The results were predictable and were in fact predicted by me and many, many others.  Like so many things they are doing in China, government driven industrial policy will end in failure, just like it has everywhere else.  There is no free lunch, politically driven malinvestment is the road to perdition.  The examples of the folly of central planning are abundant, the lefties just won’t believe their own eyes.  Here is a short list:  Soviet Union, Europe, Japan. It doesn’t work.

» on 03.21.13 @ 01:59 PM

That is a mixed blessing. I am glad China suffers the hit. Unfortunately I am still a big proponent of solar PV for commercial application. I also agree the technology is not there yet, right along with my favorite replacement for oil, geothermal. However the subsidies we pour into developing new energy conversion technologies should be culled directly from hydrocarbon development. Since I have no fear of impending doom from man made climate apocalypses, this would be the lease economically intrusive method of financing R&D. The goal of the government should be to make sure energy is abundant and cheap, since they are as much a benefactor of that policy as we are. Right now they are doing exactly the opposite and the end result will be many Tams out there trying to scratch their next meal out of dirt.

» on 03.21.13 @ 03:00 PM

I don’t mind some government dollars going to research but I have a huge problem with government “investment” in industry.  I have a huge problem with government mandating use of renewables like they have here in CA, to our great detriment, and the absurd ethanol mandates in gasoline, and the subsidies to coerce solar power usage.  Particularly to achieve political and social goals which is exactly what all this green energy investing is.  These activities are distortive to the market and are ultimately malinvestment of scarce resources.

When the technology matures and is cost competitive it will find a home on its own.  All of this nonsense is driven by the eco-marxists and their anti-carbon jihad.  If they were really serious about carbon they would be pushing nuclear power for electricity.

» on 03.21.13 @ 09:11 PM

I just want to add one thing to Wireless’s last post: The renewable energy mandates, subsidies and regulatory burdens will increase the cost of energy for Californians. We already pay more per kilowatt hour or gallon than the rest of the country and that gap will widen in the coming years. Californians better get use to their utility bills increasing at rates far greater than any increase in their disposable income.

» on 04.03.13 @ 04:56 PM

Oil exports from the US get a second look:

http://online.wsj.com/article/SB10001424127887323361804578389061086381802.html?mod=rss_mobile_uber_feed

Gee, where’s all the production drop off Tam says is happening?

» on 04.03.13 @ 06:56 PM

Getting our politicians to allow the export of crude oil and liquefied gas will not be easy. There is no reason not to allow this. It could potentially be quite harmful to the industry if a free market for any energy-related product is restricted or constrained by our govt.

Tam is blinded by radical environmental politics and is totally incapable of being objective about this subject. If Tam was my investment adviser, I would fire him immediately. Some of the greatest investment opportunities this decade is in the shale oil and gas sector. There are numerous energy-related MLP’s that have excellent fundamentals and will make significant money for investors. Just look where investors are willing to commit their private capital; that will tell you much more about the future of shale than the nutty politics coming from the left-wingers.

» on 04.15.13 @ 04:09 PM

The folly of electric cars.  Cost an average of $12K more than a normal car over the life of the vehicle.

http://www.project-syndicate.org/commentary/the-false-promise-of-electric-cars-by-bj-rn-lomborg

» on 05.01.13 @ 02:49 PM

Radio Check Tam. 

As you’ve gone silent understandably licking your wounds, my predictions continue to prove accurate while your case is increasingly on the shaky ground of leftist delusion.  Here is the latest from the right wing rag known as the Washington Post.  Recoverable oil in the Bakken formation is twice as high as previously thought according to Obama’s Interior Department.

http://www.washingtonpost.com/national/health-science/northern-plains-site-has-twice-as-much-oil-as-previously-thought-interior-says/2013/04/30/16e0a436-b1cf-11e2-9a98-4be1688d7d84_story.html?wpisrc=nl_headlines

I can hear Homer Simpson going ooouuuggghhhh…....

» on 05.02.13 @ 03:48 PM

Here’s another shocker:

http://www.bloomberg.com/news/2013-05-01/electric-car-maker-coda-files-for-bankruptcy-to-seek-sale-1-.html

Yet another scam electric car maker biting the dust.  All this great government “investment”.

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