I was talking GDP for the advanced economies (say G7).

Yes, I'm willing to say that's the absolute worst case. And you STILL haven't given us a prediction.

And once again, if all of your bitching and whining is just that you think we're going to have 1% growth over the next 5 years - give this whole topic a rest. That's not a big deal.

It would be much easier for everyone, particularly you, if you would just admit you are way out over your skis, and that you are the one who doesn't understand how this works, not me. Your answer illustrates that beautifully.

First, we are on balance a net consumer of oil. As much as it pains me to have to walk you through the fundamentals of the first day of micro, I will remind you that an OPEC cut in production (supply) would have increased price ( cost), which is bad if you are a net consumer. The article I posted, and any other one lays out this obvious point. So in fact we did not take it in the balls. You did by writing that.

Second, in addition to not understanding the fundamental implications, you evidently don't understand the fundamental rationale. Economic rationale would have led to a cut in production. OPECs decision was based on a lack of trust among member states (outlined in the enclosed article).

Your smarmy retort notwithstanding, you still have yet to explain why anybody should give a **** about "peak oil". More specifically, 1) why will prices accelerate so suddenly that markets will not have time to respond with innovation as they do in all other markets, 2) why market prices do not reflect your conspiracy, and 3) why you are better equipped to talk down to the rest of us from the comfort of your postal route, while both academics and sell side investment banks are on record dismissing the phenomenon entirely.

http://m.seekingalpha.com/article/27...?source=feed_f

And last but not least...

http://oilprice.com/Finance/investin...il-Prices.html

More like that's the very best-case scenario... And if you think 1% growth for the world's biggest economy, held up by debt, isn't a big deal, you don't understand what's at play here at all.

In any event, I'm glad you've tacitly admitted the peak condition is on our doorstep, even if you don't think it'll hurt much. That's progress.

Ok, excellent. This sounds like a real prediction. So over the next five years we can see who is right.

LOL...

We can add that to the mountain of miss-the-mark oil industry deep-throaters who write that peak is a "myth" simply because they baselessly insist shale oil production has no limitations in scale.

Douche.

Yeah, that stance was put to bed a few years ago now. Writing from the perspective of finance as that Goldman Sachs groupie just did has always run in wrong direction right out of the gate, leading to more egregious false assumptions as they go along. This clown obviously doesn't understand the difference between reserves and rate of production. And neither do you.

But do make a habit of jumping just as high as Goldman tells you to. They have a long track record of being honest with their investors, huh?

I mean seriously. Click on the author's link and absorb the "more from Al Fin" headlines. What a breadth of douchey capitalistic propaganda, with a side order of Putin paranoia, to boot. Straight from central casting.

You're easily convinced by prose that you already want to be true, just like 90% of this forum that doesn't apply much critical analysis in what they read about capitalism. It's why I post here. Fortunately, physics doesn't really care what some industry-funded tool declares as they do their best to buoy investment dollars and keep the game going.

Goldman doesn't "know better" than the Pentagon, Post Carbon Institute, Energy Watch Group and the countless other national and private entities who've declared oil from shale is doomed. Heck, even industry mouth piece IEA said last month that the shale game is up by 2020, with nothing but decline to follow. I guess Goldman (with no drilling division, no petrol geologists) has a secret.

Bitter, as I've said time and time again, you don't have the math on your side. Never did. And neither do your heroes who write this crap. The logistics of what you claim to be possible simply are not there. There is absolutely no way unconventional crap-grade oil production can be expanded (exponentially) wide enough to make up for the rate of conventional declines, let alone maintain overall production growth. Especially for an industry suffering from 40% annual decline for the average well already. Think rationally. Even if you could turn 2/3 of the U.S. into this:



Where is the water going to come from? What university is pumping out the engineers to man each new pad? And where on Earth are the trillions in annual investment capital going to come from when half of these companies are deep in the red already?

What this jaggov of a writer is pretending is that what's in the ground is all that needs to be discussed. That proving flow rate growth isn't necessary. Goldman doesn't say how they get from A to Z, they just claim Z is inevitable. And so do people like you.

If you want to get into a link war pitting those who insist shale oil has no limits vs. those who see it nosediving within 6 yrs., we can do that. I have an infinite arsenal. Just remember to notice which side uses science and hard data, and which one just masturbates over cost-benefit analysis and outliers re: rosy share value.

Once again:

- too expensive to produce
- too expensive to afford
- doesn't burn nearly as efficient
- extremely carbon intense
- requires alarming amounts of water
- requires alarming levels of carcinogens
- ave. well suffers from 40% production decline each year

And people like you and Al Fin insist it will usher Star-Spangled America into a new era of prosperity and promise!!!

Get real.

LetsGambool, I'm deleting your posts because Jiggs has banned you from his thread.

Jiggs, I'm not actively policing your thread by your rules. It's up to you to tell someone they're not welcome and up to you to report the posts.

luuuulllz what has unchained become

Jeezus... Let me know what your straw man says in response.

As for me, I'm pretty sure I'm on record as acknowledging that a production cut would lead to higher prices, and the consumer would suffer. I'm also pretty sure I'm on record declaring that oil at any price these days is a drain. It's not nearly as expensive as it needs to be for those who produce it, and it's not nearly as cheap as it needs to be (yet) for the margin consumer to keep spending. That's because the sweet spots are terminal, and there's not enough any more to meet global demand.

You don't know what you're talking about. Why should the more efficient producer of a commodity be the one to cut their rate of production? Shouldn't the far-more expensive version be the one to do so? Do you think a country like Saudi Arabia "wants" to lose a trillion dollars in revenue? ... The price is where it is because that's what the consumer is willing to pay. THAT is the economic rationale at play here. This is no conspiracy to punish anyone. ... That the debt-based U.S. shale bubble kept growing for a few years isn't Saudi's problem, and they don't have to suddenly make room for our crap, any more than they have to make room for Venezuela's super expensive crap. ... If it's an oil price war, it's coincidental.

In the end, it's starving U.S. shale producers who will have to cut production, as we'll begin to see next year. And, yes, the price will likely rise again (provided the world doesn't slip into depression and crush demand even further).

Awww, you're still kinda new here.

It's been explained many times over. But let's see:

1) ummmm, because summer 2008 ...among other examples of market panic after an oil shock.

2) actually, they do ... you might wanna get a better grasp of my argument. ... And it's no "conspiracy".

3) Well, this was covered in my previous post ... And we can do the link war if you like, but you don't get to pretend one douchey author (Fin) and his one source (Goldman) are all you need.

I understand that... But that was not my first request.

He's completely useless to the discussion, and always has been.

I'm trying to get some other quantifiable predictions in here. Jiggs, is it fair to say that you believe overall oil production in 2020 will be lower than it is now?

Barring perpetual and unsustainable money printing by all central banks to maintain investment, yes, that is fair to say.

lulz so that's a no, you don't think oil production will drop then jiggs.

Can we quantify the "perpetual and unsustainable money printing"? Like with an inflation rate?

lawl

I tell ya, it is telling watching the denial camp, drawing dead, desperately shift the dynamics of the discussion by trying to box me into a prediction of their choosing.

Here's a prediction: The oil industry is doomed. Near-to-mid term.

Quite a blood bath Sunday for oil markets. Holy crap. ... Let the sell-off begin!

Gulf Markets Weaken on Falling Oil Prices

“Investors, especially international, are reassessing their [Gulf] regional exposure amid sharply weaker oil,” said Mohammed Ali Yasin, managing director at Abu Dhabi-based NBAD Securities. “The concern obviously is that lower oil [prices] will curb the governments’ ability to spend locally and grow the economies.”

Naimi inferred this was a move against U.S. tight oil. But many don't buy that. Thursday's refusal to cut production was no conspiracy to punish anyone. It was merely an effort to maintain market share amid a price that simply reflects what the consumer is able to pay. If that hurts Russia, the U.S., Iran and others, well that's just a coincidence... Because guess what? It hurts everyone.

It will be interesting to see what happens this week on Wall St.

How is it desperation to ask for a testable prediction?

That's not objectively measurable. Hell, you claim the oil industry is doomed now and we obviously disagree.

Show some confidence and make a prediction.

This sums up the current fix the U.S. industry finds itself in.

Cheap Oil A Boon For The Economy? Think Again

The oil industry is no longer what it once was, it’s not even a normal industry anymore. Oil companies sell assets and borrow heavily, then buy back their own stock and pay out big dividends. What kind of business model is that? Well, not the kind that can survive a 40% cut in revenue for long. The industry’s debt levels were, in Ambrose’s words, at a ‘danger level’ when oil was still at $110.

Is Big Oil still a going concern? You tell me. I don’t want to tell the whole story bite-sized on a platter, there’s more value in providing the numbers, this time from Ambrose but there are many other sources, and have you make up your own mind, do the math etc.

Ambrose’s exact numbers can and will be contested three ways to Sunday, but his numbers are not that far off, and if anything, he may still be sugarcoating. WTI closed at $66.15 on Friday, Brent is at $70.15. Given the above data, where would you think the industry is headed? What will happen to the trillions in debt the industry was already drowning in when oil was still above $100?

And how will this be a boon to the economy even if, as Ambrose puts it, the ”oil drop lasts”? Do you have any idea how much your pension fund is invested in oil? Your money market fund? Your government? I would almost say you don’t want to know.

So, you're going to avoid making any more predictions?

I tell you what, I'll make another one:

By 2020 overall oil production will be above current oil production levels UNLESS oil prices are below $100/barrel (in which case it may be above or below current production levels).

See Jiggs, I'm not even saying you have to make pretty ambitious predictions.

Jiggs,
Have you ever read this blog?:

http://ourfiniteworld.com/2014/10/06...ent-come-true/

I just came across it recently. I'm wondering if you agree with her views.

The problem with asking Jiggs for really specific and quantifiable predictions, imo, is that the interactions within the world economy and oil production are extremely complex so it is likely impossible to accurately predict. He could be correct in principle about the collapse of the oil industry in the near to mid term but could be off by a decade if you ask him to give an exact date. Pretty sure saying "I don't know when but it will happen relatively soon" is a reasonable position to take, whether he ends up being right or wrong.

Again no. Jiggs fundamental theorem was that oil production was going to peak and catastrophe would result. People said that we'd use less and find more. When 'conventional' oil peaked, many countries used less and a lot of people invested in ways to find more. Jiggs fundamental theorem is dead.

Really? He's making all of the arguments but he can't make ANY quantifiable predictions from these views? That's absurd.

Like I said, it doesn't even need to be particularly extreme - just quantifiable and objective so we can all agree on whether it happened or not.

I'm giving him a 5 year window to define 'relatively soon'. If he wants a 10 or 15 year window, that's fine. But even ignoring the time aspect, he hasn't defined what "it" is in any quantifiable way. Like he won't even say that he believes overall oil production is going to go down.

When total cost to produce exceeds the price of oil [edit2: Got that backwards] and/or people can no longer afford to pay for oil [edit: and goods that are produced/distributed with oil] due to economic reasons very bad things will happen. Just because "we find more oil" doesn't mean it makes sense to extract that oil at a given price point. And the price of extraction will increase over time.

Also, collapsing oil prices can be just as bad as it causes exporters to go out of business. Lack of energy, lack of resources, lower growth leading to major conflicts, etc.

Whether we avoid this or not depends on if we can find a suitable substitute for oil. Meaning a large enough quantity to maintain energy needs and as cheap as oil. Much easier said than done.

People can only "use less and find more" up to a certain point unless a suitable substitute is found. Where that point is I have no idea, and I doubt anyone else does either.

Not necessarily. I could say I believe we'll colonize Mars but I have no idea when and that doesn't seem too absurd to me.

How about something like: if oil prices continue to fall and stay at a low enough level where oil companies start to go out of business it will be incredibly disruptive to the overall economy? Maybe worse than the financial crisis.

Of course I can't predict whether this will happen or not because I have no idea how long OPEC will keep supply this high. We can't predict human behavior.

If he believes in "peak oil" I'm pretty sure that implies he thinks overall oil production is going to go down. And isn't that inevitable? The only question is when it will happen, whether we find a suitable substitute before it happens, and how disruptive it will be when it does.

If we don't and the world economy stagnates that will be catastrophic.

That's a horrible analogy.

Jiggs is talking about things that are happening 'right now', and their immediate and short-term effects. He should absolutely be able to come up with some sort of quantifiable predictions for what's going to happen next.

But even if it weren't a horrible analogy, if you spent your whole 2+2 career talking about how colonizing Mars was inevitable I would absolutely expect you to be able to put certain short, medium, and long term milestones on your prediction. Otherwise you clearly don't have the kind of knowledge that can actually back up your prediction.

You clearly don't know what Jiggs is actually arguing nor what our criticisms of his point actually are. Feel free to go back and read the thread.