Gail Tverberg / Running Short of Cheap Oil

This is a link to an interview done by Justin and Seth of the, while I attended the Degrowth Conference in Montreal. The interview relates to how running short of cheap-to-extract oil affects the economy.

The interview is 13 minutes long. The video shows only my answers, not the questions they asked, so it seems to transition quickly from one topic to another. This is a link to the vimeo version.

Limits We are Reaching – Oil, Debt, and Others

The world is clearly reaching many limits. This graphic below shows how I see man interacting with natural systems, back before man discovered fire and back before man became intelligent enough to kill off whole species.

Figure 1. My view of man’s relationship to natural systems, in the beginning.

In these earliest days, human systems were a part of the natural system. Humans behaved like other animals, and fit easily into the natural order. There weren’t many humans–probably under 100,000 total in the whole world.

This is the way I see man’s systems interacting with the natural system now:

Figure 2.My representation of relationship of systems created by humans to the natural system, at the present time.

In my illustration, human systems are sufficiently interrelated that they combine to form one single interrelated “humans’ system”. This system draws its power from the natural system. It also puts its waste products back into the natural system. Because of entropy, we know that everything we create eventually ends up as waste products. In order to keep the humans’ system going, we need to keep adding new energy to the system, partly to offset entropy and partly to support the growing world population.

What limits are the human and natural systems reaching now? Continue reading

Attending “Degrowth” Conference

I will be attending the conference, Degrowth in the Americas, an International Conference, in Montreal, for the next few days, returning home on Friday. If any readers happen to be at the conference, let me know, and perhaps we can get together.

After I return home, I will be getting ready for more travel. I am not sure how much I will have time to write in the next few weeks. Perhaps I will be able to write some shorter pieces. My schedule should be more normal in a month or so.

New IMF Working Paper Models Impact of Oil Limits on the Economy

The International Monetary Fund (IMF) recently issued a new working paper called “The Future of Oil: Geology versus Technology” (free PDF), which should be of interest to people who are following “peak oil” issues. This is a research paper that is being published to elicit comments and debate; it does not necessarily represent IMF views or policy.

The paper considers two different approaches for modeling future oil supply:

  1. The economic/technological approach, used by the US Energy Information Administration (EIA) and others, and
  2. The geological view, used in peak oil forecasts, such as forecasts made by Colin Campbell and forecasts made using Hubbert Linearization.

The analysis in the IMF Working Paper shows that neither approach has worked perfectly, but in recent years, forecasts of oil supply using the geological view have tended to be closer than those using the economic/technological approach.  Since neither model works perfectly, the new paper takes a middle ground: it sets up a model of oil supply where the amount of oil produced is influenced by a combination of (1) geological depletion and (2) price levels.

This blended model fits recent production amounts and recent price trends far better than traditional models. The forecasts it gives are concerning though.  The new model indicates that (1) oil supply in the future will not rise nearly as rapidly as in the pre-2005 period and (2) oil prices are likely to nearly double in “real” (inflation-adjusted) terms by 2020. The world economy will be in uncharted territory if this happens.

It seems to me that this new model is a real step forward in looking at oil supply and the economy. The model, as it is today, points out a definite problem area (namely, the likelihood of oil high prices, if growth in oil production continues to be constrained below pre-2005 rates of increase). The researchers also raise good questions for further analysis.

At the same time, I am doubtful that the world GDP forecast of the new model is really right–it seems too high. The questions the authors raise point in this direction as well. Below the fold, I discuss the model, its indications, and some shortcomings I see.  Continue reading