The “Wind and Solar Will Save Us” Delusion

The “Wind and Solar Will Save Us” story is based on a long list of misunderstandings and apples to oranges comparisons. Somehow, people seem to believe that our economy of 7.5 billion people can get along with a very short list of energy supplies. This short list will not include fossil fuels. Some would exclude nuclear, as well. Without these energy types, we find ourselves with a short list of types of energy — what BP calls Hydroelectric, Geobiomass (geothermal, wood, wood waste, and other miscellaneous types; also liquid fuels from plants), Wind, and Solar.

Unfortunately, a transition to such a short list of fuels can’t really work. These are a few of the problems we encounter:

[1] Wind and solar are making extremely slow progress in helping the world move away from fossil fuel dependence.

In 2015, fossil fuels accounted for 86% of the world’s energy consumption, and nuclear added another 4%, based on data from BP Statistical Review of World Energy. Thus, the world’s “preferred fuels” made up only 10% of the total. Wind and solar together accounted for a little less than 2% of world energy consumption.

Figure 1. World energy consumption based on data from BP 2016 Statistical Review of World Energy.

Figure 1. World energy consumption based on data from BP 2016 Statistical Review of World Energy.

Our progress in getting away from fossil fuels has not been very fast, either. Going back to 1985, fossil fuels made up 89% of the total, and wind and solar were both insignificant. As indicated above, fossil fuels today comprise 86% of total energy consumption. Thus, in 30 years, we have managed to reduce fossil fuel consumption by 3% (=89% – 86%). Growth in wind and solar contributed 2% of this 3% reduction. At the rate of a 3% reduction every 30 years (or 1% reduction every ten years), it will take 860 years, or until the year 2877 to completely eliminate the use of fossil fuels. And the “improvement” made to date was made with huge subsidies for wind and solar.

Figure 2. World electricity generation by source, based on BP 2016 Statistical Review of World Energy.

Figure 2. World electricity generation by source based on BP 2016 Statistical Review of World Energy.

The situation is a little less bad when looking at the electricity portion alone (Figure 2). In this case, wind amounts to 3.5% of electricity generated in 2015, and solar amounts to 1.1%, making a total of 4.6%. Fossil fuels account for “only” 66% of the total, so this portion seems to be the place where changes can be made. But replacing all fossil fuels, or all fossil fuels plus nuclear, with preferred fuels seems impossible.

[2] Grid electricity is probably the least sustainable form of energy we have.

If we are to transition to a renewables-based economy, we will need to transition to an electricity-based economy, since most of today’s renewables use electricity. Such an economy will need to depend on the electric grid.

The US electric grid is often called the “World’s Largest Machine.” The American Society of Civil Engineers gives a grade of D+ to America’s energy system. It says,

America relies on an aging electrical grid and pipeline distribution systems, some of which originated in the 1880s. Investment in power transmission has increased since 2005, but ongoing permitting issues, weather events, and limited maintenance have contributed to an increasing number of failures and power interruptions.

Simply maintaining the electric grid is difficult. One author writes about the challenges of replacing aging steel structures holding up power lines. Another writes about the need to replace transformers, before they fail catastrophically and interrupt services. The technology to maintain and repair the transmission lines demands that fossil fuels remain available. For one thing, helicopters are sometimes needed to install or repair transmission lines. Even if repairs are done by truck, oil products are needed to operate the trucks, and to keep the roads in good repair.

Electricity and, in fact, electricity dispensed by an electric grid, is in some sense the high point in our ability to create an energy product that “does more” than fossil fuels. Grid electricity allows electric machines of all types to work. It allows industrial users to create very high temperatures, and to hold them as needed. It allows computerization of processes. It is not surprising that people who are concerned about energy consumption in the future would want to keep heading in the same direction as we have been heading in the past. Unfortunately, this is the expensive, hard-to-maintain direction. Storms often cause electrical outages. We have a never-ending battle trying to keep the system operating.

[3] Our big need for energy is in the winter, when the sun doesn’t shine as much, and we can’t count on the wind blowing.

Clearly, we use a lot of electricity for air conditioning. It is difficult to imagine that air conditioning will be a major energy use for the long-term, however, if we are headed for an energy bottleneck. There is always the possibility of using fans instead, and living with higher indoor temperatures.

In parts of the world where it gets cold, it seems likely that a large share of future energy use will be to heat homes and businesses in winter. To illustrate the kind of seasonality that can result from the use of fuels for heating, Figure 3 shows a chart of US natural gas consumption by month. US natural gas is used for some (but not all) home heating. Natural gas is also used for electricity and industrial uses.

Figure 3. US natural gas consumption by month, based on US Energy Information Administration.

Figure 3. US natural gas consumption by month, based on US Energy Information Administration.

Clearly, natural gas consumption shows great variability, with peaks in usage during the winter. The challenge is to provide electrical supply that varies in a similar fashion, without using a lot of fossil fuels.

[4] If a family burns coal or natural gas directly for winter heat, but then switches to electric heat that is produced using the same fuel, the cost is likely to be higher. If there is a second change to a higher-cost type of electricity, the cost of heat will be even greater.  

There is a loss of energy when fossil fuels or biomass are burned and transformed into electricity. BP tries to correct for this in its data, by showing the amount of fuel that would need to be burned to produce this amount of electricity, assuming a conversion efficiency of 38%. Thus, the energy amounts shown by BP for nuclear, hydro, wind and solar don’t represent the amount of heat that they could make, if used to heat apartments or to cook food. Instead, they reflect an amount 2.6 times as much (=1/38%), which is the amount of fossil fuels that would need to be burned in order to produce this electricity.

As a result, if a household changes from heat based on burning coal directly, to heat from coal-based electricity, the change tends to be very expensive. The Wall Street Journal reports, Beijing’s Plan for Cleaner Heat Leaves Villagers Cold:

Despite electricity subsidies for residential consumers, villagers interviewed about their state-supplied heaters said their overall costs had risen substantially. Several said it costs around $300 to heat their homes for the winter, compared with about $200 with coal.

The underlying problem is that burning coal in a power plant produces a better, but more expensive, product. If this electricity is used for a process that coal cannot perform directly, such as allowing a new automobile production plant, then this higher cost is easily  absorbed by the economy. But if this higher-cost product simply provides a previously available service (heating) in a more expensive manner, it becomes a difficult cost for the economy to “digest.” It becomes a very expensive fix for China’s smog problem. It should be noted that this change works in the wrong direction from a CO2 perspective, because ultimately, more coal must be burned for heating because of the inefficiency of converting coal to electricity, and then using that electricity for heating.

How about later substituting wind electricity for coal-based electricity? China has a large number of wind turbines in the north of China standing idle.  One problem is the high cost of erecting transmission lines that would transport this electricity to urban centers such as Beijing. Also, if these wind turbines were put in place, existing coal plants would operate fewer hours, causing financial difficulties for these coal generating units. If these companies need subsidies in order to continue paying their ongoing expenses (including payroll and debt repayment), this would create a second additional cost. Electricity prices would need to be higher, to cover these costs as well. A family who had difficulty affording heat with coal-based electricity would have an even greater problem affording wind-based electricity.

Heat for cooking and heat for creating hot water are similar to heat for keeping an apartment warm. It is less expensive (both in energy terms and in cost to the consumer) if coal or natural gas is burned directly to produce the heat, than if electricity is used instead. This again, has to do with the conversion efficiency of turning fossil fuels to electricity.

[5] Low energy prices for the consumer are very important. Unfortunately, many analyses of the benefit of wind or of solar give a misleading impression of their true cost, when added to the electric grid. 

How should the cost of wind and solar be valued? Is it simply the cost of installing the wind turbines or solar panels? Or does it include all of the additional costs that an electricity delivery system must incur, if it is actually to incorporate this intermittent electricity into the electric grid system, and deliver it to customers where it is needed?

The standard answer, probably because it is easiest to compute, is that the cost is simply the cost (or energy cost) of the wind turbines or the solar panels themselves, plus perhaps an inverter. On this basis, wind and solar appear to be quite inexpensive. Many people have come to the conclusion that a transition to wind and solar might be helpful, based on this type of limited analysis.

Unfortunately, the situation is more complicated. Perhaps, the first few wind turbines and solar panels will not disturb the existing electrical grid system very much. But as more and more wind turbines or solar panels are added, there get to be additional costs. These include long distance transmission, electricity storage, and subsidies needed to keep backup electricity-generation in operation. When these costs are included, the actual total installed cost of delivering electricity gets to be far higher than the cost of the solar panels or wind turbines alone would suggest.

Energy researchers talk about the evaluation problem as being a “boundary issue.” What costs really need to be considered, when a decision is made as to whether it makes sense to add wind turbines or solar panels? Several other researchers and I feel that much broader boundaries are needed than are currently being used in most published analyses. We are making plans to write an academic article, explaining that current Energy Return on Energy Invested (EROEI) calculations cannot really be compared to fossil fuel EROEIs, because of boundary issues. Instead, “Point of Use” EROEIs are needed. For wind and solar, Point of Use EROEIs will vary with the particular application, depending on the extent of the changes required to accommodate wind or solar electricity. In general, they are likely to be far lower than currently published wind and solar EROEIs. In fact, for some applications, they may be less than 1:1.

A related topic is return on human labor. Return on human labor is equivalent to how much a typical worker can afford to buy with his wages. In [4], we saw a situation where the cost of heating a home seems to increase, as a transition is made from (a) burning coal for direct use in heating, to (b) using electricity created by burning coal, to (c) using electricity created by wind turbines. This pattern is eroding the buying power of workers. This direction ultimately leads to collapse; it is not the direction that an economy would generally intentionally follow. If wind and solar are truly to be helpful, they need to be inexpensive enough that they allow workers to buy more, rather than less, with their wages.

[6] If we want heat in the winter, and we are trying to use solar and wind, we need to somehow figure out a way to store electricity from summer to winter. Otherwise, we need to operate a double system at high cost.

Energy storage for electricity is often discussed, but this is generally with the idea of storing relatively small amounts of electricity, for relatively short periods, such as a few hours or few days. If our real need is to store electricity from summer to winter, this will not be nearly long enough.

In theory, it would be possible to greatly overbuild the wind and solar system relative to summer electricity needs, and then build a huge amount of batteries in order to store electricity created during the summer for use in the winter. This approach would no doubt be very expensive. There would likely be considerable energy loss in the stored batteries, besides the cost of the batteries themselves. We would also run the risk of exhausting resources needed for solar panels, wind turbines, and/or batteries.

A much more workable approach would be to burn fossil fuels for heat during the winter, because they can easily be stored. Biomass, such as wood, can also be stored until needed. But it is hard to find enough biomass for the whole world to burn for heating homes and for cooking, without cutting down an excessively large share of the world’s trees. This is a major reason why moving away from fossil fuels is likely to be very difficult.

[7] There are a few countries that use an unusually large share of electricity in their energy mixes today. These countries seem to be special cases that would be hard for other countries to emulate.

Data from BP Statistical Review of World Energy indicates that the following countries have the highest proportion of electricity in their energy mixes.

  • Sweden – 72.7%
  • Norway – 69.5%
  • Finland – 59.9%
  • Switzerland – 57.5%

These are all countries that have low population and a significant hydroelectric supply. I would expect that the hydroelectric power is very inexpensive to produce, especially if the dams were built years ago, and are now fully paid for. Sweden, Finland, and Switzerland also have electricity from nuclear providing about a third of each of their electricity supplies. This nuclear electricity was built long ago, and thus is now paid for as well. The geography of countries may also reduce the use of traffic by cars, thus reducing the portion of gasoline in their energy mixes. It would be difficult for other countries to create equivalently inexpensive large supplies of electricity.

In general, rich countries have higher electricity shares than poorer countries:

  • OECD Total – (Rich countries) – 2015 – 44.5%
  • Non- OECD (Less rich countries) – 2015 – 39.3%

China is an interesting example. Its share of energy use from electricity changed as follows from 1985 to 2015:

  • China – 1985 – 17.5%
  • China – 2015 – 43.6%

In 1985, China seems to have used most of its coal directly, rather than converting it for use as electricity. This was likely not difficult to do, because coal is easy to transport, and it can be used for many heating needs simply by burning it. Later, industrialization allowed for much more use of electricity. This explains the rise in its electricity ratio to 43.6% in 2015, which is almost as high as the rich country ratio of 44.5%. If the electricity ratio rises further, it will likely be because electricity is being put to use in ways where it has less of a cost advantage, or even has a cost disadvantage, such as for heating and cooking.

[8] Hydroelectric power is great for balancing wind and solar, but it is available in limited quantities. It too has intermittency problems, limiting how much it can be counted on. 

If we look at month-to-month hydroelectric generation in the US, we see that it too has intermittency problems. Its high month is May or June, when snow melts and sends hydroelectric output higher. It tends to be low in the fall and winter, so is not very helpful for filling the large gap in needed electricity in the winter.

Figure 4. US hydroelectric power by month, based on data of the US Energy Information Administration.

Figure 4. US hydroelectric power by month, based on data of the US Energy Information Administration.

It also has a problem with not being very large relative to our energy needs. Figure 5 shows how US hydro, or the combination of hydro plus solar plus wind (hydro+S+W), matches up with current natural gas consumption.

Figure 5. US consumption of natural gas compared to hydroelectric power and to compared to wind plus solar plus hydro (hydro+W+S), based on US Energy Information Administration data.

Figure 5. US consumption of natural gas compared to hydroelectric power and compared to hydro plus wind plus solar (hydro+W+S), based on US Energy Information Administration data.

Of course, the electricity amounts (hydro and hydro+S+W) are “grossed up” amounts, showing how much fossil fuel energy would be required to make those quantities of electricity. If we want to use the electricity for heating homes and offices, or for cooking, then we should compare the heat energy of natural gas with that of hydro and hydro+S+W. In that case, the hydro and hydro+S+W amounts would be lower, amounting to only 38% of the amounts shown.

This example shows how limited our consumption of hydro, solar, and wind is compared to our current consumption of natural gas. If we also want to replace oil and coal, we have an even bigger problem.

[9] If we need to get along without fossil fuels for electricity generation, we would have to depend greatly on hydroelectric power. Hydro tends to have considerable variability from year to year, making it hard to depend on.

Nature varies not just a little, but a lot, from year to year. Hydro looks like a big stable piece of the total in Figures 1 and 2 that might be used for balancing wind and solar’s intermittency, but when a person looks at the year by year data, it is clear that the hydro amounts are quite variable at the country level.

Figure 3. Electricity generated by hydroelectric for six large European countries based on BP 2016 Statistical Review of World Energy.

Figure 6. Electricity generated by hydroelectric for six large European countries based on BP 2016 Statistical Review of World Energy.

In fact, hydroelectric power is even variable for larger groupings, such as the six countries in Figure 6 combined, and some larger countries with higher total hydroelectric generation.

Figure 4. Hydroelectricity generated by some larger countries, and by the six European countries in Figure 3 combined.

Figure 7. Hydroelectricity generated by some larger countries, and by the six European countries in Figure 6 combined, based on BP 2016 Statistical Review of World Energy.

What we learn from Figures 6 and 7 is that even if a great deal of long distance transmission is used, hydro will be variable from year to year. In fact, the variability will be greater than shown on these charts, because the quantity of hydro available tends to be highest in the spring, and is often much lower during the rest of the year. (See Figure 4 for US hydro.) So, if a country wants to depend on hydro as its primary source of electricity, that country must set its expectations quite low in terms of what it can really count on.

And, of course, Saudi Arabia and several other Middle Eastern countries don’t have any hydroelectric power at all. Middle Eastern countries tend not to have biomass, either. So if these countries choose to use wind and solar to assist in electrical generation, and want to balance their intermittency with something else, they pretty much need to use something that is locally available, such as natural gas. Other countries with very low amounts of hydro (or none at all) include Algeria, Australia, Bangladesh, Denmark, Netherlands, and South Africa.

These issues provide further reasons why countries will want to continue using fossil fuels, and perhaps nuclear, if they can.

[10] There has been a misunderstanding regarding the nature of our energy problem. Many people believe that we will “run out” of fossil fuels, or that the price of oil and other fuels will rise very high. In fact, our problem seems to be one of affordability: energy prices don’t rise high enough to cover the rising cost of producing electricity and other energy products. Adding wind and solar tends to make the problem of low commodity prices worse.   

Ultimately, consumers can purchase only what their wages will allow them to purchase. Rising debt can help as well, for a while, but this has limits. As a result, lack of wage growth translates to a lack of growth in commodity prices, even if the cost of producing these commodities is rising. This is the opposite of what most people expect; most people have never considered the possibility that peak energy will come from low prices for all types of energy products, including uranium. Thus, we seem to be facing peak energy demand (represented as low prices), arising from a lack of affordability.

We can see the problem in the example of the Beijing family with a rising cost of heating its apartment. Economists would like to think that rising costs translate to rising wages, but this is not the case. If rising costs are the result of diminishing returns (for example, coal is from deeper, thinner coal seams), the impact is similar to growing inefficiency. The inefficient sector needs more workers and more resources, leaving fewer resources and workers for other more efficient sectors. The result is an economy that tends to contract because of growing inefficiency.

If we want to operate a double system, using wind and solar when it is available, and using fossil fuels at other times, the cost will be very high. The problem arises because the fossil fuel system has many fixed costs. For example, coal mines and natural gas companies need to continue to pay interest on their loans, or they will default. Pipelines need to operate 365 days per year, regardless of whether they are actually full. The question is how to get enough funding for this double system.

One pricing system for electricity that doesn’t work well is the “market pricing system” based on each producer’s marginal costs of production. Wind and solar are subsidized, so they tend to have negative marginal costs of production. It is impossible for any other type of electricity producer to compete in this system. It is well known that this system does not produce enough revenue to maintain the whole system.

Sometimes, additional “capacity payments” are auctioned off, to try to fix the problem of inadequate total wholesale electricity prices. If we believe the World Nuclear Organization, even these charges are not enough. Several US nuclear power plants are scheduled for closing, indirectly because this pricing methodology is making older nuclear power plants unprofitable. Natural gas prices have also been too low for producers in recent years. This electricity pricing methodology is one of the reasons for this problem as well, in my opinion.

A different pricing system that works much better in our current situation is the utility pricing system, or “cost plus” pricing. In this system, prices are determined by regulators, based on a review of all necessary costs, including appropriate profit margins for producers. In the case of a double system, it allows prices to be high enough to cover all the needed costs, including the extra long distance transmission lines, plus all of the high fixed costs of fossil fuel and nuclear power plants, operating for fewer hours per year.

Of course, these much higher electricity rates eventually will become unaffordable for the consumer, leading to a cutback in purchases. If enough of these cutbacks in purchases occur, the result will be recession. But at least the electricity system doesn’t fail at an early date because of inadequate profits for its producers.

Conclusion

The possibility of making a transition to an all-renewables system seems virtually impossible, for the reasons I have outlined above. I have outlined many other issues in previous posts:

The topic doesn’t seem to go away, because it is appealing to have a “solution” to what seems to be a predicament with no solution. In a way, wind and solar are like a high-cost placebo. If we give these to the economy, at least people will think we are treating the problem, and maybe our climate problem will get a little better.

Meanwhile, we find more and more real life problems with intermittent renewables. Australia has had a series of blackouts. A several-hour blackout in South Australia was tied partly to the high level of intermittent energy on the grid. The ways of reducing future recurrences appear to be very expensive.

Antonio Turiel has written about the problems that Spain is encountering. Spain added large amounts of wind and solar, but these have not been available during a recent cold spell. It added gas by pipeline from Algeria, but now Algeria has cut back on the amount it is supplying. It has added transmission lines north to France. Now, Turiel is concerned that Spain’s electricity prices will be persistently higher, because he believes that France has not taken sufficient preparations to meet its own electricity needs. If there were little interconnectivity between countries, France’s electricity problems would stay in France, rather than adversely affecting its neighbors. A person begins to wonder: Can transmission lines have an adverse impact on new electricity supply? If a country can hope that “the market” will supply electricity from elsewhere, does that country take adequate steps to provide its own electricity?

In my opinion, the time has come to move away from believing that everything that is called “renewable” is helpful to the system. We now have real information on how expensive wind and solar are, when indirect costs are included. Unfortunately, in the real world, high-cost is ultimately a deal killer, because wages don’t rise at the same time. We need to understand where we really are, not live in a fairy tale world produced by politicians who would like us to believe that the situation is under control.

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to inadequate supply.
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2,531 Responses to The “Wind and Solar Will Save Us” Delusion

  1. the eu was created on the back of trade and growing prosperity in the 50s and 60s.
    that is the critical factor that everyone chooses to ignore—it was the upslope of collective wealth

    if that slope could have go up forever, the eu would not be in trouble

    as it is, the slope is now downwards, but everyone is convinced the all we have to do is vote for it to tick upwards again

    it’s nothing to do within politics, it has everything to do with increasing poverty, because of the end of cheap surplus energy

    • True, but the evidently increasing poverty made the dominant political class sort of more naked, they are easier to be hated, later ignored and rolled over..

      That being said, and piggybacking on the what I posted above, what are these children going to do when finally entering the halls of power, the globalist interests sit them down, “ehm, congrats to your elections results, but we have a little problem here, if you don’t continue to sign on these debts here and here, the next day everything stops, food, oil, .., and pitchforks in streets but now against you fools! “

      • the denial factor that drives the majority convinces them that prosperity is just a matter of putting the cross against the right name on the ballot paper.

        Why?

        Because this is what has worked in the past—so must work in the future,
        So the political promises get more bizarre and improbable as poverty intensifies, and thus you get fas-cists of every stripe getting elected.

        Eventually that system breaks down but not before a lot of misery and mayhem kicks off

        • Agree, but look, we are getting into some staircase style collapse discussion here!
          Hah.

          • doomphd says:

            time was, assuming you were a carnivore or omnivore, you enjoyed the occasional pheasant or quail dinner, and perhaps some wild rabbit or venison. nowadays, you usually have to enjoy factory-farmed chicken, pork or beef, sheep.

            so, I figure we’ll have no problem adjusting to boiled or slow-roasted rat, with some nice insect recipes being passed around.

            lots of available protein, assuming you can stomach it. after all, humans are so adaptable!

            • WhatCreatureIsAmongUs says:

              “lots of available protein, assuming you can stomach it. after all, humans are so adaptable!”

              Fixed it for you. Wrong “able”.

              lots of available protein, assuming you can stomach it. after all, humans are so palatable!

            • DJ says:

              Google says 19 billion rats. We will quickly run out of rats.

              Best chance is long pork until population can be sustained on organic potato and legume farming.

            • hkeithhenson says:

              ” long pork”

              Easter Island really did have a collapse, possibly from 20,000 down to one or two thousand. The time line is really hard to read, but the collapse might have taken a generation or two. Not much has come down from those days, but one story is that a taunt was to yell at the opposing warrior “The flesh of your mother sticks between my teeth.”

              A collapse of that intensity would take the world population from ~10 B down to one B.

              Is the world so closely coupled that it could all go down at once? I don’t know. We have been working to make it that way, but the world is far from a mono culture. The wild card is high technology. Nanotechnology, for example, would result in very cheap solar and storage as well. Advanced AI would allow much faster investigation of technologies and charting what side effects they are expected to have. We are not that far away from being able to build stuff out of diamond. When that happens, there may be another climate crisis as too much CO2 gets sucked out of the air.

              It could go either way.

              But there is no point in being pessimistic when you can work on solving the problems.

            • Babakaput says:

              “But there is no point in being pessimistic when you can work on solving the problems”
              Yes like how to make dental floss post collapse.

    • Agreed. We have cheap oil back then. We could add a whole lot of infrastructure. Now we have trouble even keeping the infrastructure repaired.

  2. Dr Fast Eddy says:

    This is a really interesting visual posted by psile…. for those who are complacent…

    • psile says:

      The current excuse of “low prices slashing exploration” is nonsense when you realise that discoveries peaked over 50 years ago and have been declining remorselessly ever since. The drawbacks of living on a finite planet…

      Even when the price of oil spiked to $147 way back in 2008, and then, despite all the free money thrown at the industry from 2009 until now, blowing one of the biggest bubbles ever, and saw oil back above $100 for a protracted period of time, the “journey of discovery” has continued to grow grimmer.

      • Greg Machala says:

        Exactly! Folks just ignore this convenient truth that the discoveries that matter are the ones made 40 to 70 years ago. All the hype about massive shale discoveries are just a blip. I would be more hopeful if in 2008 (when oil prices reached record highs) the bars on this graph equalled the discoveries of the 1970’s. But, that did not happen and the economy global economy collapsed in 2008 overnight. There would have been tanks in the streets in 2008 if it were not for the unprecedented global money creation. How little most people read about the 2008 collapse and realize just how close we came to all out Armageddon. And that happened nearly overnight. We are floating on the most massive debt bubble in history that is backed by energy and this graph shows you we have no oil in the bank now or anytime in the near future.

        • Rodster says:

          “There would have been tanks in the streets in 2008 if it were not for the unprecedented global money creation.” How little most people read about the 2008 collapse and realize just how close we came to all out Armageddon.

          Indeed, those were the words of Hank Paulson to then President George Bush if they had not bailed out the banks. And let’s not forget when the biggest player collapses, so will everyone else. There will be no winners. We are getting closer to the Eastern Island scenario.

        • Dr Fast Eddy says:

          ++++++

          Recall The Big Short – Steve Eisman character — upon realizing the scale of the problem — and even though it means he will make a fortune — turns very sombre… and says something to the effect that this is the end of the world…

          The central banks of course stepped to hold the wall a little longer… but Eisman was right — that was the beginning of the end

          It would be interesting to speak to him and Burry and Bass…. completely off the record … and see what they think now

  3. Dr Fast Eddy says:

    Singapore banks’ problem with oil and gas services firms has just stepped up a notch.Pain from distressed loans to offshore energy companies dominated Oversea-Chinese Banking Corp.’s earnings call Tuesday and will probably be a hot topic when DBS Group Holdings Ltd. reports its own numbers Thursday. OCBC Chief Executive Officer Samuel Tsien repeated several times that he can’t guarantee the worst is over.

    https://www.bloomberg.com/gadfly/articles/2017-02-15/collateral-damage-in-singapore

    IDIOTS! Didn’t they know that making loans to shale companies is the only safe bet in this turbulent market???????

    Glenn — you should package yourself as a consultant – these banks NEED you

    • These things tend to start out slowly, and get worse. At this point, things are not a big enough problem that they become front page news stories.

      • Greg Machala says:

        Kind of like magma under a volcano. It is a bit buried under the surface. The scientist know it is there but the people are delusional and build homes right by the darn thing. The same story with oceans and areas of wildfire danger. Collectively we really do have only two modes: complacency (brought about by delusion) and then panic (when things blow up).

  4. Interguru says:

    Peak affordable oil
    Peak water
    Peak fertilizer
    Peak topsoil
    But not peak comments

  5. adonis says:

    if the elites did have a masterplan to survive the end of BAU then this is what it would look like read about ‘alternative 2′ at the following link remember an open mind is required for this type of knowledge some of the opinions on aliens can be treated as’hogwash’ but the information on ‘alternative 2’ seems plausible and would validate the reasons why 911,invasion of iraq,libya etc and all the ‘ can kicking’ of our financial system had to occur to give the elites more time to prepare for the ‘inevitable its all about survival of the human race and the survivors would only amount to a low number. http://www.theforbiddenknowledge.com/hardtruth/alternatatives123.htm

  6. jerry says:

    When a bank such as HSBC starts talking peak oil you know the writing is on the wall. This is an important piece of journalism and the report by HSBC WOW. Imagine we need 4 Saudi Arabia’s just to stay flat!!!!! This is what they are saying now – a major international bank!!!! Must read!!!!!!
    View story at Medium.com

    • Greg Machala says:

      WOW! This may really be it. I just don’t see how we make it to 2020 without this party coming to a grinding halt. I have been fearful of not making it to 2020 for a while now. I am with Fast Eddy I just don’t want dear BAU to end but in my mind I know it must end.

      • Greg Machala says:

        I really liked this quote:
        “That means a global oil squeeze could end up having a dramatic impact on continued demand for oil, as twin crises of ‘peak oil’ and ‘peak demand’ end up intensifying and interacting in unfamiliar ways.” – We are in uncharted territory.

      • ITEOTWAWKI says:

        Same here Greg, I can’t see how we get past 2020…the small consolation is we won’t have to suffer the end of BAU too long as we will drop like flies when it happens…

        • kurt says:

          Summer of 2020 has been my prediction for quite some time.

          • ITEOTWAWKI says:

            I’m pretty much in the same range as you. Since around 2012, I have been thinking to myself that I probably won’t see my 50th birthday because of the collapse of BAU…I was born in 1971…

            • Greg Machala says:

              If you would have told me 15 years ago I would be talking like this I would have thought you were crazy. It is amazing how ignorant I was and how long it has taken me to fully understand how the system works.

            • Dr Fast Eddy says:

              I remember — must be well over 10 years ago now — I kept seeing ‘the most important presentation you will ever see’ from what I thought must be some crazy old guy:

              I ignored it…. then one day I clicked it…. and I watched this

              And so it began….

            • Greg Machala says:

              Every now and then there is a person (usual very old) that is not just intelligent but, can explain complex things in very simple terms. That is an incredibly under-appreciated talent a person can have. Albert Bartlett was such a person. I admire the man for having the tenacity to tell the truth about our predicament and do it in mathematical terms. Gail also has that same unique gift. I too watched Albert’s video many years ago. I was already deep into the 911 conspiracy (given my engineering background, I never believed those building collapsed into their own footprints naturally). So, I just kept following the rabbit hole deeper and deeper and learned why 911 had to happen sooner or later to keep America in the thick of the cheap energy game. I graduated now to accepting that my life and all the luxuries I grew up with are really ill-gotten and artificial gains from a finite source of fuel. I realize how truly brief a period of time the industrial revolution will encompass in the 200,000 year existence of humans on this planet. I am thankful to have lived at the height of human existence on this finite planet. I don’t regret learning the hard facts of the real world of life on Earth. I am a scientist by nature and I want to know the truth and understand how things work without any assumptions or delusion.

            • Joebanana says:

              It is interesting to read how people here became aware of the big picture. It was the 2008 financial crisis for me, and trying to understand the economic system better. I expect there are a few here that thought after some research to buy gold, silver, and junior mining stocks, wait for economic collapse and reset to become a rich guy.

              After that it was prepping and supplies but learning more and more about energy issues. It was not until getting my head around energy that things started to make more sense.

              *Big* downer.

            • Dr Fast Eddy says:

              Joe – the journey is not complete until you realize that prepping is futile….

            • Ert says:

              @joebanana

              Did you also pick up gardening at some point?

              I wonder about the Martenson folks (over at Peak-Prosperity)… still sells that there is a easy way out and that you can be financially prepared…. have gold, silver, your own little homestead or house with a garden – and survive well when everything falls to pieces.

              May happen if we have a slow grinding. Have still to get the water well – but thats it. Water, some food, some wood, some skills. Hope for the system to go as long as possible and try to invest less hope and fear into preparedness stuff. It was quite a heavy burden on my mood / soul.

              At some point I wonder if Martenson has really understood what he preaches – or If he is now financially depended on his PP business?! Still… doing something and connecting to people is a cure in itself… so it is good what he does for the people who believe that there may be a way…

              Best
              Ert

            • Joebanana says:

              @Ert-

              I started gardening in 2000 for tomatoes but yes, 2008 got me into it big time for security reasons. There is plenty of water here but a dug well is something I plan on doing this spring and it is pretty much the last thing I need for convenience.

              I think Martinson is on the right rack with connecting people together and good luck to him in his endeavours. It might be pointless in the long run but building community is good. I don’t know if he gets the big picture but I suspect he does and sees no point in changing at this point.

              I’ve been investing in very high end tools, nothing electric or requiring fuel, in the chance that my boys will have them as well as getting them into blacksmithing, masonry and carpentry. Guns too of course. One of them is a great musician and plays pipes, fiddle and piano. If it were ever possible to survive what is coming people will long for music. He played for a dance this past Saturday and it was such a great time. But knowing what we know you look at everyone so happy and think about what is coming. I know what you mean about the burden on your soul.

              We are having a big party here tomorrow with plenty of Cape Breton fiddlers, piano players and liquor! Fast E might have heard of our music here. Don’t I wish the people on this site could be here.

              God Bless you Ert.

            • ITEOTWAWKI says:

              I think many of us here who get that we are nearing the end of BAU, the realization has come through a process of discovery and deep curiosity. Like many, my starting point was the GFC in 2008. During 2009 as I was reading about what happened, I found out, like someone mentioned in an earlier post, that we came very close to Armageddon: there was a credit freeze, cargo ships were at a standstill because they were worried that the credit notes would not be honored once the goods were delivered. And this is also where I learned what JIT was, and that EVERYTHING uses JIT logistics, including food delivery. Then in the fall of 2009 I saw Bartlett’s video and also the documentary Collapse with Michael Ruppert. That documentary opened my horizons, and I proceeded to watch all the Peak Oil documentaries from circa 2005…and that made me understand that our whole Industrial Civ is underpinned by one master resource: COVENTIONAL oil….NOT that gook from Alberta or Shale from the States. As I went deeper into the rabbit hole, I found this blog around 2011…Economic Undertow is another excellent one. In 2013, I read Tim Morgan’s excellent Perfect Storm report when he was still with Tullett Prebon, and also Norman Pagett’s End of More…and as you read all this you slowly come to the realization that this is unsustainable, but at the same time without BAU, we cease to exist. Anyway, like Greg said I am happy that I found out about all this…now I live my life taking advantage of every moment..and I am also aware that my short life here will have been better than 99.9% of all humans that have come before me in the last 200k years or so that we have been around and for that I consider myself very lucky!!

            • Froggman says:

              This whole comment chain is just filled with some great comments, thank you all for sharing.

              I was blindsided in 2008, working as a city planner in Florida in the heart of the housing boom. It was crazy, subdivisions going up everywhere, house values going up double digit percentages in a year. Stupid me bought the hype and figured this was the new normal.

              After that delusion was shattered I started thinking for myself: read zerohedge, found Bartlett, McPherson, oil drum, peak oil. Left Florida for a climate with better odds, started prepping, farming, etc. And now here I am.

            • InAlaska says:

              Been doing this since 2006. Even though it probably won’t make a difference in the long run, it still feels good to be prepped.

            • el mar says:

              40 years ago, when I was 18, at school, I draw a picture of a fish called “capitalism” who ate a smaller fish called “socialism”. Behind the “capitalism fish” I draw a bigger fish called “finite world” who ate both of the other two fish.
              Since that time I am an outsider.

            • el mar says:

              I wrote this in 2002 in german language:

              Bedingt durch den Globalisierungsdruck, Überkapazitäten, Sparzwang und Käuferstreik wird die Deflation in den nächsten Jahren unser Wirtschaftssystem bedrohen. Die Preise Fallen und Arbeit wird immer billiger und knapper mit den entsprechenden Folgen für die Sozialsysteme. Später, wenn die die Staatspleite akut wird und der Preisdruck von der Rohstoffseite zunimmt (vor allem durch knappes Öl), geht die Deflation wahrscheinlich in Inflation über.

              Wer z.B. ein Haus kaufen will, sollte (wenn ich recht hätte) jetzt sein Pulver trocken halten. (Wer zu früh kauft, den bestraft das Sonderangebot). In wenigen Jahren würde der Markt dann mit Immobilien überschwemmt, weil überschuldete Häuslebauer zu jedem Preis verkaufen müssten. Wenn dann die Inflation kommt, können Immobilien Werte konservieren. Gold wäre auch eine Alternative (wenn es noch was nutzt)!

              Das aufeinander folgen von Deflation und Inflation ist vor dem zweiten Weltkrieg schon einmal ähnlich abgelaufen. Es muss keinen neuen Weltkrieg geben aber wir werden wahrscheinlich Bundeswehreinsätze im Inneren sehen, wenn” die Systeme” nicht mehr tragen und der bürgerliche Mittelstand in Existenzpanik gerät. Die Bürgerüberwachung wird ja schon aufgerüstet. Ebenso die Einlullung der Menschen durch” Tittiytainment”, Medientrash, Schönfärberei und Massenverfettungswaffen”.

              Was sich nicht bestimmen lässt ist das Timing der Entwicklung. Der Deflations-Tanker ist noch träge und die Schuldeneinheizer kommen mit dem feuern noch nach, aber von einem bestimmten Punkt an, könnten sich die Ereignisse überschlagen.

              Die Chinesen arbeiten für ca. 70 Cent die Stunde, sie kennen kaum soziale Absicherung und Umweltstandards. Diese Kosten-Schere können wir durch Reformen nicht (auch nicht annähernd) schließen. Die Reförmchen wirkten wie eine Fahrradbremse am ICE.

              Wir befinden uns in einer Zwickmühle, in die wohl jede sich entwickelnde Gesellschaft auf Dauer gerät (wie schon die alten Römer). Marktwirtschaftliche Systeme benötigen durch den Zinsdruck (man muss immer mehr zurückzahlen als man sich geliehen hat) ständiges Wachstum. Ständiges Wachstum frisst sich jedoch am Ende selbst, oder stößt an Grenzen. Es gilt das universelle Gesetz des abnehmenden Grenznutzens. Ob beim Bierkonsum oder beim Wirtschaftswachstum, irgendwann kommt der Kater. Auch Kebszellen, die sich in ihrem Wirt exponentiell wachsen, werden am Ende Oper ihres Wuchers. Es gibt Grenzen für alles. So ist es logisch, dass die Schwellenländer mehr Wachstumspotential haben als das ausgewachsene Deutschland. Mein 8-jähriger Sohn hat auch mehr Wachstumspotential als ich. Weil wir jetzt offensichtlich Grenzen erreicht haben, was die Verschuldung und den Umfang der Sozialsysteme angeht, werden Reformen angemahnt. Ohne drastische Reformen crashen die Systeme wird zu Recht festgestellt. Doch durch drastische Reformen wird der Kreislauf ebenfalls abgewürgt. Denn wenn in Deutschland alles” halbiert” wird, können die Systeme (Renten, Gesundheit, Arbeitslosen- und Sozialhilfe) nicht überleben. Die Haushalte von Bund, Ländern, Gemeinden, Unternehmen und Privatpersonen würden ebenfalls zusammenbrechen. So haben alle irgendwie Recht. Es stimmt, dass wir sparen müssen und Kosten senken sollten, es stimmt allerdings auch, dass Autos keine Autos kaufen. Es stimmt nach Keynes, dass der Staat in Schwächphasen als Ersatznachfrager Schulden aufnehmen und investieren sollte um Deflation zu verhindern. Es stimmt aber auch, dass uns die Schulden und die Zinsen längst erdrücken. Ich befürchte, es gibt keine Lösungen außer drastischer Kontraktion und Systemzusammenbrüchen bedingt durch die” normative Kraft des Faktischen”. Der Prozess läuft bereits und hat den” point of no return” wohl schon überschritten.

              Die Demografie (Kindermangel) wirkt als Multiplikator ebenso wie unserer Rohstoffabhängigkeit und der Verfall unseres Innovations-Vorsprungs. Umweltverramschung und Plünderungskosten kommen hinzu. Aber auch dies sind Kosten, die noch auf die Zukunft abgewälzt werden können und bisher schwerpunktmäßig in anderen Kontinenten entstehen.

              Viele Arbeitsplätze in Deutschland stehen an der Klippe. Da reichen 4-5 Jahre Deflation um die Lichter auszublasen. Bei vielen geht es auch noch schneller. Die industrielle Basis und somit das Rückgrat unserer Wertschöpfungskette wird mit der Abrissbirne behandelt. Besuchen Sie z.B. in einen Baumarkt und schauen sie was da noch” made in Germany” ist. Beinahe jeden Tag hört man von Firmenverlagerungen und Stellenkürzungen.

              Ich berate z.B. Bäckereifilialisten. Selbst Teiglinge für Brötchen werden inzwischen aus Polen importiert und hier verramscht. Auch wenn der Geiz ist geil – Wahnsinn nachlässt, der Sparzwang wird bleiben. Wir werden am Standort Deutschland nicht billig produzieren können. Die vorhandenen, für unser Wirtschaft notwendigen Strukturen und Lebenshaltungskosten lassen das nicht zu, auch wenn wir den Gürtel enger schnallen. Wenn sich gleichzeitig die Innovationsfähigkeit weltweit nivelliert, werden die Wohltandniveaus anpassen. Wer dabei von unten kommt hat damit kaum Probleme. Eine drastische Anpassung nach unten, wie sie für Deutschland und andere westliche Länder ansteht, beinhaltet das Rsiko von Verwerfungen.

              Wenn der Staat sich nicht seit vielen Jahren exponentiell verschulden würde (es handelt sich dabei um ein Kettenbriefsystem), um das wachsende Wertschöpfungsdefizit auszugleichen, wäre längst Schluss mit lustig. So konnte das böse Erwachen seit vielen Jahren in die Zukunft verlagert werden wobei sich die Fallhöhe ständig vergrößert, bis der Zinseszinseffekt am Ende seine Sprengkraft entfaltet. Die angehäuften Schulden werden wohl niemals zurückgezahlt und deshalb wird es einer meiner Meinung nach mit einer Inflation enden. Wir haben einen langen Boom hinter uns, der mit der New-Economie-Manie endetet. Die Folgen sind noch nicht annähernd verarbeitet. Die Wirtschaft wird weiterhin, auch in den USA, künstlich am Leben erhalten. Dort wurde die Geldpresse bereits angeworfen. Die Amerikaner kaufen vor allen in Japan und China dinge die sich nicht brauen, mit Geld das sie nicht haben. Die Folge ist ein gigantisches Außenhandelsdefizit der Amerikaner. Zum Ausgleich und um den Kreislauf aufrecht zu halten kaufen China und Japan amerikanische Staatsanleihen. Aber die Käufe reichen längst nicht mehr, was den Dollar unter Druck setzt. Auch hier handelt es sich um ein Kettenbriefsystem mit Verfallsdatum. Kommt diese Pumpe zum Stillstand, könnte dies auch der noch fehlende Trigge für den Knock-out in Europa bedeuten.
              Was wir jetzt z.B. an den Börsen sehen ist eine Echo-Rallye, getrieben durch die” Schön-Wetter-Generationen”, die sich außer ständigen Wohlstandsvermehrungen und Depotzuwächsen, unterbrochen von kleine” Konsolidierungen” nichts anderes (schon gar keinen Kondratieff Winter) vorstellen können.

              Ausgang ungewiss aber wenig wird bleiben wie es ist!

              Vielleicht ist Abschottung auf niedrigerem Niveau eine Lösung – aber auch dieser Gedanke gefällt mir nicht. Besser wären Lösungen im Weltmaßstab – aber wir bekommen ja nicht mal unsere Bundesländer unter eine Decke.
              Die USA suchen die Lösung aus Notwehr inzwischen in geopolitischen Kriegen. Es geht also schon ums” Eingemachte”. Das werden wir auch bald noch viel stärker spüren.

              Dies ist nur meine persönliche Einschätzung. Manchmal passieren zum Glück Dinge, auch positive, mit denen man nicht rechnet.

              So hoffe ich auf das Gute und befürchte das Schlimmste

            • Ert says:

              @joebanana

              Thanks for your personal reply. As there are so many things to pick up from your answer I will limit me this this one – that directly emotionally connected with me:

              But knowing what we know you look at everyone so happy and think about what is coming. I know what you mean about the burden on your soul.

              I have thoughts/feelings this sometimes, too. Especially if I see happy kids – or even babies. Thats probably also some of the reason I stopped any meaningful kind of ‘prepping’, which I did a lot from 2009-2013. ‘Prepping’ in that sense constantly reminds me on the predicament I imagine ‘us’ taking…. and this constant, every day reminder – is very hard to live with for me.

              And for me all the thoughts which are behind my prepping motivation even disconnect me from the people around… as these fearful? thoughts are nothing most people want to hear or discuss or even let in their conscious mind. Being an INTJ (Meyers Briggs) / Enneagramm Type 1 doesn’t make the whole story simpler…

              All my best wishes to you, joe!

            • Rainydays says:

              I started to work in the oil industry around 2007 and the price of oil was skyrocketing. I started to investigate why this was the case and quickly found my way in to peak oil, LTG, Maltheus, TOD, JHK, Tainter and all that. I understood how the society revolved around petroleum and the finiteness of it all.

              It was a big downer at first, but it has taught me to live fully and be thankful for each day. Some would say ignorance is bliss, but I say nay, if I did not know of our predicament I would still be grinding it out, accumulating “wealth” and planning 40 years ahead. Those people are really wasting their lives.

            • Ert says:

              @el mar

              Good text, especially as it was written 15 years ago. At that time I was in my happy bubble of no economic knowledge…

              In regard to that text: Currently it seems that inflation picks up. All producer price indexes jump up. The central banks have made clear that they will prep everything, buy everything up, etc. pp. If no one collapses its hard to kick the next crisis which pushes a lot of people over the corner…. hence deflation…

              Do you see for your part (sustained) inflation coming? Or is that what we see only a straw fire – since the next (deflationary) crisis cycle is long overdue – and will hit us in the next 1-3 years? I mean we are in kind of a twilight zone… some assets in some locations are in a inflationary bubble – other and the price of paid work is in kind of a stagflation or under deflationary pressure.

            • Ert says:

              @rainydays
              if I did not know of our predicament I would still be grinding it out, accumulating “wealth” and planning 40 years ahead. Those people are really wasting their lives.

              I can’t (and won’t) judge the ‘wasting part’, as this give people meaning or sense – but I agree with your sentence to the fullest – and in a sense that I am ‘still’ glad that I figured out the things we discuss here at OFW.

              It certainly is and was a life changer… not an simple or easy one for sure. Often still a heavy burden for me – at least it feels that way. But it also brought me to a different understanding, feed much time for other (personal) development.

            • el mar says:

              @Ert
              I see no sustained inflation coming. We are in a Deflation-Spiral and finally just a short crack up boom as soon as confidence in fiat money disappears and everybody rushes to the excits.

            • DJ says:

              Ert,
              Is it possible to be a collapsniak and anything else than INTJ?

            • Ert says:

              @DJ

              Yes, the other IN-Types regarding to this little survey: http://www.doomsteaddiner.net/blog/tag/personality/. But an INTJ is surly a high ‘burden’ in the aspect of being a ‘collapsniak’… and it doesn’t make it simpler to deeply connect with others or oneself.

              On a positive side: There are not much doubts, once a INTJ sums up the (available) data and comes to a conclusion….. 😉

            • Ert says:

              @elmar

              Thanks for the reply. I hope the crack-up boom is still some years away….. there is surly enough money around that looks for things to buy. But I see a lot of classical investments as even more problematic in the time after the crack-up boom… they may become a more of a burden… because all investments which require a constant input of money (taxes, regulations, up-keeping) can put financial stress on oneself if there is no or not enough revenue from those assets in the depression phase after the crack-up boom.

              And If I take that what we discuss here for granted… then the chance of another boom-and-expansion phase that may last another 5-10 years is very low….

            • DJ says:

              “all investments which require a constant input of money (taxes, regulations, up-keeping)”

              How convenient it must be to be an instadoomer who can disregard things like that. We declineists are prepared for years when things become less and less affordable. And worst are sunk costs that demands maintainance and taxes.

            • Chris Harries says:

              I’ve never met any economist – not even a radical, alternative one – who can nut out a future world economy that stays afloat without sustained growth. Is the only alternative to growth collapse? In the short term it seems so because the financial bubble that’s built on returns to investors would burst with a very loud BANG! – resulting in quite dramatic repercussions all around the world

              Here is a current article that talks about a ‘circular economy’. Worth a read even if it may be clutching at straws. http://www.resilience.org/stories/2017-02-16/the-circular-economy-is-it-the-solution-to-resource-depletion-and-pollution/

        • Chris Harries says:

          It’s so risky picking a date, all the same. In the past I nominated around 2014 when things would most likely go belly up, especially on the oil front and the EU falling apart financially. Big systems have unexpected resilience… until, of course, they get to a critical breaking point. In the staircase crash model we will just see a major symptom here and another symptom there, like the sudden movement of millions of people fleeing their home states in order to find refuge elsewhere. Like world extreme temperature records being repeatedly broken. Like Brexit and Trump. A hurtling train coming off the rails in slow motion, albeit we onlookers knowing that there’s no chance that it can get back on once the wheels have left the tracks.

          • doomphd says:

            prepping is like that ship’s hand in The Perfect Storm that swims like mad in the upside down, sinking boat to reach an internal hold with a big air bubble. he looks around, safe for now, while the boat continues to dive and the water gushes in.

            the best that can be said for prepping is it buys you some time to figure your next gambit. who knows, how lucky can you get?

            • Ert says:

              the best that can be said for prepping is it buys you some time to figure your next gambit. who knows, how lucky can you get?

              Isn’t it always that way? The doings of every day, week, month and year buy us some time to figure out the next round? In that understanding prepping would be a bit like planting seeds. You don’t know how the weather will develop, how the harvest will be…. but if you hadn’t planted the seeds one thing will be for sure: There will be no harvest…

    • Dr Fast Eddy says:

      HSBC doesn’t know that Shale will provide unlimited cheap oil …. it’s a closely guarded secret….

      If the analysts would join the 50 Buck Club…. they’d get access to information that proves this.

      • Duncan Idaho says:

        The Bakken and the Eagle Ford are in the rear view mirror.
        The Permian is still marginally profitable (most are conventional plays) in a few sweet spots.
        Things will be getting even more interesting soon.

        • As we posted the data few days ago of the basic run scenario, Permian is supposedly able to keep the gently sloping plateau for next ~4-5yrs or ~7yrs in outlier case of both elevated price and growing economy. After that the US should be revealed as no more domestic energy independent entity by any stretch of imagination or propaganda.

          However, that’s lot of time as even before that theoretical threshold, say in next 3-4yrs we can get some serious war (Asia, ME, Europe) or wave of revolutions or market crash or some combination, and who is going to be thinking about some Permian again as providing signal for the final hours of BAU then..

  7. Christian says:

    Where can I find actual US ntagas end user prices?

    • This link is where you can find numbers. Monthly http://www.eia.gov/dnav/ng/ng_pri_sum_dcu_nus_m.htm
      Annual: http://www.eia.gov/dnav/ng/ng_pri_sum_dcu_nus_m.htm

      The natural gas producers are really unhappy about how low oil prices are. This is a major reason for their LNG export plans.

      • Christian says:

        Thanks. It’s bizarre prices go down in winter, when it’s colder

        • With respect to gasoline, prices go down in winter because in winter we can utilize short-chain hydrocarbons in the gasoline mix. These short chain hydrocarbons would simply evaporate in warm weather. They are therefore stripped out of the supply, and stored for winter use.

          These short chain hydrocarbons (more like NGLs) are much cheaper than the longer chains that have to be used in the summer. So we end up with a short supply in summer, consisting of a higher-priced product. In winter, we end up with a larger supply, including a share of a lower-priced product that cannot be used in summer.

          • hkeithhenson says:

            Gail is right. Specifically, it’s butane, C4H10. Winter gasoline can be up to 40% butane. Or at least that was the situation when I was spending a lot of time in a refinery in the late 70s. If you drive by a refinery, the spherical tanks are used to store butane under pressure.

    • Thanks! The only area that has really been doing well is the Permian Basin.

      I wouldn’t get terribly excited about December North Dakota numbers. Production is a problem when it is cold out. I know it was very cold in December.

  8. Duncan Idaho says:

    “It’s funny that we can look at this and have absolutely no idea “which side” we’re going to be on. I mean, the moderate side, of course, but?”

  9. Duncan Idaho says:

    The latest ECMWF forecast is quite aggressive at calling for the return of ElNino conditions over the next few months.

    And I wouldn’t bet to often against the ECMWF

    • Pintada says:

      Dear Duncan;

      I wondered when I first saw that chart how it could be any different. The oceans are tremendously hotter than they were, the average temp then must be higher, thus, the permanent El Nino is right around the corner (in geologic time of course).

      Thanks for posting,
      Pintada

      PS I always liked the Duncan Idaho character, especially after he was cloned, but never identified with him as you must.

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