Apocalypse Soon?

[CEngelbrecht]

I'd just like to say, that the planet don't need crude oil for its transportation needs. At all. Even with hybrid engine solutions, current gasoline and diesel can easily be swapped for the likes of renewable ethanol and cooking oil from biomatter. For cars, semis, planes, ships, every damn thing imaginable. And that's excluding the simplicity in gaining more and more electricity from wind, sun, water and what ever hasn't been thought of yet.

But ... you peasants are not gonna get those hippie-solutions untill the day there's absolutely no more fossil carbon dioxide left in the crust, and half the planet has become uninhabitable for human beings. 'Cause the engineers and politicians of the world don't want cancer.

 

[Photizo]

[QUOTE="CEngelbrecht,]I'd just like to say, that the planet don't need crude oil for its transportation needs. At all. Even with hybrid engine solutions, current gasoline and diesel can easily be swapped for the likes of renewable ethanol and cooking oil from biomatter. For cars, semis, planes, ships, every damn thing imaginable. And that's excluding the simplicity in gaining more and more electricity from wind, sun, water and what ever hasn't been thought of yet.

But ... you peasants are not gonna get those hippie-solutions untill the day there's absolutely no more fossil carbon dioxide left in the crust, and half the planet has become uninhabitable for human beings. 'Cause the engineers and politicians of the world don't want cancer.[/QUOTE]

 

[billvon]

Your post is very childish.

I have been steadily simplifying my posts so that you can better understand them, since you seem to not understand what people post here.

Of course the current price of oil is not sufficient to meet the full cost of oil production, including investment in future oil production.

Of course it is - because companies can sell it at a profit. In the future it will likely go up again for the most part, as the easier-to-extract oil is extracted. In the future it may go down temporarily as rising prices enable greater economies in extraction. The cost of oil is indeed burdened with most of the costs of future oil production. (The balance comes from investment capital.)

That is why all the oil companies are downsizing, buying back stock, and cutting investment in exploration, etc.

They are cutting investment in exploration because the more-expensive tight oil that they have been looking for is not profitable at the current price of oil. Once the price of oil rises again, then exploration will increase. This cycle has been going on for over 100 years.
What do you think of the Etp model?[/quote]
The IEA ETP 2015 model is a reasonable projection of future energy needs.

 

[Futilitist]

Hi billvon.

The cost of oil is indeed burdened with most of the costs of future oil production.

This is correct! Congratulations.

They are cutting investment in exploration because the more-expensive tight oil that they have been looking for is not profitable at the current price of oil. Once the price of oil rises again, then exploration will increase.

The world is running out of cheap oil. In your example, oil consumers would have to have an infinite ability to pay any price that would produce a profit for oil companies. And they clearly don't have this ability. If they did, the price of oil would always be high enough to make a profit for producers. Catch-22.

They are cutting investment in exploration because the more-expensive tight oil that they have been looking for is not profitable at the current price of oil. Once the price of oil rises again, then exploration will increase.

Tight oil is too expensive, as is most unconventional production. Consumers cannot currently afford it. What development will suddenly cause consumers to be able to afford unconventional oil production in the future?

This cycle has been going on for over 100 years.

Yes. But now this cycle must be over. That is because, as a result of this cycle, the price of oil which will yield a profit for oil producers is too high for oil consumers to afford. For the cycle to continue, you must explain how future consumers will ever be able to afford the expensive oil they cannot afford now. That is the point of the Futilitist Collapse Challenge, which cannot be solved. Are you starting to understand the dilemma now?

---------

Hi Russ.

I have already satisfactorily answered all of the points you brought up (yet again). Your post is repetitive and vexatious.

You are just upset that you cannot solve the Futilitist Collapse Challenge. Too bad. Get over it.

---Futilitist

 

[billvon]

The world is running out of cheap oil. In your example, oil consumers would have to have an infinite ability to pay any price that would produce a profit for oil companies. And they clearly don't have this ability.

Correct. However, they clearly DO have the ability to pay far more than oil costs now. Historical data shows that oil consumers have the ability to pay well over $100 a barrel for oil - a price that puts most tight oil reserves within reach.

If they did, the price of oil would always be high enough to make a profit for producers.

The price of oil is always high enough to make a profit for producers. (Of course they make more profits at some prices, less at others.)

Tight oil is too expensive, as is most unconventional production. Consumers cannot currently afford it. What development will suddenly cause consumers to be able to afford unconventional oil production in the future?

The same development that allowed them to afford $130 a barrel oil in 2008.

Yes. But now this cycle must be over.

The cheap oil cycle is indeed coming to a close. Now we are entering the era of tight oil, with the same overall economic factors controlling the price of oil. This will result in more expensive gasoline and other fuels. What will it look like? 2008.

That is because, as a result of this cycle, the price of oil which will produce a profit for oil producers is too high for oil consumers to afford. For the cycle to continue, you must explain how future consumers will ever be able to afford the expensive oil they cannot afford now.

No problem. Two simple data points will prove that they can afford tight oil:

June 2008 oil prices per barrel: 136.33 in 2014 dollars
June 2008 oil consumption rate: 72.5 million barrels per day

That is the point of the Futilitist Collapse Challenge, which cannot be solved.

I just solved it. What do I win?

 

[Russ_Watters]

Hi Russ.

I have already satisfactorily answered all of the points you brought up (yet again). Your post is repetitive and vexatious.

You are just upset that you cannot solve the Futilitist Collapse Challenge. Too bad. Get over it.

Yeah, I'm upset all right. BRB, I need to go gas-up my car with gas that is cheaper than last year, yet somehow less affordable to me.

Let's do this again in two years!

 

[Billy T]

... The price of oil is always high enough to make a profit for producers. (Of course they make more profits at some prices, less at others.) ...

False as I have already explained to Futilitist.

Currently Nigeria and Venesula are pumping oil like crazy even losing up to $35 on each barrel. - They have bills to pay, and their creditors (or government employees) will not accept oil, but want money. Selling oil is their main source of cash.

Quite few gold mines are in the same fix - Selling gold at a loss, not only as they must repay borrowed money, but also don't want their skilled workers to leave - They hope price of gold will rise, before they go bankrupt.

Some US shale oil producers are doing the same, for the same reasons, and in some cases because it they don't produce for X month, that voids their lease.

 

[Russ_Watters]

False as I have already explained to Futilitist.

Certainly over the long term oil companies must turn a profit otherwise they would go bankrupt. So it can only be over the short-term, due to a rapid market upset like the one we had last fall, that oil companies can lose money. And a number of smaller oil companies did lose money and even go bankrupt recently:
http://fortune.com/2015/03/17/oil-bankruptcy/
But none of the Big 5 oil companies showed a Q4 loss or are even likely to show a Q1 loss (the oil price kept dropping until January).

Currently Nigeria and Venesula are pumping oil like crazy even losing up to $35 on each barrel. - They have bills to pay, and their creditors (or government employees) will not accept oil, but want money. Selling oil is their main source of cash.

I know it will sound wishy-washy, but I think only in certain contexts can a country be called an oil company and this isn't one of them. Countries don't have shareholders and the governments just spend all the profits on the country, so it is a separate issue whether a country can break-even or a country's oil company can break even. Just like an oil company, if a country's oil production weren't turning a profit, it would stop producing completely. And most of the big oil producing countrys' companies can turn a profit even with ridiculously low oil prices.

 

[Futilitist]

Certainly over the long term oil companies must turn a profit otherwise they would go bankrupt. So it can only be over the short-term, due to a rapid market upset like the one we had last fall, that oil companies can lose money. And a number of smaller oil companies did lose money and even go bankrupt recently

What you are correctly describing above are the conditions I set forth in the Futilitist Collapse Challenge, which you previously saw fit to make fun of. It seems like you are now coming to the slow realization that the dilemma it presents is quite real. Now that you have finally stopped making fun of Futilitist Collapse Challenge, and instead just tried to solve it, you have begun to see how difficult it really is (impossible, actually). That is progress.

But none of the Big 5 oil companies showed a Q4 loss or are even likely to show a Q1 loss (the oil price kept dropping until January).

I know it will sound wishy-washy, but I think only in certain contexts can a country be called an oil company and this isn't one of them. Countries don't have shareholders and the governments just spend all the profits on the country, so it is a separate issue whether a country can break-even or a country's oil company can break even. Just like an oil company, if a country's oil production weren't turning a profit, it would stop producing completely. And most of the big oil producing countrys' companies can turn a profit even with ridiculously low oil prices.

You are correct, Russ. You do sound wishy-washy. The biggest oil companies are are not currently profitable enough to fund future exploration and production. And big oil producing countries, like Saudi Arabia, have to heavily subsidize their economies from their oil profits. If they don't, all hell could break loose.

It is irrational to claim that any oil producer is fine with low oil prices.


---Futilitist

 

[Russ_Watters]

What you are correctly describing above are the conditions I set forth in the Futilitist Collapse Challenge....

No, your meaningless scribbles have nothing more to do with real-world oil economcis than a 5-year-old fisting a crayon.

...the dilemma it presents is quite real.

There is no dilemma in the current oil situation and your random chicken-scratches in the dirt don't "present" anything, much less a dilemma.

The biggest oil companies are are not currently profitable enough to fund future exploration and production.

Big oil companies have reduced future exploration/drilling. That much is true. But you know what will happen if Saudia Arabia "cracks the whip" and oil prices go up again? They'll increase exploration/drilling. That's basic economics and it works just fine -- there's no dillema there.

And big oil producing countries, like Saudi Arabia, have to heavily subsidize their economies from their oil profits. If they don't, all hell could break loose.

I'm not sure they have to, but they've grown accustomed to it, sure. The current situation is one that Saudia Arabia chose, so it certainly doesn't present a dillema for them. Their problems are coming over the next few decades as their oil starts running out and their power to control the market wanes as we take over. That future fear is what drove them to run this little ill-advised test of theirs.

It is irrational to claim that any oil producer is fine with low oil prices.

I don't think anyone did. Certainly, oil producers prefer higher oil prices, but that doesn't make the current situation permanent or a problem. And none of this has anything to do with your ridiculous graph and I'm glad you haven't referred back to it here. Maybe you can make progress in learning economics if you keep moving away from it.

 

[Futilitist]

There is really no point in getting so upset, Russ. You really should chill out.

You are a hard core peak oil denier. You have made your position quite clear.

There is no reason to keep making such offensive comments toward me. Thanks.


---Futilitist

 

[Billy T]

http://fortune.com/2015/03/17/oil-bankruptcy/ ... Just like an oil company, if a country's oil production weren't turning a profit, it would stop producing completely. ...

But that is NOT what oil companies in danger of going bankrupt do - They produce as long as they can, even at a loss on each barrel, just like gold companies, now going bankrupted continue to produce gold so long as they can pay their workers. (They have debts much greater than they have cash, but that does not mean their bank account is without funds on deposit.)

Your own link indicates this in the text below quoted from it:
"Quicksilver Resources Canada has signed an agreement with its lenders for forbearance until June 16, 2015, of any default under the agreement arising from the chapter 11 filing."

The purpose of the extension, is so that they can continue to pump - hoping oil prices will rise and that they can turn profitable again.* Yes, governments are no different in this regard: They produce as long as they can and also sell at a loss as they have police etc. to pay. Venezuela & Nigeria have not stopped selling oil even losing at least $30 on each barrel (when oil price was less than $50/brl.)

* If they were to shut down as you claim, then their workers leave, find other jobs, and the company is destroyed, even if prices rise back to $100/brl. Not rational to shut down and lose all hope of recovery.

 

[Futilitist]

But that is NOT what oil companies in danger of going bankrupt do - They produce as long as they can, even at a loss on each barrel, just like gold companies, now going bankrupted continue to produce gold so long as they can pay their workers.

That's right, Billy T. And since all oil producers are currently pumping as hard as they can to avoid bankruptcy, we will have an oil glut for a long time, which will keep preventing oil prices from rising. That is a dilemma.


---Futilitist

 

[Billy T]

That's right, Billy T. And since all oil producers are currently pumping as hard as they can to avoid bankruptcy, we will have an oil glut for a long time, which will keep preventing oil prices from rising. That is a dilemma. ---Futilitist

Probably not "for a long time" - A year at most, I would guess before oil price is back above $75/brl.

Russ is correct in that they don't, unless very lucky, avoid bankruptcy by digging the economic hole they are in even deeper - just delay it. Usually a delay of bankruptcy is possible ONLY if their creditors will agree to a delay of the re-payment due.* That typically is a few months only. In the case of Quicksilver Resources Canada, discussed in Russ's link, the creditors gave less than three months of delay. (Two months only if from 16 April until 16 June, as seems to be what happened.)

* The creditors who give short delay are forgoing the interest for that period in hope of getting 100% face value of the debt, rather than typically less 60% if the companies assets are foreclosed and sold.

 

[Russ_Watters]

There is really no point in getting so upset, Russ. You really should chill out.

You've never seen me upset and I don't think there is anything someone like you, on the internet, could possibly do to upset me.

You are a hard core peak oil denier. You have made your position quite clear.

Yes.

There is no reason to keep making such offensive comments toward me.

If you keep posting garbage, I'll keep calling it garbage. If that offends you, you should do something about it -- like stop posting garbage.

 

[Futilitist]

You are a hard core peak oil denier. You have made your position quite clear.

Yes.

Interesting.

Is this a peak oil denial website?


---Futilitist

 

[Russ_Watters]

But that is NOT what oil companies in danger of going bankrupt do - They produce as long as they can, even at a loss on each barrel, just like gold companies, now going bankrupted continue to produce gold so long as they can pay their workers. (They have debts much greater than they have cash, but that does not mean their bank account is without funds on deposit.)...

The purpose of the extension, is so that they can continue to pump - hoping oil prices will rise and that they can turn profitable again.* Yes, governments are no different in this regard: They produce as long as they can and also sell at a loss as they have police etc. to pay. Venezuela & Nigeria have not stopped selling oil even losing at least $30 on each barrel (when oil price was less than $50/brl.)

* If they were to shut down as you claim, then their workers leave, find other jobs, and the company is destroyed, even if prices rise back to $100/brl. Not rational to shut down and lose all hope of recovery.

The words "short-term", "long term" and their context was a key part of my post, which you have overlooked. I'm aware that in the shor term they keep pumping and try to find ways to keep from going-under until prices rise again. All of that is short-term survival techniques. If a company can't weather that short-term low price, it goes bankrupt, which, of course, causes it to stop pumping oil (unless the wreckage is bought-out by another company that keeps pumping, of course).

 

[Russ_Watters]

Is this a peak oil denial website?

There are no peak oil denial websites that I'm aware of. There are just peak oil websites and everything else -- and a few of the more prominent peak oil websites are now defunct due to the failure of peak oil. So there is no need to create a "denial" website for a low-impact, fringe concept that is adequately debunked by normal news, energy and economics sources...particularly now that it has basically dissipated after failing so spectacularly. All of the slightly and moderately gullible/delusional aherrents have abandoned it.

 

[brucep]

There is really no point in getting so upset, Russ. You really should chill out.

You are a hard core peak oil denier. You have made your position quite clear.

There is no reason to keep making such offensive comments toward me. Thanks.


---Futilitist

That's right, Billy T. And since all oil producers are currently pumping as hard as they can to avoid bankruptcy, we will have an oil glut for a long time, which will keep preventing oil prices from rising. That is a dilemma.


---Futilitist

You're a nitwit. Which oil producers and refiners are going bankrupt? On the rare occasion that the profit margins are challenged they'll leave the oil in the ground while they cut refining rates.

 

[Billy T]

The words "short-term", "long term" and their context was a key part of my post, which you have overlooked. I'm aware that in the shor term they keep pumping and try to find ways to keep from going-under until prices rise again. All of that is short-term survival techniques. If a company can't weather that short-term low price, it goes bankrupt, which, of course, causes it to stop pumping oil (unless the wreckage is bought-out by another company that keeps pumping, of course).

Yes. You are correct. I did over look your "short term" they can lose money. Sorry.