Re-Visiting Peak Oil after the Fracking boom

[giskard]

Back around 2007 the Peak Oil Theory was very popular. I think Jacob was really involved in this as well (so I hope he will see this), I was in high school at the time but it was definitely an acute interest of mine (I remember writing reports about it). Well, fracking technology was developed and the expected production shortfall was delayed.

Anyway, I bring it up because I was reading a book about climate change from before the fracking boom (circa 2009) and it mentioned peak oil quite a bit, predicting $250 barrels of oil

But interestingly I decided to do some googling and two things are apparent:

1. Current US Oil consumption is actually well below projected demand 20 years ago (due to biofuel, car efficiency and EVs)
2. Many articles have been written in the last year speculating that the fracking boom is close to over and that wells only produce well for about 2 years after they are fracked.

Anyway what do people think? Have we already hit peak oil demand? Is supply ever going to be an issue again?

I also thought this was timely to bring up since global oil markets are currently spiking due to the unfolding US/Iran situation.

[ertyu]

search for mark gordon hedgeye on youtube. after that go search for him on macrovoices. and after that go search art berman on macrovoices <- interesting podcasty stuff on the topic I remember listening to recently

[7Wannabe5]

Peak oil can look like humans slowly becoming less affluent as the higher cost of production of any available form of energy is factored in.

[ertyu]

the desert that's not antarctica, canada, and russia is gonna be all nuclear reactors manned by ai drones

think big the future's gonna be awesome

[7Wannabe5]

I agree that the gdp/capita of the future may depend on whether forecast of 1 trillion devices connected to internet by 2025 transcends peak oil, etc. How about we all set our current odds at 50/50 and then adjust Bayesian style as new evidence flows in?

[tonyedgecombe]

Peak oil can look like humans slowly becoming less affluent as the higher cost of production of any available form of energy is factored in.

Until we reach the point where it costs more energy to extract than we are getting, at that point it all stops.

[jacob]

One thing that has become clear is that demand is not as stiff as previously thought. People won't be throwing grenades at each other at gas stations fighting over the last gallon like they did in the 1970s. Yet. There's simply too much waste/inefficiency in the consumption patterns.

For example, us liquid consumption (most of which goes to transportation) is down but that's mainly due to higher gasoline prices. Americans simply drive less when the oil price is higher. Another thing that has happened is that shale gas has outcompeted coal on price. Coal is dead (in the US) which is wonderful news because coal is IIRC around twice as CO2/energy intensive as natgas. This has affected liquid usage in power plants too which is also down.

IEA foresees a shale gas peak around 2025. BTW, the conventional peak back in 2010ish was correctly called. Nobody (in the peak oil community) predicted how successful shale was going to be. OTOH, nobody in the shale community seems to have predicted how fast wells are depleted.

Another thing that has changed is that peak oil nerds no longer think of the decline as a Gaussian existing in and of itself (that is independent from the rest of the economy). It has become more clear that understanding interaction the economy (oil price) is important for the extraction rate. One immediate worry here is that the oil price can actually be too low. When this happens not enough gets invested (that is the fraction of the oil sector of the economy becomes too small) and the economy simply does without. Basically, if the economy can't afford high-priced oil (say at $100-barrel), parts of the economy simply shuts down which immediately takes care of the demand. The exception to this rule is using debt which is what happened in the initial shale boom in 2015---people were drilling regardless thanks to ZIRP. This strategy has now ended.

Basically, if the oil price is too low, producers won't invest in new production to replace the depleted production. If it's too high, consumers can't afford it. This conundrum is partially resolvable since it has a lot to do with economic inequality in society. How this is resolved will be interesting to say the least ... but we're currently stuck with this being a money-problem.

The second framework is to look beyond money and consider the EROI of the Gaussian which is what actually matters to the end-consumer. Since EROI keeps going down, this will make the back side of the Gaussian look steeper stopping the "engine of the world" much faster.

On a world basis, keep in mind that after China became a member of the WTO, much manufacturing has been transferred to China and so world consumption of fossil fuels is as high as ever. 2019 was another record year of CO2 emissions. I'll remind people that despite peak oil, there's still enough resources to fry the planet sooner rather than later and every indication that we'll do just that.

[Lucky C]

What are the specific risks/challenges we are likely to face with fossil fuel use in the future, how likely are these risks, and how severe might the consequences be (specifically for someone working toward a FIRE lifestyle but not fully prepared for these types of major risks)?

In the engineering project management world it is common practice to construct a risk matrix where one axis is the probability that an unfortunate outcome happens and the other axis is severity (or likelihood of project failure) if it happens. Then each box is the overall risk level / how much you should prioritize mitigating it. E.g. (copied from Wikipedia):

Code: Select all

v PROBABILITY \ SEVERITY >	NEGLIGIBLE	MARGINAL	CRITICAL	CATASTROPHIC
CERTAIN				High		High		Extreme		Extreme
LIKELY				Moderate	High		High		Extreme
POSSIBLE			Low		Moderate	High		Extreme
UNLIKELY			Low		Low		Moderate	Extreme
RARE				Low		Low		Moderate	High

Might be interesting to try and map peak oil related risks to such a matrix, though I am sure the likelihood and timelines will be very difficult to predict. Ideally as generalists we would be prepared decently well for any scenario, but those of us lower on the ERE scale or with only so much free time should know where to prioritize skills. E.g. higher priority to work on gardening in case of food price spikes vs. street-fighting skills in case of riots. If the interest is there, we could make a new thread to assess all potential resource, financial, political, etc. risks that would pose threats to a FIRE lifestyle.

[7Wannabe5]

There should be no disruption to an optimized ERE lifestyle because most inefficient solo hunter-gatherer just needs 1 square kilometer domain to provide all forms of energy needs. 250 acres at $3000/acre = $750,000 plus cost of boundary security if/when 3rd party enforcement of property rights becomes dubious. Any skills or technology beyond level of least efficient hunter- gatherer will, of course, reduce acreage required. Additionally, recent studies reveal efficiencies of scale with increased population density up to approximately 120 in “tribe.” Acreage needed being reduced by approximately 1/3 per capita for each doubling of population at this level of technology.

[giskard]

search for mark gordon hedgeye on youtube. after that go search for him on macrovoices. and after that go search art berman on macrovoices <- interesting podcasty stuff on the topic I remember listening to recently

Thank you this podcast is right up my alley!

[giskard]

IEA foresees a shale gas peak around 2025. BTW, the conventional peak back in 2010ish was correctly called. Nobody (in the peak oil community) predicted how successful shale was going to be. OTOH, nobody in the shale community seems to have predicted how fast wells are depleted.

...

2019 was another record year of CO2 emissions. I'll remind people that despite peak oil, there's still enough resources to fry the planet sooner rather than later and every indication that we'll do just that.

It's fascinating how much fracking changed what we thought the future would be:

- oil got cheap and plentiful (maybe just till 2025)
- nat gas got cheap and amazingly plentiful
- coal died
- oil/gas are now so cheap we worry about investment into new production and too much of the sector going bankrupt.

On the CO2 emissions note - it seems that most countries are actively working to reduce emissions and many are even doing so effectively. I think if the world economy was not running so hot the increases would be much less and these last two or three years might be outliers. China is the biggest emitter, I wonder how dramatically we will see that slow as their economy slows. Same with the US, we are due for a recession.

[Riggerjack]

On the CO2 emissions note - it seems that most countries are claiming to be actively working to reduce emissions and many are even pretending to be doing so effectively.

Fixed that for you.

But on a positive note, the options to reduce carbon emissions on a personal scale are getting more common and cheaper. But now that a lowered footprint is a more recognizable virtue signal, I expect this to ramp up for as long as we can afford the virtue signaling.

[Jean]

There should be no disruption to an optimized ERE lifestyle because most inefficient solo hunter-gatherer just needs 1 square kilometer domain to provide all forms of energy needs. 250 acres at $3000/acre = $750,000 plus cost of boundary security if/when 3rd party enforcement of property rights becomes dubious. Any skills or technology beyond level of least efficient hunter- gatherer will, of course, reduce acreage required. Additionally, recent studies reveal efficiencies of scale with increased population density up to approximately 120 in “tribe.” Acreage needed being reduced by approximately 1/3 per capita for each doubling of population at this level of technology.

Where do you pull those number from? Because I highly doubt my square kilometer of forest could feed me without heavy work (and that wouldn't be gathering anymore), and hunting could work only because the hundreds of square kilometers around it are only lightly hunted.

[ertyu]

I just learned today that Amazon, Google, and MSFT have all started to work with oil companies to develop AI that would analyze data from drilling sites to determine where it's best to drill, and then other AI that optimizes drilling/extraction for amount and energy efficiency. Might be another tech wave postponing the ultimate peak

[7Wannabe5]

@Jean:

Oops! You are right. I should have written that most efficient hunter- gatherer density was tribe of approximately 100 on 100 kilometers squared. Least efficient solo hunter gatherer or small family band would scale up from that in acreage/capita.

Relevant articles:

“Hunter Gatherer Populations Inform Modern Ecology” PNAS
“Hunter Gatherers Show Human Populations Are Hardwired for Density”- Scientific American
“Nonlinear Scaling of Space Use in Human Hunter Gatherers” Marcus, Milne, ...

I happened upon these while attempting compare/contrast with modern urban/suburban scavenging. You own 250 acres all to yourself?!?! How much did it cost? $3000/acre is rough going rate in rural Michigan for non prime agricultural.

[7Wannabe5]

@ertyu:

Since West in “Scale” described similar effect for city dwellers vs rural dwellers in affluence per capita as is indicated in terms of reduced acreage per capita in the studies I linked above, and he also indicated relationship with electrical outlet/ acreage, it might be interesting to consider how possibility of a trillion internet linked devices With variety of sensors might similarly impact affluence/energy efficiency?

The funny thing is I started thinking about solar powered robots when I was doing permaculture project because even very intensive agriculture benefits from additional human intelligence. So, any technology that extends human intelligence, such as irrigation sensor, will increase production/acre. Since AI can already identify plants, insects, and even microbes and other vectors not immediately visible or otherwise sensible to humans, the possibilities are pretty immense.

[Jean]

is 100km squared (i understand it as 100kmx100km = 10'000 km^2=) the same as 100 squared km (i understand it as 100 km^2)?

[jacob]

@Jean - She means 1km x 1km which is 250 acres per person, that is, a tribe of 100 people on 100km^2. The proper way to say it would be 100 square kilometers. "100km squared" is somewhat ambiguous/context dependent and could certainly mean 10000km^2 which is about a quarter of Switzerland.

[7Wannabe5]

What Jacob said. Typing messy on my phone and I can only visualize in archaic unit of acres. 10,000 hectares per 100 humans or 100 hectares/human in a cooperative society of population 100.

Anyways, we’re looking at something more like 312 hectares per one human given lack of fractal dimension formed by social interaction. So, maybe $2 million = $60,000 @ 3% to survive back to Stone Age collapse as solo hunter gatherer.

[JollyScot]

Every so often I hear the price of large land areas in US and it depressing on how expensive it is over here compared to you. Then even if you can buy up the land, so many restrictions are put on what you can do with it that its not as useful as it should/could be.

Even in Scotland where large areas are virtually empty. There are 50-100 core landowners that hold most of it and they have no intention to letting it go. With no land tax, they just sit on it. Its a shame as I would very much like a nice bit of the scottish highlands for myself.

At least here they are starting to look at fixing the ecosystem a little. As we don't have any predators most of our forests have gone. Work is underway to cull large swathes of the deer population to bring them back. Some mumbling about reintroducing wolves again after we killed them all. We will see.

As for fracking, currently Scotland has an outright ban on it. I am not sure how long that will last. I suspect a while longer, as people really don't want it in their back yard. Down in England however it gets turned on and off depending on the way the winds are blowing. Probably come down to price and who signs off starting it.

It depressing as UK frittered away all of its oil money over the years. However Scotland does have massive fresh water reservoirs (makes all that whisky) and renewable energy resources so its not all bad. If we can manage to stop eating all those chips and deep fried mars bars we'd do pretty great.

It seems like US will have a harder time shifting to less oil use as the country is set up in such a way to use more resources. A lot of Europe's cities were built for walking or horses. In US its very much cars and big houses. The much larger land mass probably means a bigger margin of error to play with though.