Comments on: Professional Money Management and Peak Oil

By: ericgarland

ericgarland — Wed, 28 Oct 2009 20:23:52 +0000

Michael – I think you're describing my life's work, which remains totally unfinished: How do you invite people along on the journey of seeing the world as interconnected systems? Like life, such a worldview is messy, uncertain, deeply fascinating, transformative. If you start seeing the world a field of interconnected systems instead of an atomistic place of Big Things and Small Things, you can no longer justify people being in control over other people. You can't pigeonhole people as easily, you have to start seeing them as changing systems in their own right.

The thing is, I believe that when you see things in this way, you do get a bonus – you are right more often, insofar as you are describing the world more accurately. I believe that my forecasts are more correct because they look, by nature, at the system that surrounds anything you want to study. You know more (but not everything!) by looking at a system.

This is what makes Mr. MacDonald's work so compelling – he's actually looking at the complexity of the energy system. Perhaps this is why he is so unnerving to the press.

By: gregor.us

gregor.us — Wed, 28 Oct 2009 19:28:37 +0000

If only the public could see the data, or was exposed to repsonsible journalism that would explain the data, than at least the public would understand that there's a fast growing gap between the increasing cost of oil production in Non-OPEC (roughly 60% of global supply) and OPEC. BTW, this was addressed well by Sankey.

Also, you have to understand that these are large moving systems. So some will only understand peak supply in nominal terms, others will only understand peak supply in nominal and real terms, while others will only understand peak demand as a function of price or GDP. Still others only want to pay attention to mitigation--new technologies.

In other words, even if you laid it all out, many people would only take a piece away from the discussion. No doubt, many people will do just that with the Sankey report, just as they would with any newsarticle, or TV segment.

G

By: gregor.us

gregor.us — Wed, 28 Oct 2009 19:00:00 +0000

Well, I could have certainly made a long post, using the 3 pages of notes I made on the DB report. That said I disagree that it is exclusively a peak demand report. It is both a peak demand, peak expensive supply, and new technology mitigation report. Because I do take issue with a number of these takes in the DB report, my intention was to highlight its existence–rather than its full array of assertions. To this end I think my take in this post is both quite fair and accurate. To characterize it as a peak demand report would not be correct, in my view. However, one has to remember that I see the broad sweep of the report more fully than others would. It helps to have watched the progression of this work over the decade.

By: DB

DB — Wed, 28 Oct 2009 18:53:08 +0000

Apparently, you didn't spend much time at all reading the DB report on oil…it does not analyze peak production, but peak demand – which says will peak around 2015 when oil prices are at about 7% of GDP.

By: ian807

ian807 — Wed, 28 Oct 2009 16:06:02 +0000

I would argue that “peak oil as the maximum rate of oil production” is the most critical issue to watch here. We face two oil “peaks.” The first is price. New finds are all well and good, but they tend to be in multiple small reservoirs, consist of heavier hydrocarbons and are frequently in deep water. They can be exploited profitably, if the price of a barrel is allowed to rise, and that's exactly what will happen.

The second peak is a bit more subtle, but may sideswipe us first. Energy *return* on each barrel of oil (EROEI) has been declining very rapidly since the 60s when a barrel of oil's worth of energy got us 100 barrels in return. When it starts taking a barrel of oil's worth of energy to retrieve a barrel of oil, oil will cease to be a significant energy source. While *current* estimates of energy return vary (from 1 to 8 to 1 to 12), EROEI can only decrease as we selectively deplete the reservoirs with the highest economic return. Worse, EROEI seems to be decreasing much faster than actual supply.

By: jenniferleej

jenniferleej — Wed, 28 Oct 2009 14:57:35 +0000

We can't turn back time we need to adapt. Take a look at this article The Great Transition: http://www.scribd.com/doc/21656220/The-Great-Tr...

By: michaelfkelly

michaelfkelly — Wed, 28 Oct 2009 06:49:07 +0000

Eric – Thanks for reminding us that we live in systems and most people would prefer not to deal with all that messiness. Your same comments could be made for the usual views of any market, including that for technology, which I'm familiar with and have researched for years. But try to put a dynamic system model on a PowerPoint where effectiveness is judged by seven bullets and 3 to 6 words each. As you say, 'once you start thinking in systems' but how does that happen? Beats me….

By: chrisnelder

chrisnelder — Tue, 27 Oct 2009 23:26:34 +0000

Unlikely: As I think you're aware, all credible peak oil analysts define peak oil as the maximum rate of oil production. That's it. It's never been about the size of the reserves, although that does figure in peak rate calculations. To talk about reserve growth without talking about the rate is simply changing the subject.

By: gregor.us

gregor.us — Tue, 27 Oct 2009 22:51:09 +0000

As I'm sure you can understand, I cannot post a copy. I would suggest you contact Sankey's Dept in the NY Office of DB, and see if you can get a copy.

By: gregor.us

gregor.us — Tue, 27 Oct 2009 22:50:21 +0000

I see that Soros is funding a new Economics Institute. imo if he wasn't doing so, someone else would. I'd hate to be a Chicago School Econ prof right now, as the entering classes of students are going to ask you WTF?

G