Tuesday, July 14, 2009

Jeffrey Brown Makes a Fool of Himself

Oil Drum writer Jeffrey Brown is infamous for his Export Land Model. For those unfamiliar, it works like this:



  1. Growth in oil exporting countries (particularly exacerbated by high oil prices) will increase their oil consumption.


  2. Oil exporting nations' higher consumption leaves less oil for oil importers.


  3. Eventually, this supposedly will create tight supplies; we're screwed.


Scary stuff, except...

For the past few years, major importers' appetites have been dropping a lot faster than major exporters can gain it - thus gutting the basis of Jeffrey's argument.

This has been particularly well laid out in several recent posts on Peak Oil Debunked (here, here). JD has also noted that OECD demand, which has been in decline for four years now, has gorged out - by a wide margin - any gain in exporters' appetite.

The second post, in fact, so ired Jeffery, he himself barged into the comments' section to defend his position:

In any case, the "POD People" (Peak Oil Debunked People) have repeatedly criticized me for "cherry picking" examples of net export declines. The crux of my argument is that net exports tend to decline at a rate faster than production declines. Once an oil exporting country starts showing lower production, if they don't systematically and continually cut consumption, the most likely scenario is that they will show an accelerating net export decline rate.

For the fourth time, can the POD People show me some examples of an oil exporting
countries systematically cutting their consumption in order to maintain constant
net oil exports?

JD countered with this basic counter-comment: "learn the crux of my argument first."

The crux of my argument is that net exports tend to decline at a rate faster than production declines.

That's a valid point, and I accept it. However, you have consistently reacted with complete denial to my point, i.e. if shrinkage in importer consumption is much larger than growth in exporter consumption, then the effect you mentioned is canceled out, and available exports do not decline at a rate faster than production declines. Please try to wrap your mind around it: reduction in importer consumption increases the pool of available net exports.

Of course this didn't stop Jefferey Brown, a cross-eyed mutt, from going back for seconds on his own vomit:

I freely concede that the scope of the decline in demand (falling below the supply of exported oil) surprised me, but for what it's worth, the EIA is estimating the total worldwide decline in demand at only about 1.5 mbpd this year. I suspect that we will transition from a combination of voluntary + involuntary reductions in net oil exports this year to mostly involuntary reductions in net oil exports next year and in fllowing years, subject of course to the supply/demand balance (Note: Jeffrey then goes on a long rant, listing a slew of exporters' production/consumption statistics).

A decline of only 1.5 mbpd? Folks, I've shown this image so many times, it's burned into people's pupils:


As you can see, a 1.5 mbpd decline is in perfect parameters of the current multi-year trend.

Now, for the Ghawar Guzzler smart cookie of the week... congrugulations, Gavin, for driving the final stake in Brown's heart:
The data you have cited shows 8 countries taking a combined total of 2.3 Mb/d off the market in 8 years

Since in 2007 the OECD have reduced their consumption by 4 Mb/d (source is the usual EIA).

This means that there is an extra 1.7 Mb/d on the world export markets.There is no reason to believe that the sudden reversal in demand growth is temporary, even if there is a stunning worldwide economic recovery.
Jeffrey Brown made this prediction in 2005: "As I said last year, I expect that by the end of 2006 we will be in the teeth of a ferocious net oil export crisis." Good work, JD; and Jeffrey Brown, your infamous prediction shall now be enshrined into the Peakers' Hall of Shame.
- Brewskie

9 comments:

  1. Poor Mr. Brown. First, there is the confusing name he selects for his model. The Export Land Model? What the bejeez does that mean?
    Then, his tireless, relentless predictions of doom, carried on for years now. Meanwhile we have become swamped with oil and gas. The gas glut looks "permanent," in the sense we will all be dead by the time it evens tightens up.
    The oil glut? I think years left, and maybe more. What if some of the oil thug states start to be serious about production? What about the extra 2 mbd of gas condensates suddenly on the market? What if China pushes it populace into electric vehicles? What is the USA starts to seriously tax gasoline?
    There are any number of scenarios that could prolong an oil glut for decades.
    Then, there is the elephant Brown still refuses to recognize: The price mechanism.
    See, when oil gets exepensive, people use less, and produce more. Meaning you get a glut.
    I think more liekly is that we are watching the Oil Era end, with a whimper and not a bang.

    ReplyDelete
  2. You will probably be able to add his new quote to that hall of shame in a couple of years too:

    “I suspect that we will transition from a combination of voluntary + involuntary reductions in net oil exports this year to mostly involuntary reductions in net oil exports next year and in fllowing years, subject of course to the supply/demand balance”

    Got to make a note of that one.

    ReplyDelete
  3. If you look at your graph and draw an interpolated trendline in, you can see a declining trend even before the last year or two.
    The troughs are getting lower and lower with time even if the volatility increased.
    But in any case, yes, poor jeffrey. His career depends on him defending his model. But as we all know, models are not reality. Jeffrey seems to have forgotten that point in his haste to defend his fifteen minutes of fame on TOD.

    ReplyDelete
  4. Yogi,

    Who produced that quote, when and what is the source? It sounds pretty good.

    ReplyDelete
  5. DB,

    Fifteen minutes of LAME, that's how I'd say it. It' better than Orlov, though. Poor guy... he had about 15 seconds of fame.

    ReplyDelete
  6. It was Jeff “West Texas” Brown himself, of course!

    The original source was a comment he posted on POD in the past few days,

    http://peakoildebunked.blogspot.com/2009/07/410-import-land-model-ii.html#c3038930803196925637

    You also quoted it in your own post, just above the chart of OECD liquids demand.

    ReplyDelete
  7. Sorry, I should have added that Jeff posted it on Sunday, July 12, 2009 at 12:07:00 PM PDT, and it’s in his second paragraph.

    http://peakoildebunked.blogspot.com/2009/07/410-import-land-model-ii.html#c3038930803196925637

    ReplyDelete
  8. Yogi,

    Silly me! Work had my wires crossed.

    ReplyDelete
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