"Krap Out" Kunstler Blows 5th Dow Meltdown Call

Interesting news from Mark Perry at Carpe Diem today: the ECRI Weekly Leading Index, a U.S. future economic growth gauge, rose to its highest level in 26 years, suggesting economic recovery could be its strongest since the early '80s recession.

Mark Perry has been consistently predicting, since the beginning of the year, the current recession would bottom out around mid- to late-summer. Factoring in improvements in the housing market, the Dow's accession above 9,000, China's prelude to promising growth and Europe's recent revitalization, it seems safe to say - even a few months early - that James Kunstler has officially blown his 5th Dow Jones meltdown call.

Aside from prophesying a crash of 4,000 for this year, "Kaptain Krappy" has also made these fabulous Dow forecasts:

• Predicted the Dow cratering to 4,000 in 2005,
  


• 2006,
  


• 2007.

And in his most Joe Montana-like effort ever, James predicted a thousand-point drop during Thanksgiving week of '07. The Dow jumped up 1,000. Did I write Joe Montana? I should have wrote Dr. Wirth=)

Now naturally, this recession has been brutal, and we're not quite out of the woods yet. But for peakers to make comparisons to the Great Depression seems absurd. For a contrast of the two downturns, let's consider...

The Great Depression:

• Number of bank failures: 9,000.
  


• Unemployment peak: 25%.
  


• GDP losses in first three years: -8.6%, -6.4% and -13%.

Versus the current recession:

• Peak unemployment: 9.5% (so far).
  


• # of bank failures: 109 (the S&L Crisis experienced nearly 3,000).
  


• GDP of last, this and next year: -1.3%, -2.0% (projected), +2.2% (projected).

Also, has anyone seen this natural phenomenon?

I heard a while back that James is writing a sequel to his most recent book, "World Made by Hand." Judging from how his and the peakers' fame has swirled down the toilet recently, it may be more suitable for James to hide in a dark corner, and remorsely fiddle "World Stroked by Hand."

- Brewskie

Added: The federal government's spendthrift policies are scary, yes, but for those concerned about drowning in an ocean of inflation, check out another excellent post by Mark Perry. Accompanied by promising graphs.

Non-Opec Crude Contiues its Glacial Descent

(Note: Sorry about the small graph. Blogger is demonstrating the wrath of her bugs again.)

The peakers are certainly counting their chickens until peak oil fiesta kicks in. 5%, 8% - who knows, maybe we'll have double-digit decline-rates dragging us down to hell! The only problem is if the decline in non-OPEC crude production is a sign of things to come - the 2004 non-OPEC peak, after all, was an event that threw the peakers into an ecstasy of orgy four years back - it's likely they're going to be very disappointed.

I peaked over at the most recent issue of Oil Watch Monthly to see how things were going; pretty slow as expected, and as evidenced from the graph above, production is a smidgen up this year. From 2005 to 2008, production fell - at worst - a rough 1% - a far cry from the 5%+ dreams of many peakers.

Naturally if non-OPEC production was falling at 5% annually, we would have a load boat of problems: this would translate into about 6 mbpd of loss production, not the rough 1 mbpd. And remember - this is factoring heavy losses from both Canterrell and the N Sea.

The game of the debunkers has never been about denying peak oil, but rather, sifting through the hype, paranoia, rank facts and outright lies to bring a better sense of rationalization of things to come, of how the era of peak oil will materialize.

One should run under this theory to determine the world's fate: if peakers have been dead wrong for the past 100 years in the pre-peak world, they're going to be just as wrong in the post-peak era. If non-OPEC production is any indicator, we can rest assure that when worldwide conventional crude enters its decline, the human race will have plenty of time to adjust, thus preparing itself for the next phase of its energy destiny.

God, we should all be delightful.

- Brewsie

WTF, Leanan?? Fire Kills Six Saudi Oil Workers...

What's this about? A bad day for Leanan, the Drum's Drumbeat editor? She's got the most tedious job in peak oil=(

Anyway, I've remarked about the lack of women in peak oil as proof that it's a doom day-based religion: religions with apocalyptic endings - i.e., Christianity, Islam, Judaism, etc. - are male-dominated; pagan beliefs, dominated by female stature, have traditionally shown greater respect for life, greater tolerance for humanity. And isn't this just a coincidence(?): Leanan, one of peak's best known ladies, gets the tedious, but all-important job of hauling doomer feed to the pig trough for the doomers' daily tasting - all while her doomer buddies (big, boastful males) get the glory jobs of presenting "exciting" analysis, scenarios.

Plus, isn't it interesting, that, all the other doom-themed cults of recent memory - Y2K, Heavens' Gate, Jim Jones, etc. - are too male-dominated? So folks, if you want to find out if a cult is worth its merit in deadly prophecy, all you have to do is search for the priestesses in high places. Rare sightings probably means your life is safe; but such a clique, likely, is not a good place to get laid...

- Brewskie

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

Matthew Simmons's Idiotic "Plan B"

Money doesn’t sleep and crack pipes smoke all night: Matthew Simmons is a big rig engine, plowing his baby batter of a greedy mind through the cold of a frigid landscape, cracking ice like an ice road trucker. His redlining mind barrels through in top gear, fuming metaphoric smoke from sulfuric ashes smoldered on his ravenous chops. He’s got a big plan for peak oil and he wants your dime - up to 1 quadrillion of them, to be exact.

Matt Simmons is jet-setting a preposterous plan of epic proportions; he’s garnering support to blow $50-$100 trillion. Not on renewable research, not on oil exploration, not on conversation or a Manhattan Project-like effort to adjust to peak oil; no he wants to rebuild the oil industry's infrastructure, globally, piece-for-piece. Did I hear a feint whisper of “Check, please?” before the china crashed?

This is the gospel according to corrosion.com:

The Oil & Gas Journal has reported in its recent edition that the US oil and gas industry will need to invest US$50-100 trillion to rebuild its ageing infrastructure within the next 7 years and stave off a serious drop in oil and gas production. That’s according to Matt Simmons, chairman of Simmons & Co.International, who spoke recently at the Offshore Technology Conference in Houston, Texas.In a worst-case scenario, Simmons said, oil and gas output could fall by 10-20% by 2013 if industry does not replace its rusting, corroded assets. Spare capacity has also run out because formerly cheap prices for oil and gas precluded upgrading and construction of new facilities.

And from a presentation:

Rebuilding any significantpart of the infrastructure will absorb most of high quality iron ore and other metals.

Before we even tackle the rationality of clawing through such presbyopic expenditures, let's first observe the problems at hand. First, we're going to need lots of steel; and since America no longer carries the world's preeminent steel industry (we're third, but the industry is a shell), it means we'll have to buy produced steel elsewhere (hello trade deficit; oh brother China, can you spare a pauper a dime?). Also, such exorbitant expenditures will entice industry to cheapskate, inducing government to foot the bill, sucking money out of our pockets and enduring future generations stratospheric debt; vital engineers will be excoriated across sectors; and with this much money, planning, construction and engineering being concentrated into oil - an effort Simmons states "we might find that winning World War II was an easier task than what we have ahead of us" - means those faltering pipes and crumbling roads are going to be put off for a while...

Drive at your own risk: we have an oil industry to rebuild!

Now consider the time and cost required to build some of the following...

Oil Refinery...

Time to construct: depends... 4, 6, 7 sometimes even 10 years.

Cost: billions a piece

Number in US alone: 132.

Offshore drilling rig

Time to construct: years, depending on size and depth qualification

Rental fee: six-figures a day, going up to $500,000-$600,000.

Oil pipeline

Miles of oil pipeline in US alone: 55,000 of crude oil trunk lines (8-24 inches in diameter), 30,000 to 40,000 of small gathering lines (2-6 inches in diameter).

Mad Matt's guesstimate of replacing global pipeline network: $15 trillion.

Now mind you, even if the world got this rolling next year, it would take decades to complete (something Simmons admits). Simmons is also notorious for claiming oil peaked in 2005 (not according to the EIA, dipshit), and that oil is headed for a crash landing of 60 mbpd by 2015. This means he abides by the 5%, 6.5% annual depletion-rate flavors favored by many doomers (he stated months back that the world's oil fields are declining at annual depletion-rates of 20%, and that only significant investment can bring that down to single digits).

Still, we're going to pretend Simmons is a real Roosevelt, we'll assume we can get this done in 20 years. So, taking last year's total liquids production of 86.17 mbpd, considering Simmons's rhetoric that oil is in decline, and applying a 5% annual depletion-rate to this, we find that... after 20 years, total global production is under 30 mbpd!

It's not half-empty empty, girl. We have a shiny new oil industry for the next fifty years!

So, under Matt Simmons, we managed to squander tens of trillions of ollars, excoriated engineers from practically every vital sector, neglected renewable energy and infrastructure projects, and wasted an asinine amount of steel - all to build a brand new, spanking oil industry that will last us for the next fifty years; even though America, with a current refinery capacity of 17.455 mbpd, wouldn't even need anywhere near that amount under Simmons's apocalyptic future!

In all seriousness... is the oil industry's infrastructure aging? Yes. Is this a concern? Sure; but to the extent Simmons claims? Not even close.

According to the IEA:

Repair of the oil-production facilities built in the 1970s is part of the $6 trillion that needs to be spent by 2030 to meet global oil and gas needs.

Now some critics say the IEA is too stodgy, too out of touch to be reliable. Maybe. But considering Simmons's record of the past few years (I know you debunker aces already have this stuff down, but the mentally-stunted Billy Madisons of the peak oil community are a little behind their special ed. peers, and they need a few "tough love" donkey kicks to their rosey heads to - let's say... - speed them up):

$120-$190 barrel of oil was suppose to hit in 2005.

OPEC currently has no spare capacity.

He stated months back that "the boom of summer 2008 that sent oil and gas prices skyrocketing was the only truly great situation the industry ever had." (the seventies didn't count(?) - oh, and he oddly enough stated the 2008 industry boom wasn't likely to return anytime soon)

Back in 2003, predicted looming gas shortages by 2005; failed to predict shale gas's impact, or the current gas glut; still believes we're going to gas Purgatory.

Throws a conniption about Ghawar's 28% water cut (didn't anyone tell him oil fields typically don't peter out until they cross 50%?).

An oil price crunch is going to hit in a few months (link).

Was featured in the documentary "the Power of Community: How Cuba Survived Peak Oil." (this of course was beautifully debunked by JD)

Even Robert Rapier - a peak oiler, an Oil Drum writer, a fan of Matthew Simmons and somebody I do respect - questioned Simmons's technical expertise in this piece:

I would say that most technical people are familiar with fuzzy logic, so I figured that Simmons was just not a technical guy.

[...]

So, the point is that I am learning to take Simmons with a grain of salt when he is discussing technical subjects. He may be an ace investment banker - and he has certainly made a lot of money - but he has given me no reason to put stock in predictions like this from him: (Rapier goes on to discuss several subjects)

So anywho, what exactly does Mr. Simmons like to say?

“Data always beats theories. 'Look at data three times and then come to a conclusion,' versus 'coming to a conclusion and searching for some data.' The former will win every time.”

Indeed, Mr. Simmons. Twighight in the desert, my ass.

- Brewskie

Mr. Simmons's Mental Capacity Goes Up in Smoke

This ultimately will be a somewhat quick debunker post on the man (a trademark, "heart attack brick burger-like meat stack" is in the pipeline for him=)). I was reading a vaguely noticeable article on "why gas won't go to $4 a gallon this summer (as if anybody couldn't see that)," when this bit was eyeballed (link):

Houston consultant Matthew Simmons sees higher prices ahead as well. OPEC's supply capacity is strained, he said, and the recession has halted refinery expansions, pipeline improvements and offshore-drilling projects. "There's no extra crude in OPEC's pocket," he said. "We have no cushion."

There you have it, folks: "we're screwed;" all coming from the mouth of the man who driveled last winter "we don't have any evidences of a glut," or who's messianic certainty of natural gas Armageddon prevented him from forecasting shale gas's significance, or the gas glut we have now.

Of course for normal people - those who don't flake out their brains from "phalanxing" insidious chemicals from layers of makeup plastered onto one's face (like Wacko Jacko) - who have been paying attention to the news, they have gained clarity of a situation a 1st grader could comprehend: you're wrong, old fart.

Here's the real money shot:

And we fist-pounders demandingly ask: "Where's the beef?"

I hate to run rehashed material into the ground - yah gotta run idiots' heads into roughshod soil like wheel barrels to perk any activity in their frontal lobes! - but Saudi Arabia is or will be adding spare capacity(here, here... poke here), plus has exhibited avarice avity for its vaunted offshore potential; Iran's not shabby with "Great Lakes" oil discoveries (same can't be said for political freedom), then or now; and Iraq, if it can hold its shit together, has a Kobe Bryant-like oil future, with plenty more oil to be found.

Mr. Simmons is a colossal businessman who started his company from scratch; yet he banked an ego the size of his fortune on oil and gas Armageddon. This man has gotten practically nothing right this decade with his dooms day scenario forecast; yet his "fleet" of peak oil Lassie clones slobber their rough collie smiles to every phonon he emits. "Oh no, OPEC has no cushion. We're soo fucked!!"

Mr. Simmons never-the-less persists into his wintry charge of peak oil doom like ravenous Napoleon charged pig-head first into Russia. With such callous disregard to facts, it's no wonder Mr. Simmons played an influencing part with another indefatigable turd:

- Brewskie

Who Needs Cantarell?

One of the most popular firearms for this peakers' drive by shooting summer is the Canatrell collapse cannon. "Canterll collapsed in 2004 at 2 mbpd. It's down to 700,000 bpd; it's no longer Mexico's largest-producing field (Ku Maloob Zaap is)! I say: who needs it?

In 2007, Mexico was supplying America with 1.3 mbpd, making it effectively America's 3rd largest supplier. However, like much of the developed world, America has shrank the flubby ballast in response to high oil price overdose. As we can see from the graph below...

her appetite has shrunk considerably from the 21+ mbpd day she gorged on back in 2005, to under 19 mbpd currently. A recent estimate holds steady at 18.74 mbpd; the 2Q US oil usage is projected to be 4.2% lower than of last year, making it the lowest in 12 years. Don't slack now kids, let's keep up the good work!

As I've also posted before, despite Canatrell and the N Sea's seemingly sharp drops, non-OPEC crude production hasn't declined that catastrophically since its record in 2004:

She's declined an average of roughly 1 mbpd - that's an annual depletion rate of less than 1%! That's a far cry from the peakers' call of 5%, 6.5% 8% (I've even heard as high as 13%!). It also fits the debunkers' assertion that global peak will result in a slow decline, not a hard crash. It seems King Hubbert thought so, too.

So while Canatrell is giving up the ghost, OECD countries move on without a care...

And let's not forget that non-OPEC total liquids has been kicking ass; that we have our friendly neighbor to the north, Canada, who in good time pick up the slack where Mexico is leaving off (with unpardonable environmental sins, of course). So I say... let Canatrell die, because with 700,000 bpd to date, it can't hurt things much more.

In actuality, there is one country that needs Canatrell badly: Mexico. This impoverished nation receives 40% of its federal budget through oil revenues. With declining oil revenue, Mexico is still loaded with poverty, illiteracy, gangs, drug wars and guns. Somebody might want to tell Dr. Wirth he may want to reconsider his location for a peak oil sustainability.

- Brewskie

The King's Latest Presentation

I was scoping out the Oil Drum and found a link to Matthew Simmons's latest slide-show presentation, Two Energy Oxymorons: 1. Energy Independence 2. Energy Security. I didn't have much time to check it out, but here's a few things I found while skimming through it:

• Oil defiantly peaked in 2005 (some things never change; I think his reputation peaked in 2005).

• Shale gas won't save us; gas production still going down.

• UN dead wrong: world population will soar past 2050 expectations (Freddy Hutter pointed this out earlier).

• We're screwed! Oil production is going to fall off of a cliff, so is gas, the world's population is going to soar past anything meager oil production is going to sustain. Therefore... it's completely imperative to divert mountainous supplies of cash and resources to rebuild the oil industry's infrastructure! (Yeseriee, the King of Peak's twisted and contradictory logic is becoming eerily more Wacko Jacko.)

That's just a few tid bits. I'll try to scope through it more when I get the time.

- Brewskie

The Good Nazis Need Your Support

The Oil Drum has launched its fund drive; it needs your zealotry, your unquestioning patriotism, your punch drunk love of Jim Jones' Kool-aid, and most of all - your Schatzanweisung des Deutschen Reichs.

The Drum would love your support more than ever in these tough times; they need your support so they can stifle dissenters, knock off the scarlet letters with the dishonorable "Drum boot."

Remember - if King Hubbert couldn't nail global peak, the Wikipedia-sourcing stooges won't either.

- Brewskie

Oil's Got a While in the Infirmary

Regardless of the low oil price environment, it's still fun and reassuring to know that, oil will likely be sitting in the outhouse for the rest of the year, with nothing - not even mosquitoes - giving a notice or care of which dank hole it's lost in. I planted an earlier post on why the oil bulls may be gone for a while - and I have this rationale: crapping demand, excess capacity (OPEC production is down from record production of 32.82 mbpd last year to 28 mbpd last March; remember, Saudi Arabia will add surplus capacity this year, and has more on the way), plus the eradication of speculative rats.

Here's an interesting bit I discovered: while OPEC is trying to reinvigorate $80 per barrel dreams - like the federal government is trying prop Wall Street Banks from the reeking dead - Russia are Brazil are contrarian players of infuriation. Read below:

Well, part of the plan is successful. U.S. imports from OPEC fell 818,000 barrels per day or 14% to 5.02 million barrels per day in January from a year earlier. But if you remember the old adage, "While the cat is away, the mice will play," OPEC's plan is not holding up too well. When OPEC cut production, Russia and Brazil jumped in and did the opposite, namely increase exports to the U.S.

Brazil more than doubled its exports to 397,000 barrels per day, while Russia increased its to 157,000 barrels per day. Russia even lowered its export duty to $15.00 per barrel from $15.70 per barrel. Russia has been trying to get a foot hold in the U.S. market for years, while Petrobras is very aggressive in its marketing policies and plans to spend $174.4 billion through 2013 on increasing production and exports.

So where are we now? Well, inventories have climbed to 1.65 million barrels in the week ending April 3, the highest level since July 1993. Supplies are 12% above the five-year average and the equivalent of 25.4 days consumption.

Check this out - America's driven miles continues to decline:



Now, to further affirm my promulgation, I will post this recent Seeking Alpha post of some recent OxAn rationle:

Producers argue that oil prices need to remain high to fund the investment necessary to meet future oil demand, an important part of which is replacing production lost to depletion, OxAn says in Outlook for oil prices looks weak. They say that at current price levels investment will be insufficient. Once oil demand growth resumes, OPEC’s production cuts will be quickly eroded as will the level of surplus capacity. The attraction of this argument is that it justifies high oil prices no matter how bad or deep the current crisis because it is future shortages that are the imperative rather than the present.

“However, with supply relatively abundant and OPEC finding each incremental reduction towards its output goal of 24.845 million b/d harder, how demand evolves is critical to the price outlook. It is far from certain that a return to the pre-credit crisis ‘peak oil’ paradigm of ever-rising commodity prices will be quick, or will
happen at all.”

It adds,

Consumer wealth. Part of the ability to absorb rising oil prices without impacting demand was that oil had become relatively cheaper in terms of the proportion of consumers’ disposable income that it absorbed.

However, with rising unemployment, economic contraction and falling wage inflation, oil continues to be perceived as expensive, despite having lost two-thirds of its value since its peak.

And...

There is a tendency to assume that under ‘normal’ economic conditions, oil demand will always rise everywhere, and for developing economies it will trend towards per capita levels seen in the OECD. However, both Japanese and European oil demand was falling or static before the financial crisis, while neither have nor are likely to see the same level of car ownership as the United States.”

So there you have it. Not only are the herd of oil bulls not stampeding, it's time for the bulls to take a one-way trip to the Smithfield morgue.

- Brewskie

The Oil Drum Becomes a Subsidiary of Fox News

It's April Fools, but it might as well be true. Rubert Murdoch's fascist black heart would be proud with palpitations if he learned about "New Age Nazi" censorship: deleting dissenting comments; for the particularly recalcitrant scoundrels, the royal "Drum boot (my scarlet mark is still fresh:))." Why... for a small parcel of good farm land, a couple of wheel barrels, a dopey crew of new age slaves drunk on peak oil Kool-aid, plus Jim Jones' ever-reverberating loud speakers, I bet Rubert could fetch the "Good Nazi" Oil Drum handsomely; enough for Mathew Simmons to delightfully shout, "Empire!"

Here's a couple of hilarious videos of Stephen Colbert slamming Glenn Beck. Glenn Beck isn't just borderline mentally retarded - he's a paranoid-schizophrenic freak himself! Blogger.com won't let me post them (for some reason), so I've provided links to the "doom bunker (here and here)."

The new age hippies and grungies, who comprise a large readership of the Drum, may be markedly different from a segment of Fox News' audience - say, overweight and undereducated trailer-trash, flannel shirt-wearing truck drivers, and portly "bible belt" moms -; but they share one principle in common, and that's the pacified, pensive appetite of being spoon-fed bowdlerized garbage without taking a moments' thought, and trying something different from the "other view points" buffet.

Speaking of good Nazis... Drum nuts, here's your new "doom bunker" roommate:

- Brewskie

The Oil Drum: Four Years in the Desert

Today marks the 4th birthday of the Oil Drum. From Prof. Goose:

Dear readers, today marks the 4th full of year of the existence of The Oil 'Drum.
Our durability is because of you, the readers. We wouldn't—couldn't’t—do this if we didn't think people were listening, helping us spread the word, and participating in and advancing the conversation. So, I offer you, our readers, a sincere thank you from all of our staff.

Their durability is because an army of morons are IV'd to the Drum for daily tasting, laconically nodding their space-monkey minds like Limbaugh dittoheads.

Prof. Goose acknowledges a recent peak-and-decline:

In our fourth year, we’ve almost doubled our historical number of visits from 9.7M to 17.1M and historical unique views from 23.6M to 39.6M. While the traffic to TOD has waned a bit of late with the decline in the price of oil, the upward traffic trendline still holds.

Typical Orwellian-doublespeak from the Drum troglodytes. Always report rosy forecasts though numbers are down; periodically change peak dates, but never admit to the Nazi-zombie masses your previous blowups. Your word is golden; it feel like soothing god-breeze from Hitler's mouth.

I should remake Ghawar Guzzler into a James Bondesque site, a blog devoted to spying on the Oil Drum. I'll call it, "You Can Never be Wrong Twice."

Lookin' forward to being a pain in the ass, peaktards.

- Brewskie

The Oil Drum Shoots Blanks Again

The mentally challenged peak oil community has been a little obdurate at grasping basic facts. This is what happens when, as a subspecies of homo sapiens, one refuses to evolve his/her bumble bee attention span like the rest of the race. However, a few of the brighter bulbs are starting to dimly flicker to a basic concept: oil did not peak in 2005. Their new hypothesis? 2008 is the new 2005. This has been recently proposed by Dr. Clifford Wirth (who I burned last week), and another Drum dead beat of the Peak Royal Guard, Ace, who - along with his compadre, Gale "the Actuary" - comprise an ugly two-headed mutt I neutered several weeks ago.

Let's get to the rematch. Ace had an earlier proposition that Saudi Arabia peaked in 2005. Never mind that Saudi hit record production last summer of 9.7 mbpd. Ace didn't notice that when he was burning books; he also doesn't mention his porous Saudi production numbers that would flunk a kid in special ed. In his recent post, he also mentioned Saudi Arabia as "having peaked," but with "a sustainable surplus of 1 mbpd." Uh... no, Ace. Since Saudi Arabia produced 9.7 mbpd last summer, since it has reduced production to just under 8 mbpd, and since the oil kingdom still maintains low production costs ($2-3 per barrel), this is indicative that Saudi has more than 1 mbpd of surplus production; plus they're adding to their surplus (here, here and here)!

With Ace trying to keep cool with the latest peak oil trend, by proclaiming that 2008 is the year peak landed, he recently fired his battle shot to shake the peak world. Here's some rambling from his paranoid thesis:

World oil production peaked in 2008 at 81.73 million barrels/day (mbd) shown in the chart below. This oil definition includes crude oil, lease condensate, oil sands and natural gas plant liquids. If natural gas plant liquids are excluded, then the production peak remains in 2008 but at 73.79 mbd. However, if oil sands are also excluded then crude oil and lease condensate production peaked in 2005 at 72.75 mbd.

The US Energy Information Administration (EIA) and the International Energy agency (IEA) should make official statements about declining world oil production to renew the focus on oil conservation and alternative energy sources.

What toilet paper is your MBA made out of, Ace - Afghan Afghani? The IEA has news for you: Record production for 2008. There's a big difference in production, too. Notice the first graph below:



And the second, which excludes biofuels and includes EIA production info.:

Notice the big difference in production stats. between my graphs and Ace's; notice, too, where our sources of information come from - I got mine from the EIA and IEA. If you look in the left-hand corner of his graphs, you'll see he got his info. from... Wikipedia...??

Now just to be fair, I recently posted a link about electric freight trains from Wikipedia last week when I roasted Dr. Wirth - but this was a safe bet. Anybody who's been to Europe or other developed parts of the world knows electric freight trains exist - something Dr. Wirth's Ph.D. didn't tell him; but to rely on Wikipedia for scientific information, particularly on matters of oil production and peak oil, is a ludicrous and stupid bet at best, and a humilating one at worst. No respectable journalist refers to Wikipedia anymore; they did in 2004, but Wikipedia's reputation has rotted since.

Anyways, Ace, it's not fair using the recent declines in production as proof of global decline. That's been the result of repeated cuts by OPEC (scroll down for info.) in effort to stave off cheap oil; and as I stated in my assault on Dr. Clifford, (a) the world was in the midst of an oil glut last summer and (b), the glut could have been much bigger and thus more harmful on OPEC and Russia's fiances.

Your 0-for-2 now, Ace. You and your failed statistics are nothing more than rotted cabbage in the peak oil land fill. You're a footnote in a long history of failed peak oil and its prophecies, a cult that dates much of the oil industry's history, a cult that - like Dubya - refuses to learn from one thing - personal mistakes. One of your high peak priests, Ken Deffeyes, recently celebrated his ninth failed peak oil prediction (via Peak Oil Debunked). "The King of Peak," Mathew Simmons, bluntly stated at the beginning of last year's oil flop, there's "no roof on oil prices at this point." Ooopppss.

Your referral to Wikipedia is bleeding red rosacea to you and your peak oil community. It's this and your bottomless pit of failed predictions that are proof nobody can take you seriously. Oil will inevitably peak someday - nobody, with at least a fair double-digit I.Q., will dispute this; but when the day inevitably comes, the BBC and other outlets of respectable journalism will turn to others for referral. They'll turn to OPEC, Exxon Mobil, the IEA and EIA, CERA and others with access to the industry. Nobody, but lowly peak bloggers, will to turn to the Oil Drum. You'll have your celebrations in your peak oil "victory gardens," but no one will come. Stay there.

Hand over your blanks before you shoot yourself in the ass again, Ace.

- Brewskie

Dr. Clifford Wirth's Big Mistake Super Sized My Oil Glut

(Fair warning: this is a long one, so grab a drink:))

Dr. Wirth screwed up bad. He tried to pull off a miracle upset for the peak team on the game's last play, but his Ph.D. couldn't save him from his own stupidity. Yesiree... after he "Lambeau Leaped" into the stands to celebrate his 45-yard touchdown run... he realized, after the fans' clawing wrath, he scrambled into the wrong end zone and the clock axed his team!

I first remembered Dr. Clifford when he roamed around the halls of the Internet last year, incessantly screaming this blathering doom prophecy like an annoying banshee:

"Oil prices are set to skyrocket: According to energy investment banker Matthew Simmons and most independent analysts, global oil production is now declining, from 74 million barrels per day to 60 million barrels per day by 2015. During the same time demand will increase 14%.This is equivalent to a 33% drop in 7 years. No one can reverse this trend, nor can we conserve our way out of this catastrophe. Because the demand for oil is so high, it will always be higher than production; thus the depletion rate will continue until all recoverable oil is extracted. Alternatives will not even begin to fill the gap. And most alternatives yield electric power, but we need liquid fuels for tractors/combines, 18 wheel trucks, trains, ships, and mining
equipment..."

This is what happens when you become Mexico's finest peak freak: you don't realize that you can run tractors/combines (hydrogen and electric), trains (you're embarrassing yourself, Clifford), ships (it's the armed forces, but they gave us the internet), semis, and mining equipment on electric power! Didn't he know diesel locomotives are actually diesel-electric hybrids - have been for decades? The diesel engine is, in effect. a diesel generator; we’ve had electric trolleys since the 19th century.

Anyway, Dr. Clifford recently went to Tijuana to load up on peak oil kool-aid for his best performance; this is what he blathered while hooked up to the half-barrel...

“Global crude oil production had been rising briskly until 2004, then plateaued for four years. Because oil producers were extracting at maximum effort to profit from high oil prices, this plateau is a clear indication of Peak Oil.Then in August and September of 2008 while oil prices were still very high, global crude oil production fell nearly one million barrels per day, clear evidence of Peak Oil (See Rembrandt Koppelaar, Editor of "Oil Watch Monthly," December 2008, page 1)”

Since peakers have a memory retention of a bumble bee when recalling their failed predictions, I decided to make sobering sense out of info. seen through kool-aid goggles. First, he had the wrong address (you can find it here); secondly, his puzzle was solved in a matter of minutes, plus I made a bigger discovery - additional light on the size of the glut and how much bigger it could have was gained. Let's start with this:


Okay, production dropped by a million in September, and another thing Clifford didn't mention, it dropped more than a million the month before. This is nothing to worry about and everything will be explained in a bit. Let me explain August: The August drop was caused by a sharp, but coincidental and momentary drop in production by a group of non-OPEC producers. Such drops are known to occur, with instant rebounds coming a month or so down the road. For example:

Aberizan took an August vacation in 2007, and rebounded in September with no effect; and production went into the infirmary last year, around August, taking roughly 500,000 bpd with it. This chart only goes to October.Also among our list of guilty partners, we have (EIA goes to October):

And Norway with four weeks of European vacation in August...

But non-OPEC was back in the swing of things by October; look, by November (EIA goes to October) production was nearly healed to prior levels, and were fully functional by X-mas. Onto September...

The month Dr. Wirth referred to was easy. One perpetrator was primarily responsible: the United States. An all-star hurricane season, led by Captain Ike, barreled through the Gulf of Mexico. Where does America get 25% of its 5 mbpd (2008 numbers; crude only, no liquids) of production? You're a genius! Check out the graph below and pat your intelligence on the back:

America’s fat ass raced against Nicole Richie to see who could lose the most weight in a month. All hands to the star-spangled winner of the Biggest Loser: One Million Barrel Edition!

Now for the real kicker. A drop of over 2 mbpd of production over two months is a major cut, especially when oil prices were high. Yet, despite the added jet propulsion from the drop, Wiley E. Coyote's jet pack, fueled by expensive oil, couldn't keep him falling to the ground from the upper stratosphere - because it was built by greedy speculators, not honest Acme factory workers:)

If these production cuts had not occurred, OPEC and Russia would have been flabbergasted with even bigger financial problems; would Russia have had deja vu of Boris Yeltin's spectre laughing his roasted drunk ass off? The more than 2 mbpd drop was a blessing in disguise for these lads. Remeber when Iran proclaimed oil markets were oversupplied by 2 mbpd late last year? Just think of how much more things could have been bloated...

The oil game was blowout, the peak team has a long off-season to drag out before the Mayan doom date. They're pissed off at the current collapse-trend driving doomers' hearts into primal urges - the finance crisis. Dr. Wirth, your peak oil career is over, there's no room for you on the team's bus except in the septic tank. It's time to take one for the team.

Meanwhile, Dr. Wirth, if you ever come to your senses and decide to come back to the states, we have one career perfectly suitable for your background (Clifford Wirth taught public policy and public administration). You can start by helping these people plan sustainable communities:

- Brewskie

Take 2: More Oil Drum Pseudoscience

Note: Blogger.com evidently has some bugs in it. I was working on a bit about some recent Oil Drum postings several days ago, and decided to post the blog today. For some strange reason, the post got shoved back several days; here's the bit right here.

More Oil Drum Pseudoscience

The Drum nuts have declared war. They've painted their obdurate faces with soy-based war paint; they're dressed with empty oil barrels strapped around them, dancing around like tribal shaman to an apoplytic drum beat, burning piles of decadent "Uncle Sams" and smoking reefer through rolled-up bills of local currency. These half-baked nitwits are burning a dark cloud remiscant of "Old Pittsburgh," burning half of Mexico smoked in their stead; and they're desoltely depressed, plus they're going to do their damnest to pull us down into their "sustainable" abyss.

Below I have three recent golden eggs cooked up by the peaktard geese themselves. It's time to get chopping and debunking.

The first is a glittering doozy by Gail the Actuary. His thesis proclaims that a collapse of the global finacial markets will rot the floor under global oil produciton, sending it smack-face into the concrete foundation hundreds of feet below. His make-believe scenario plays out that oil production, as a result of finacial meltdown, will fall to... 20 mbpd by 2012!! And does he have an ebola virus to play with, too?

Some worthy moresels found in this torrid essay can be read below:

When the economy hits limits, such as an oil supply that cannot grow fast enough to support the growth needed to keep the treadmill going, repaying the
debt with interest becomes a huge burden.

We have been reaching that point in the last few years, as oil production remained approximately flat and oil prices rose. Food prices rose as well, but real wages did not rise fast enough to keep the treadmill going.

Soon defaults on debts started.Once defaults started on debts, we suddenly shifted into a new cycle:Peak oil -> higher oil prices, but little additional production-> stagnant wages -> defaults on debt -> banks not in a position to lend as much because of losses on loans -> debt harder to obtain -> lower demand -> lower prices on oil -> layoffs and less investment.

[...]

It is not too hard to envision a situation where the worldwide banking system collapses, and it is necessary to start over, perhaps almost from scratch, with new currencies and new international treaties.

As the result of such changes, there is at least the possibility that the world's financial system may function at only a minimal level, and world oil production will take place at only a very low level.At this time, there is vastly more debt than there are assets to pay back the debts.

Many times, two or three or four people or organizations think they have claims on the same assets. Think of a house. An investor buys the house, and rents it out. The renter pays his rent, and has a claim on the house. The investor is the "owner", so he has a claim on the place. The mortgage on the property is likely added to a package of other mortgages, and sliced and diced and resold to other investors. Each of them indirectly believes that they have some sort of claim to the property. There also may be an insurer guaranteeing the debt that also has some type of claim.

The Federal government, through one of its loan or debt guarantee programs may also depend on the underlying assets. In addition, if the owner doesn't pay his taxes, the local government may also feel it has a claim to the property.

[...]

I would expect that the renaissance, when it comes, would begin with basic human needs, in local communities and local agriculture. People will grow their own food, and trade with others in their community.

There will be small shops that make shoes and clothing and cooking utensils. People may begin to raise animals for transportation.People will still need energy for heating their homes and for cooking.

The initial impulse will be to cut down trees for these purposes, but with the world's large population, this will tend to produce deforestation. Neo-environmentalists may urge people to use other products for this purpose--such as coal or oil, if these can be obtained. There may be some local electricity produced, particularly water generated, if transmission systems can be kept in good enough repair.

Wow. Without using any high-powered financial tools, without drawing upon a worthy financial background (he hasn't indicated one), Gail has managed to make a worthy prediction of a frightening, yet gentle Mad Max "alternative-verse." This man is truly brushed up on his James Kunstler; perhaps he can find a few other worthless novels scribed by the man buried in some K-Mart bargain bin.

Anyway, I'd like to know what he had burning up his ass when he plugged in his tired Apple IIe to formulate this startling forecast. The only card he's got up his sleeve to build this hypothetical shack of a house is something based on feelings. At least Mathew Simmons did some honest research before getting his rear knocked on the ground.

The next golden egg was laid by an Oil Drum writer who goes by the alias, "Ace." Ace has an MBA, has been a professional investor for ten years, and still has not figured out how to properly link his email address. His unoriginal thesis is that - you've heard this before! - Saudi Arabia peaked back in 2005. Why do peakers have such an obsession with Ghawar peaking back in 2005(?) - it's purely a numbers obsession. It can't be 2006, 2007. It can't be several years or a decade+ in the future; no, they said it peaked in 2005, so it had to have peaked mid-decade. There's no other rationale explanation for it other than their own pig-headed stupidity.

According to his graph, Saudi peaked in 2005 at 9.6 mbpd and is destined for a inescapable decline of 8 mbpd by 2011! This man is an MBA, he's a professional investor - did he have a special ed. lapse when Saudi Arabia pumped 9.7 mpbd last summer? Does this man need an overdose of Strattera to help clearly realize this is a jettison of peak's gravity? His graph is below:

For one kid who deserves kudos, Khebab, good job pointing Ace's peaktarded statistics in the comment section:

Forecast 2006 2007 2008 2009 2012 2015

EIA: 9.15 (2006), 8.72 (2007), 9.33 (2008), NA for beyond.

IEA: 9.23 (2006), 9.34 (2007), 9.44 (2008), 9.55 (2009), 10.26 (2010), 11.30 (2012).

Cambell: 9 mbpd straight through.

Ace('07): 9.02 (2006), 8.73 (2007), 8.44 (2008), 8.16 (2009), 6.86 (2012), 5.96 (2015).

Ace('09): NA (2006), NA (2007), 8.85(2008), 8.30 (2009), 7.70 (2012), 6.72 (2015).div>

As you can see, the EIA, the IEA have different production statistics - all of them higher than Ace's. The EIA and IEA both indicate that Saudi Arabia increased rather than decreased production in 2008. Good job, Khebab, for the exemplary fact-checking homework and for debunking this fraud; while Ace is taking a load boat of Xanax to heal his stunted feelings (and help with mommy issues), we'll move onto the next golden bit.

This one is a little retro-recall posted last week. This is Drum at it's worst: under a hell-bent binge of meth, these boys resorted to funky "count the teeth math" to come up with this golden goober. According to the graph below, oil production will see a near 10 mbpd nosedive by 2012, followed by a gentle glide down to 60 mbpd by 2015. The peak priests have a serious obsession of seeing oil fall to 60 mbpd by 2015. They've been proclaiming this ever since the general peak consensus stated that production peaked back during 2005. Since oil production has gone up since 2005, and with 2015 is getting closer, perhaps panic is setting in and the religious zealots are now resorting to desperate measures, creating a warped version of their production predictions. That's cheating, peaktards. Maybe you guys should join pastor Ted Haggard for group therapy and help generate "manly thoughts."

The funniest joke the peak oil community doesn't get, aside from getting ridiculed for their false "the sky is falling" prophecies, is they're so often proven wrong on other false proclamations; and yet they continue to plunge off their cliff like the good war horses they are. They're the stupid dog that returns to its vomit. Ghawar was pronounced an old man that was declining at 8%, even though production has held steady at 5 mbpd for years; natural gas production was going to "fall of of a cliff" here in the U.S., yet production shot up 9% at one point last year - the biggest increase since the late 50s; or that large deposits of oil aren't being discovered.

These scatter-brained twits fall in the same category as other schizophrenic outcasts: paranoid right-wing gun nuts, survivalists and religious zealots. Listening to stupid people like Rush Limbaugh is occasionally entertaining, but it's shocking to witness how far human intellect can fall.

As Albert Einstein said, "Only two things are infinite, the universe and human stupidity; and I'm not so sure about the former."

- Brewskie

The Oil Drum Kranked on Meth: 2012 Will See 65 mbpd

I realize I've been fixated on the Oil Drum lately, but these peak oil tycoons have really been OD'-ing on the peak oil Kool Aid lately.

Today, we have this gem from the boyz. It's a declaration that oil production will free fall after this year, seeing a rapid decline from 73-74 mbpd of crude production (stated on the graph), sliding down to about 65 mbpd by 2012 - after which... production will (somehow) glide down rather than fall. Below is a graph, and you can find this load of crap here.

Mind you, these lads - like Mathew Simmons and others in the peak oil community - have been screaming wolf for decades, screeching as loud as their tourette syndrome loaded lungs will allow, as often as their schizophrenic "peak demons" taps them on the shoulders.

Let's consider:

• They proclaimed the Ghawar Oil Field has been in decline at a rate of 8% since 2005 (Ghawar increased production last summer, sending it to heights not seen since its record setting year of '81).

• They've proclaimed Saudi Arabia itself is in decline (again, the oil kingdom increased production last summer, sending the slack jaws of the Drum boyz to the floor).

• Three years back, they forecasted a Norht America gas decline this decade. They completely shot down shale gas' potential, and got knocked back on their asses last year when they witnessed, at one point, America's near 9% increase in production - the largest since the late 1950s.

• They failed to forecast oil's Wiley E. Coyote free fall last summer.

• And so on...

The point is these bong boyz have been making failed proclamation after failed proclamation. They cherry pick their interpretations in the face of their detailed graphs and extensive research. Have they mentioned anything about last year's oil glut (I've got stuff coming about this later this week)? How much do they report on the oil glut we have now; the decline in demand occurring presentling, and has been occurring with OECD nations since 2005 (see page 5)? If they're going to make this ludicrous prediction, then let's hold them accountable. Let's ask them why production isn't nose diving in several years. Let's ask them what's wrong with their analysis, and why oil isn't up to $300 a barrel.

This is why mainstream society doesn't take these ostracized cranks seriously: because they're a load of Chicken Littles who've cried wolf far too many times over too many decades.

- Brewskie

Okay, Now it's Gap Oil...

"Peak oil" became a household term last year with the sky high death march of oil prices. Many supposed "experts," including Matthew Simmons and Robert Hirsch, became overnight celebrities on MSNBC, warning that the current and future supply of oil would bring dire consequences to civilized life on the planet. Their rationale stated, the situation of oil prices was a result of tight supply amidst high demand - as opposed to a speculative run, which it was (video) - global oil production was at or near peak, and global production was at or would soon enter an irreversible decline.

Now that the speculative oil bubble has burst, the global economy is in the shit can, and the world is drowning in an oil glut, prices has have rested to more palatable levels (some OPEC members, desperate for cash, are actually talking about increasing production!). This is handsomely benefiting consumers in developed countries, while (unfortunately) bruising oil producing nations' fiances. It appears cheap oil will be around for at least a bit longer. Out of the smoldering peak oil ruins has come a new concept: gap oil. Its rationale is that future oil demand will outstrip production, causing a supply-demand gap, propelling oil prices to the moon. The editorial can be read here.

Editor's comment: it's the opinion of Ghawar Guzzler that the next phase of energy evolution is in its prelude; that while oil is still king, its glory days as a fuel are in the late chapters, and future production will partially soothe demand; and humans will move into the next energy chapter in the decades ahead. One thing needed remembering is that most oil used is for transportation; solve this dilemma, and the world will have more oil than it will know what to do with, creating "fantastic" cheap plastic products such as beef jerky makers found at Wal-Mart. Portly greeseballs, rejoice!

- Brewskie