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 You are in : Peak conventional oil and abundant energy

US shale boom is over, energy revolution needed to avert blackouts
By Dr. Nafeez Ahmed, Earth Insight, hosted by The Guardian
In 2012, the International Energy Agency (IEA) forecast that the US would outpace Saudi Arabia in oil production thanks to the shale boom by 2020, becoming a net exporter by 2030.
The forecast was seen by many as decisive evidence of the renewal of the oil age, while informed detractors were at best ignored, at worst ridiculed.

Now IEA chief economist Fatih Birol says:

"In Europe we are facing the risk of the lights going off.
This is not a joke."
We need $48 trillion of new investment to keep the lights on - and it's far from clear that investing in increasingly expensive unconventional oil and gas is going to cut it, without serious impacts on the global economy.

Currently, already, the IEA report reveals that over 80% of oil company investment is going into making up for exhausted fields where production is in decline.

The agency also calls to ramp up investments in renewables and increasing efficiency, along with regulatory reform to incentivise investments, as part of the package.
While the fossil fuel empire is crumbling, the renewable energy sector has received 60% of total investment in power plants from 2000 to 2012.

limited availability of natural resources relative to rising costs would undermine continued economic growth by around the second decade of the 21st century.
Although widely ridiculed, recent scientific reviews confirm that the original report's projections in its 'base scenario' remain robust.
In 2008, Australia's federal government scientific research agency CSIRO concluded that The Limits to Growth forecast of potential "global ecological and economic collapse coming up in the middle of the 21st Century" due to
convergence of "peak oil, climate change, and food and water security"
, is "on-track."
Actual current trends in these areas "resonate strongly with the overshoot and collapse displayed in the book's 'business-as-usual scenario.'" 06/06/2014

MHIP thinks this article is already confirmed in (23/02/2015) (24/02/2015)

How Long Can the U.S. Oil Boom Last?
The long-term problem for oil frackers isn't just low prices.
It's low reserves.
Dennis Dimick
National Geographic
Published December 19, 2014

Now that oil prices have dropped to levels not seen since 2009, helped by a flood of oil flowing from hydraulic fracturing or fracking wells in North Dakota and Texas, it's time to ask the question:
How long can the U.S. oil boom last?

In the short term, the price drop threatens profits from fracking, which is more expensive than conventional drilling.
Sure enough, permit applications to drill oil and gas wells in the U.S declined almost 40 percent in November.

But in the long term, the U.S. oil boom faces an even more serious constraint:
Though daily production now rivals Saudi Arabia's, it's coming from underground reserves that are a small fraction of the ones in the Middle East.

That geologic reality is easy to forget in the euphoria of the boom.
Output from oil fracking in the U.S. , from about one million barrels per day in 2010 to more than three million barrels per day at the end of 2013.
Total U.S. oil production has risen to more than nine million barrels a day, a level close to 1970's historic high and nearly as high as the 9.6 million barrels of daily oil production from Saudi Arabia.

Years of oil prices above $100 per barrel have driven a boom in oil production from shale, providing thousands of oil field jobs and boosting U.S. production to near-record levels.

While the U.S. still relies on imports for about 40 percent of its petroleum, oil imports have dropped since 2005 because of improved domestic supply from oil fracking, better vehicle fuel efficiency, and depressed fuel demand as a result of the 2008 economic crash.
Because of all these factors, oil prices that regularly reached more than $100 per barrel the past three years have dropped about 40 percent to $60 or below.

Breaking Even With Fracking

Fracking oil or gas from mile-deep shales is expensive:
It requires deep vertical and horizontal drilling and injections of chemicals, sand, and water at high pressure.
Until now, high oil prices have nonetheless made fracking a lucrative investment.
More than a million fracked oil or gas wells exist in the U.S.

With oil prices down, so are profits.

Businessweek reports that the "dirty secret" of the shale oil boom is that it may not last.
Fracked wells are short-lived, with a well's output typically declining from more than 1,000 barrels a day to 100 barrels in just a few years.
New wells must be drilled frequently to maintain production.

While wells currently pumping can survive low market prices because they have already incurred startup and drilling costs, low oil prices diminish the incentive to invest in new well investments.

Of course, as Michael Webber of the University of Texas at Austin told the New York Times, price fluctuations are part of a repeating cycle in the oil business over the past century.
No one thinks the current low prices are permanent.

"This is what commodity markets do," Webber said.
"They go to high price, and high price inspires new production and also inspires consumers to use less.
After a couple of years of that, prices collapse.

Then low prices inspire consumers to consume more and encourage suppliers to turn off production.
Then you get a supply shortage and prices go back up."

Geological Limits

While low prices may only temporarily throttle expansion of oil fracking, the underlying geology—deeply buried shale rock that contains diffuse hydrocarbons —looms as a more fundamental limit on fracking's future.
Recent projections indicate that by decade's end or a few years after, U.S. oil production from fracking will likely flatten out as supplies are depleted.

"A well-supplied oil market in the short-term should not disguise the challenges that lie ahead," International Energy Agency (IEA) chief economist Fatih Birol said in releasing the IEA's 2014 World Energy Outlook.

The IEA report projects that U.S. domestic oil supplies, dominated by fracking, will begin to decline by 2020.
"As tight oil output in the United States levels off, and non-OPEC supply falls back in the 2020s," the report says, "the Middle East becomes the major source of supply growth."

Earlier this year the U.S. Energy Information Agency (EIA) also forecast a plateau in U.S. oil production after 2020.

The basis for these forecasts are estimates of shale oil reserves.
A 2013 Energy Department report on technically recoverable shale oil—the amount that's recoverable without regard to cost—puts U.S. potential at 58 billion barrels.
That's equivalent to a little more than eight years of U.S. consumption at the current rate of almost 19 million barrels a day.

The Energy Department's estimate of "proved reserves" of shale oil—those that can be recovered economically today—is only about ten billion barrels.
That's about a sixth of technically recoverable reserves, and less than a year and a half's worth of current consumption.


Price is important, but whether oil exists at all is even more so. ( 19/12/2014 )

MHIP thinks this article is already confirmed in (23/02/2015) (24/02/2015)

Specialists say expensive oil is here to stay and it will 'break economies'
( e.g. Former BP geologist: peak oil is here and it will 'break economies' )

What do they mean?

Our global economies and societies ( 7.2 billion persons ) developed this far only because of cheap fossil fuels.

There will be no cheap fossil fuels any more ( even now the price of oil is too expensive for our fragil economies )

When we have no cheap other alternative these global economies and societies will collapse at some point.

Food prices are increasing
( 1 calorie of food needs 10 calories of fossil fuel )

Social unrest is increasing.

Global riot epidemic due to demise of cheap fossil fuels

The riots are symptomatic of a deeper, protracted process of global system failure as we transition from the old industrial era of cheap and dirty fossil fuels, towards something else.

Unfortunately we do not have enough sweet spots for renewables and fossil fuel free food.

But we have the sweet spot of the sweet spots of renewables and fossil fuel free food in Myhouseinparadise.

As such Myhouseinparadise is a Safe Haven.
and the ideal place to do research to improve the use of renewables here in Myhouseinparadise and elsewhere.
That is what we do and will.

We will show the world that we live a high quality lifestyle ( one off the highest ), drive electric and still do not pay electricity bills or fuel bills and on top of this earn good money through participation in renewables.

Industry expert warns of grim future of 'recession' driven 'resource wars'
( at University College London lecture )

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You will need renewables and a sweetspot for life or Myhouseinparadise.
The latter you already found !

The countries that are most affected by rising oil prices are the countries that use oil to the greatest extent in their mix of energy products.
In Figure 3, that would be the PIIGS.
The rest of the US, EU-27, and Japan would be next in line.

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Even before the Arab Spring erupted in Tunisia in 2010, analysts at the New England Complex Systems Institute warned of the danger of civil unrest due to escalating food prices.
( prices.

If the Food & Agricultural Organisation (FAO) food price index rises above 210, they warned, it could trigger riots across large areas of the world.


Hunger games

The pattern is clear.
Food price spikes in 2008 coincided with the eruption of social unrest in Tunisia, Egypt, Yemen, Somalia, Cameroon, Mozambique, Sudan, Haiti, and India, among others.

In 2011, the price spikes preceded social unrest across the Middle East and North Africa - Egypt, Syria, Iraq, Oman, Saudi Arabia, Bahrain, Libya, Uganda, Mauritania, Algeria, and so on.

Last year saw food prices reach their third highest year on record
corresponding to the latest outbreaks of street violence and protests in Argentina, Brazil, Bangladesh, China, Kyrgyzstan, Turkey and elsewhere.

Since about a decade ago, the FAO food price index has more than doubled from 91.1 in 2000 to an average of 209.8 in 2013.
As Prof Yaneer Bar-Yam, founding president of the Complex Systems Institute, told Vice magazine last week:

"Our analysis says that 210 on the FAO index is the boiling point and we have been hovering there for the past 18 months...
In some of the cases the link is more explicit, in others, given that we are at the boiling point, anything will trigger unrest."

The countries that are most affected by rising oil prices and have peak oil demand earlier are the countries that use oil to the greatest extent in their mix of energy products.

Peak demand is very much related to jobs.
Peak oil demand occurs when a country is not competitive in the world market-place, and because of this, loses industry and jobs.

Sheikhs v shale

The economics of oil have changed.
Some businesses will go bust, but the market will be healthier

Dec 6th 2014 | From the print edition



THE official charter of OPEC states that the group’s goal is “the stabilisation of prices in international oil markets”.
It has not been doing a very good job. ...

This near-40% plunge is thanks partly to the sluggish world economy, which is consuming less oil than markets had anticipated, and partly to OPEC itself, which has produced more than markets expected.
But the main culprits are the oilmen of North Dakota and Texas.
Over the past four years, as the price hovered around $110 a barrel, they have set about extracting oil from shale formations previously considered unviable. Their manic drilling—they have completed perhaps 20,000 new wells since 2010, more than ten times Saudi Arabia’s tally—has boosted America’s oil production by a third, to nearly 9m barrels a day (b/d). That is just 1m b/d short of Saudi Arabia’s output. The contest between the shalemen and the sheikhs has tipped the world from a shortage of oil to a surplus.

Cheaper oil should act like a shot of adrenalin to global growth.
A $40 price cut shifts some $1.3 trillion from producers to consumers.
The typical American motorist, who spent $3,000 in 2013 at the pumps, might be $800 a year better off—equivalent to a 2% pay rise. Big importing countries such as the euro area, India, Japan and Turkey are enjoying especially big windfalls. Since this money is likely to be spent rather than stashed in a sovereign-wealth fund, global GDP should rise.
The falling oil price will reduce already-low inflation still further, and so may encourage central bankers towards looser monetary policy. The Federal Reserve will put off raising interest rates for longer; the European Central Bank will act more boldly to ward off deflation by buying sovereign bonds.

There will, of course, be losers (see article). Oil-producing countries whose budgets depend on high prices are in particular trouble. The rouble tumbled this week as Russia’s prospects darkened further. Nigeria has been forced to raise interest rates and devalue the naira. Venezuela looks ever closer to defaulting on its debt. The spectre of defaults and the speed and scale of the price plunge have unnerved financial markets. But the overall economic effect of cheaper oil is clearly positive.

Just how positive will depend on how long the price stays low. That is the subject of a continuing tussle between OPEC and the shale-drillers. Several members of the cartel want it to cut its output, in the hope of pushing the price back up again. But Saudi Arabia, in particular, seems mindful of the experience of the 1970s, when a big leap in the price prompted huge investments in new fields, leading to a decade-long glut. Instead, the Saudis seem to be pushing a different tactic: let the price fall and put high-cost producers out of business. That should soon crimp supply, causing prices to rise.

There are signs that such a shake-out is already under way. The share prices of firms that specialise in shale oil have been swooning. Many of them are up to their derricks in debt. Even before the oil price started falling, most were investing more in new wells than they were making from their existing ones. With their revenues now dropping fast, they will find themselves overstretched. A rash of bankruptcies is likely. That, in turn, would bespatter shale oil’s reputation among investors. Even survivors may find the markets closed for some time, forcing them to rein in their expenditure to match the cash they generate from selling oil. Since shale-oil wells are short-lived (output can fall by 60-70% in the first year), any slowdown in investment will quickly translate into falling production.

This shake-out will be painful. But in the long run the shale industry’s future seems assured. Fracking, in which a mixture of water, sand and chemicals is injected into shale formations to release oil, is a relatively young technology, and it is still making big gains in efficiency. IHS, a research firm, reckons the cost of a typical project has fallen from $70 per barrel produced to $57 in the past year, as oilmen have learned how to drill wells faster and to extract more oil from each one.

The firms that weather the current storm will have masses more shale to exploit. Drilling is just beginning (and may now be cut back) in the Niobrara formation in Colorado, for example, and the Mississippian Lime along the border between Oklahoma and Kansas. Nor need shale oil be a uniquely American phenomenon: there is similar geology all around the world, from China to the Czech Republic. Although no other country has quite the same combination of eager investors, experienced oilmen and pliable bureaucrats, the riches on offer must eventually induce shale-oil exploration elsewhere.

Most important of all, investments in shale oil come in conveniently small increments. The big conventional oilfields that have not yet been tapped tend to be in inaccessible spots, deep below the ocean, high in the Arctic, or both. America’s Exxon Mobil and Russia’s Rosneft recently spent two months and $700m drilling a single well in the Kara Sea, north of Siberia. Although they found oil, developing it will take years and cost billions. By contrast, a shale-oil well can be drilled in as little as a week, at a cost of $1.5m. The shale firms know where the shale deposits are and it is pretty easy to hire new rigs; the only question is how many wells to drill. The whole business becomes a bit more like manufacturing drinks: whenever the world is thirsty, you crank up the bottling plant.

Sheikh out

So the economics of oil have changed. The market will still be subject to political shocks: war in the Middle East or the overdue implosion of Vladimir Putin’s kleptocracy would send the price soaring. But, absent such an event, the oil price should be less vulnerable to shocks or manipulation. Even if the 3m extra b/d that the United States now pumps out is a tiny fraction of the 90m the world consumes, America’s shale is a genuine rival to Saudi Arabia as the world’s marginal producer. That should reduce the volatility not just of the oil price but also of the world economy. Oil and finance have proved themselves the only two industries able to tip the world into recession. At least one of them should in future be a bit more stable.

The price of oil extraction is rising for a variety of reasons, an important one being that we extracted the easy to extract oil first, and what is left is more expensive to extract.
Another issue is that oil exporters now have large populations that need to be kept fed and clothed, so they don’t revolt.
This is a separate issue, that raises costs, even above the direct cost of extraction.
There is no reason to believe that these costs will level off or fall ( exept than short term ), no matter how much oil the US produces using high-priced methods, such as fracking.

According to the International Energy Agency, conventional production has already peaked and is set to decline steadily over the next few decades.


official data from the International Energy ( Agency (IEA), US Energy Information Administration (EIA), International Monetary Fund (IMF), among other sources, showed that conventional oil had most likely peaked around 2008.

MHIP : peak cheap oil = peak conventional oil = PEAK ALL !!!

Why the global economy still seems to hang on ?
Why does it seems there are not so much resource wars going on ?

Because the broken pieces are glued together with massive creation of money ( and subsequently artificially created price inflation ).

What is the difference between printing money, creating money and destroying the value of your money or destroying your money all together at some point ?

Printing money is an effort, needs and creates jobs and is therefore limited, other forms of creating money are not and can and are done at random and will destroy your assets.

ountries and communities guzzling the most oil and energy will take the biggest hits.
( How High Oil Prices Will Permanently Cap Economic Growth )

In MHIP of the years to come no oil and no energy will be used ( link ).

Still ( or should we say "Because off" ) MHIP will offer the best quality of life.

Each Owner will have the opportunity to be totally autonomous and make good money with renewables.

How High Oil Prices Will Permanently Cap Economic Growth
Extracts from Bloomberg article Sep 2012 )

In the last decade, the price of oil has multiplied ( the historical price was 20 USD/bbl ), and that shift will permanently shackle the growth potential of the world’s economies.
the economic remedies being used are doing more harm than good
Worse, when oil prices go up, so does inflation.
Higher rates popped the speculative housing bubble, which brought down the global economy.
Unfortunately, this pattern of oil-driven inflation is with us again.
And world food prices are being affected.
since 2002, the FAO’s food-price index, which measures a basket of five commodity groups (meat, dairy, cereals, oils and fats, and sugar), is up about 150 percent.
Each new barrel we pull out of the ground is costing us more than the last.
The countries guzzling the most oil are taking the biggest hits to potential economic growth.

How High Oil Prices Will Permanently Cap Economic Growth
By Jeff Rubin - Sep 23, 2012

Will All the Money Printing Lead to Hyperinflation?
Moorad Choudhry

Hyper Inflation in Germany during the 1920s

Villa Lorenza

Inflation was so bad in Germany that money became worthless.
Here a child is using money as a toy.
Money was used as wallpaper, to make kites.
Towards the end of 1923, so much money was needed, people had to carry it about in wheel barrows.
You hear stories of people stealing the wheel barrow, but leaving the money.

Printing more money is exactly what Weimar Germany did in 1922.
To meet Allied reparations, they printed more money; this caused the hyper inflation of the 1920s.
The hyper inflation led to the collapse of the economy ( MHIP : and to WWII ).

Villa Lorenza

( )

Printing Money doesn’t always cause inflation

In a recession, with periods of deflation, it is possible to increase the money supply without causing inflation.

This is because the money supply depends not just on monetary base, but also velocity of circulation.

For example, if there is a sharp fall in transactions ( velocity of circulation ) then it may be necessary to print money to avoid deflation ( see: example of US and increasing money supply )

In the liquidity trap of 2008-2012, the Bank of England pursued quantitative easing ( increasing the monetary base ) but this only had a minimal impact on underlying inflation.

This is because although banks saw an increase in their reserves, they were reluctant to increase bank lending.

However, if a Central Bank pursued quantitative easing ( increasing money supply ) during a normal period of economic activity then it would cause inflation.

( )

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