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Richard Heinberg: Why The Oil ‘Revolution’ Story Is Dead Wrong | Peak Prosperity

Richard Heinberg: Why The Oil ‘Revolution’ Story Is Dead Wrong | Peak Prosperity.

Bruce Rolff/Shutterstock

Richard Heinberg: The Oil ‘Revolution’ Story Is Dead Wrong

The data tell a vastly different tale than the media
by Adam Taggart
Sunday, March 9, 2014, 1:45 PM

With all the grandiosity of the media headlines touting our destiny as the new “Saudi America”, many pundits have been quick to pronounce Peak Oil dead.

Here at PeakProsperity.com, one of the most frequent questions we’ve received over the past two years is: will the increased production from new “tight” oil sources indeed solve our liquid fuels emergency?

Not at all, say Chris and this week’s podcast guest, Richard Heinberg. Both are fellows at the Post Carbon Institute, and you are about to hear one of the most important and most lucid deconstructions of the false promise of American energy independence:

I recently went back and reread the first edition of The Party’s Over because it was the tenth year anniversary. And I was actually a little surprised to see what it really says. My forecasts in The Party’s Over were really based on the work of two veteran petroleum geologists—Colin Campbell and Jean Laherrère. So they were saying back before 2003, because it published in 2003, so it was actually written in 2001 and 2002. So they were saying back in 2000 and 2001 that we would see a peak in conventional oil around 2005—check—that that would cause oil prices to bump higher—check—which would cause a slowdown in economic growth—check. But it would also incentivize production of unconventional oil in various forms—check—which would then peak around 2015, which is basically almost where we are right now and all the signs are suggesting that that is going to be a check-off, too. So amazing enough, these two guys got it perfectly correct fifteen years ago.

The big news right now is that the industry needs prices higher than the economy will allow, as you just outlined. So we are seeing the major oil companies cutting back on capital expenditure in upstream projects, which will undoubtedly have an impact a year or two down the line in terms of lower oil production. That is why I think that Campbell and Laherrère were right on in saying 2015, 2016 maybe, we will also start to see the rapid increase of production from the Bakken and the Eagle Ford here in the US start to flatten out. And probably within a year or two after that, we will see a commencement of a rapid decline.

So you know, on a net basis, taking all those things into account, I think we are probably pretty likely to see global oil production start to head south in the next year or two.

But this change in capital expenditure by the majors, that is a new story. You know, just a couple of years ago, they needed oil prices around $100 a barrel in order to justify upstream investments. That is no longer true. Now they need something like $120 a barrel but the economy cannot stand prices that high. So you know, if the price starts to go up a little bit, then demand just falls back. People start driving less. And so the economy is unable to deliver oil prices to the industry that the industry needs. I think Gail Tverberg is saying this is the beginning of the end. I think she’s right.

If we [continue along with our current policies and dependence on petroleum] then everything will eventually change — as a result of the economy coming apart, the debt bubble bursts, you know, agriculture declines because of the expense of oil and because of depletion of topsoil and because you cannot trust the weather anymore. And we have a very dystopian future if we do not do anything.

So it has never been more important for the average person to understand energy issues than it is right now. But I doubt if there has ever been a time when energy issues have been so deliberately confused by the people who should be explaining it to us.

Click the play button below to listen to Chris’ interview with Richard Heinberg (49m:43s):

TRANSCRIPT

Chris Martenson: Welcome to this Peak Prosperity podcast. I am your host, Chris Martenson, and today, I am really excited to introduce a man who needs no introduction, Richard Heinberg, author, educator, speaker, writer now of eleven books including Party’s Over, the one that got me started on the peak oil story, The End of Growth, and Snake Oil: How Fracking’s False Promise of Plenty Imperils Our Future.

Richard Heinberg: Try say that fast five times.

Chris Martenson: [Laugh] I did, and that is the best I could do [laughter]. Welcome, Richard.

Richard Heinberg: Good to be with you, … read more

SHARE

ABOUT THE GUEST

Richard Heinberg
Richard is a Senior Fellow of thePost Carbon Institute and is widely regarded as one of the world’s foremost Peak Oil educators. He has authored scores of essays and articles that have appeared in such journals as Nature, The American Prospect, Public Policy Research, Quarterly Review, The Ecologist, Resurgence, The Futurist, European Business Review, Earth Island Journal, Yes!, and The Sun; and on web sites such as Resilience.org, TheOilDrum.com, Alternet.org, ProjectCensored.com, and Counterpunch.com.
He has been quoted in Time Magazine and has spoken to hundreds of audiences in 14 countries, including members of the European Parliament. He has appeared in many film and television documentaries, including Leonardo DiCaprio’s 11th Hour, is a recipient of the M. King Hubbert Award for Excellence in Energy Education, and in 2012 was appointed to His Majesty the King of Bhutan’s International Expert Working Group for the New Development Paradigm initiative.
Richard’s animations Don’t Worry, Drive OnWho Killed Economic Growth? and 300 Years of Fossil Fuels in 300 Minutes (winner of a YouTubes’s/DoGooder Video of the Year Award) have been viewed by 1.5 million people .
Since 2002, he has delivered more than five hundred lectures to a wide variety of audiences—from insurance executives to peace activists, from local and national elected officials to Jesuit volunteers.
He lives in northern California with his wife and is an avid violin player.

Richard Heinberg: Why The Oil 'Revolution' Story Is Dead Wrong | Peak Prosperity

Richard Heinberg: Why The Oil ‘Revolution’ Story Is Dead Wrong | Peak Prosperity.

Bruce Rolff/Shutterstock

Richard Heinberg: The Oil ‘Revolution’ Story Is Dead Wrong

The data tell a vastly different tale than the media
by Adam Taggart
Sunday, March 9, 2014, 1:45 PM

With all the grandiosity of the media headlines touting our destiny as the new “Saudi America”, many pundits have been quick to pronounce Peak Oil dead.

Here at PeakProsperity.com, one of the most frequent questions we’ve received over the past two years is: will the increased production from new “tight” oil sources indeed solve our liquid fuels emergency?

Not at all, say Chris and this week’s podcast guest, Richard Heinberg. Both are fellows at the Post Carbon Institute, and you are about to hear one of the most important and most lucid deconstructions of the false promise of American energy independence:

I recently went back and reread the first edition of The Party’s Over because it was the tenth year anniversary. And I was actually a little surprised to see what it really says. My forecasts in The Party’s Over were really based on the work of two veteran petroleum geologists—Colin Campbell and Jean Laherrère. So they were saying back before 2003, because it published in 2003, so it was actually written in 2001 and 2002. So they were saying back in 2000 and 2001 that we would see a peak in conventional oil around 2005—check—that that would cause oil prices to bump higher—check—which would cause a slowdown in economic growth—check. But it would also incentivize production of unconventional oil in various forms—check—which would then peak around 2015, which is basically almost where we are right now and all the signs are suggesting that that is going to be a check-off, too. So amazing enough, these two guys got it perfectly correct fifteen years ago.

The big news right now is that the industry needs prices higher than the economy will allow, as you just outlined. So we are seeing the major oil companies cutting back on capital expenditure in upstream projects, which will undoubtedly have an impact a year or two down the line in terms of lower oil production. That is why I think that Campbell and Laherrère were right on in saying 2015, 2016 maybe, we will also start to see the rapid increase of production from the Bakken and the Eagle Ford here in the US start to flatten out. And probably within a year or two after that, we will see a commencement of a rapid decline.

So you know, on a net basis, taking all those things into account, I think we are probably pretty likely to see global oil production start to head south in the next year or two.

But this change in capital expenditure by the majors, that is a new story. You know, just a couple of years ago, they needed oil prices around $100 a barrel in order to justify upstream investments. That is no longer true. Now they need something like $120 a barrel but the economy cannot stand prices that high. So you know, if the price starts to go up a little bit, then demand just falls back. People start driving less. And so the economy is unable to deliver oil prices to the industry that the industry needs. I think Gail Tverberg is saying this is the beginning of the end. I think she’s right.

If we [continue along with our current policies and dependence on petroleum] then everything will eventually change — as a result of the economy coming apart, the debt bubble bursts, you know, agriculture declines because of the expense of oil and because of depletion of topsoil and because you cannot trust the weather anymore. And we have a very dystopian future if we do not do anything.

So it has never been more important for the average person to understand energy issues than it is right now. But I doubt if there has ever been a time when energy issues have been so deliberately confused by the people who should be explaining it to us.

Click the play button below to listen to Chris’ interview with Richard Heinberg (49m:43s):

TRANSCRIPT

Chris Martenson: Welcome to this Peak Prosperity podcast. I am your host, Chris Martenson, and today, I am really excited to introduce a man who needs no introduction, Richard Heinberg, author, educator, speaker, writer now of eleven books including Party’s Over, the one that got me started on the peak oil story, The End of Growth, and Snake Oil: How Fracking’s False Promise of Plenty Imperils Our Future.

Richard Heinberg: Try say that fast five times.

Chris Martenson: [Laugh] I did, and that is the best I could do [laughter]. Welcome, Richard.

Richard Heinberg: Good to be with you, … read more

SHARE

ABOUT THE GUEST

Richard Heinberg
Richard is a Senior Fellow of thePost Carbon Institute and is widely regarded as one of the world’s foremost Peak Oil educators. He has authored scores of essays and articles that have appeared in such journals as Nature, The American Prospect, Public Policy Research, Quarterly Review, The Ecologist, Resurgence, The Futurist, European Business Review, Earth Island Journal, Yes!, and The Sun; and on web sites such as Resilience.org, TheOilDrum.com, Alternet.org, ProjectCensored.com, and Counterpunch.com.
He has been quoted in Time Magazine and has spoken to hundreds of audiences in 14 countries, including members of the European Parliament. He has appeared in many film and television documentaries, including Leonardo DiCaprio’s 11th Hour, is a recipient of the M. King Hubbert Award for Excellence in Energy Education, and in 2012 was appointed to His Majesty the King of Bhutan’s International Expert Working Group for the New Development Paradigm initiative.
Richard’s animations Don’t Worry, Drive OnWho Killed Economic Growth? and 300 Years of Fossil Fuels in 300 Minutes (winner of a YouTubes’s/DoGooder Video of the Year Award) have been viewed by 1.5 million people .
Since 2002, he has delivered more than five hundred lectures to a wide variety of audiences—from insurance executives to peace activists, from local and national elected officials to Jesuit volunteers.
He lives in northern California with his wife and is an avid violin player.

IMF report: ‘Debt is good’. What are these people smoking?

IMF report: ‘Debt is good’. What are these people smoking?.

February 18, 2014
Sovereign Valley Farm, Chile

Probably every kid in the world has at some point dreamed of having a time machine and being able to travel back to the past… usually to see dinosaurs or something like that.

Time travel is an almost universal fantasy. And if I could snap my fingers and turn the pages of time, I’d be seriously curious to check out the thousand-year period between the decline of the Western Roman Empire and the rise of the Renaissance.

They used to refer to this period as ‘the Dark Ages’ (though historians have since given up that moniker), a time when the entire European continent was practically at an intellectual standstill.

The Church became THE authority on everything– Science. Technology. Medicine. Education. And they kept the most vital information out of the hands of the people… instead simply telling everyone what to believe.

People living in that time had to trust that the high priests were smart guys and knew what they were talking about.

Interpreting facts and observations for yourself was heresy, and anyone who formed original thought and challenged the authority of church and state was burned at the stake.

Granted, human civilization has come a long way since then. But the basic building blocks are not terribly different than before.

Anyone who challenges the state is still burned at the stake. And our entire monetary system requires that we all trust the high priests of central banking and economics. Those that stray from the state’s message and spread economic heresy are cast down and vilified.

You may recall the case of Harvard professors Ken Rogoff and Carmen Reinhart who wrote the seminal work: “This Time is Different: Eight Centuries of Financial Folly”.

The book highlighted dozens of shocking historical patterns where once powerful nations accumulated too much debt and entered into terminal decline.

Spain, for example, defaulted on its debt six times between 1500 and 1800, then another seven times in the 19th century alone.

France defaulted on its debt EIGHT times between 1500 and 1800, including on the eve of the French Revolution in 1788. And Greece has defaulted five times since 1800.

The premise of their book was very simple: debt is bad. And when nations rack up too much of it, they get into serious trouble.

This message was not terribly convenient for governments that have racked up unprecedented levels of debt. So critics found some calculation errors in their Excel formulas, and the two professors were very publicly discredited.

Afterwards, it was as if the entire idea of debt being bad simply vanished.

Not to worry, though, the IMF has now stepped up with a work of its own to fill the void.

And surprise, surprise, their new paper “[does] not identify any clear debt threshold above which medium-term growth prospects are dramatically compromised.”

Translation: Keep racking up that debt, boys and girls, it’s nothing but smooth sailing ahead.

But that’s not all. They go much further, suggesting that once a nation reaches VERY HIGH levels of debt, there is even LESS of a correlation between debt and growth.

Clearly this is the problem for Europe and the US: $17 trillion? Pish posh. The economy will really be on fire once the debt hits $20 trillion.

There’s just one minor caveat. The IMF admits that they had to invent a completely different method to arrive to their conclusions, and that “caution should be used in the interpretation of our empirical results.”

But such details are not important.

What is important is that the economic high priests have proven once and for all that there are absolutely no consequences for countries who are deeply in debt.

And rather than pontificate what these people are smoking, we should all fall in line with unquestionable belief and devotion to their supreme wisdom.

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