On the Peak Oil (Demand) Front...

Peak Oil demand is spreading more pain and gloom throughout the Oil Patch of the global economy.

The following two articles were posted by Raúl Ilargi Meijer on The Automatic Earth yesterday and today.

The first one:  More Pain Seen For US Crude As Product Glut Adds To Gloom (Reuters)

A glut of refined products has worsened the already-grim outlook for U.S. crude oil for the rest of the year and the first half of 2017, traders warned this week, as the spread between near-term and future delivery prices reached its widest in five months. A stubborn, massive supply overhang punished crude over the winter as U.S. oil futures hit 12-year lows in February. As supply outages and production cuts increased, crude rallied and spreads tightened significantly in May. But the unusually large amount of gasoline and oil in storage, combined with expectations of a ramp-up in crude production, has made traders more bearish on the price outlook for late 2016 and early 2017.

The second one: Fracklog in Biggest US Oil Field May All But Disappear (Bloomberg)

The number of dormant crude and natural gas wells in the U.S. stopped growing in the first quarter – and may all but disappear in the nation’s biggest oil field should prices hold steady. As of April 1, there were 4,230 wells left idle after being drilled, a figure little changed from January, according to an analysis by Bloomberg Intelligence. While some explorers have continued to grow their fracklog of drilled but not yet hydraulically fractured wells, others began tapping them in February as oil prices rose, the report showed.

Crude in the $40- to $50-a-barrel range may wipe out most of the fracklog in Texas’s Permian Basin and as much as 70% of the inventory in its Eagle Ford play by the end of 2017, according to Bloomberg Intelligence analyst Andrew Cosgrove. While bringing them online is the cheapest way of taking advantage of higher prices, the wave of new supply also threatens to kill the fragile recovery that oil and gas markets have seen so far this year. “We think that by the end of the third quarter, beginning of the fourth quarter, the bullish catalyst of falling U.S. production will be all but gone,” Cosgrove said in an interview Thursday. “You’ll start to see U.S. production flat lining.”

"Higher oil prices," that is, in the $40 to $50 range, can entice the extractors to return to pump out or frack out the wells that are dormant, or just drilled and capped. Unfortunately, according to the above Reuters article, and oil price developments today, those higher prices cannot be guaranteed. As Raúl Meijer says, What’s going to happen to the lenders who made it all possible?

Now the latest from The Wall Street Journal:

Oil prices fell Friday as a glut in oil products stoked market concerns that the global crude market will remain oversupplied longer than expected. 

U.S. crude oil for September delivery recently fell 54 cents, or 1.2%, to $44.21 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, fell 58 cents, or 1.3%, to $45.62 a barrel on ICE Futures Europe.

This simple chart explains why oil prices are so low compared to those in 2014.
Source: vox.com.

Demand is not keeping up with supply, despite an amount lower than the peak extracted in July of 2015. A NEW oil production peak, projected for the end of 2016, is not expected to outstrip demand. Which means there will be an even BIGGER glut and a backup in oil supplies being delivered because consumption by the end user is not fast enough. And storing all that oil has got to cost a lot of money.

Now what's the cause of this new oil peak? It is certainly not demand. But the lenders have to be paid, the social welfare systems of the producer countries have to be supported, companies' employee payrolls have to be met (otherwise employees get laid off), and some amount has to be set aside or spent for maintenance, exploration, drilling of new wells, and overhead, especially if lenders become loath to lend any more money to the fossil fuels industry.

Eventually the oil producers and oil producing companies will have to wise up, and reduce the supply to clear out the glut and backup of oil, in order to get the prices to go back up to a level where they can make a profit, "hopefully" at a price the end consumer can afford*.

* "Hopefully" at a price the consumer can afford: this would be good for the economy, which always has to grow to keep people employed and governments to meet its obligations and lenders to be repaid, but it would be TERRIBLE for the biosphere, us and our civilization, all of which depend on a salubrious climate that doesn't change more rapidly than species and ecosystems can adapt. Burning of more fossil fuels means more Carbon Dioxide in the air which means more and faster Global Weirding... with the coming superstorms the size of continents and the strength of hurricanes coming sooner and more frequently. One already happened last winter.

World War Three Dead Ahead!

It will come either by Hillary's neocons going Russian Bear-baiting; or, if Trump gets elected, the neo-cons in the GOP establishment going bear-baiting, or Putin thinking Trump is now treating NATO like some sort of protection racket and thereby taking back the former Soviet Republics of Estonia, Latvia and Lithuania. Maybe Finland, too.

Donald Trump just made imbecilic statements that if certain NATO countries in Europe haven't paid enough money in his estimation to the United States for their collective defense, then he'll just sit right back and let the Russians roll right over them, should Russia follow through on a decision to invade certain NATO countries.

Now our parents and grandparents knew of a certain British Prime Minister who flew to Munich and returned with a pact between the UK and Hitler, proclaiming "Peace in out time!" Soon enough, Hitler took over Czechoslovakia and the following September, invaded Poland.

To thread the needle of avoiding World War 3, if that's even possible, the United States needs to STOP poking the Russian Bear, i.e., get out of the Ukraine, and at the same time reaffirm its treaty obligation or promise as a lead pipe guarantee that it will defend the European NATO countries against a Russian attack. That means, of course, that we need to redirect our War Department dollars (622 billion of them) so as to spend them wisely, and not waste them on boondoggles such as the F-35 Lardbucket: no way is that thing going to compete with Russia's new Sukhoi fighter jets.

But most importantly, we should be waging peace at the same time we keep our committments and keep strong enough to keep them, in order to maintain the peace.

Demand-Side Peak Oil is Here -- Supply-Side Peak Oil to follow.

Major source for today's blog article: The Peak Oil Paradox -Revisited-, posted 19 July 2016 on The Automatic Earth by Raúl Ilargi Meijer.

So far, supply-side Peak Oil is a myth... so far. Although, prior to the hydrofracturing boom, it wasn't for the United States.

M. King Hubbert's Peak Oil predictions based on reserves.
Source: M. King Hubbert via The Automatic Earth.

In 1956, M. King Hubbert generated the above graph indicating Peak US Oil about 1965 for ultimate reserves of 150 billion barrels of oil, 1970 for 200 billion barrels.

Actual US Oil Production 1900 through 2015.
Enter fracking, and mutatis mutandis, no more Peak US Oil!
Source: The Automatic Earth.

I'll give you a short history behind the end of US Peak Oil, or rather, US "Twin Peaks" Oil. Right now in 2016 the US is pumping slightly less oil out of the ground due to the end of the fracking boom. The boom itself got underway by inflated estimates of the amount of oil in the Bakken Shale formation and elsewhere. Htdrofracturing was a perceived profit center. A lot of debt was issued to get the new method of oil and natural gas extraction underway. And for a short while, it was, at least for oil, so ling as fossil fuel prices remained relatively high ($100 to 110 per barrel 2011 up to mid 2014). But then the oil prices started to collapse!

Oil price History 1974 through 2014.
Source: The Huffington Post.

Oil prices have gone on a roller coaster depending on supply, demand, political intervention and speculation. However, since the end of 2014, oil prices have remained relatively low.

Oil Price History 2006 through end 2015.
Source: The Motley Fool.

The Motley Fool article asked if another price spike was underway, and indeed a small one did come about, and hit about $60 or so per barrel, but quickly collapsed when China cracked down on commodities speculation. It's now about $45 per barrel. Where the oil price goes now depends on how big the continuing supply is, and how strong or weak the demand is. Whether the oil industry can make a profit on the price is a different story.

The oil extractors at least in the United States and Canada have managed to get their costs down, at the expense of future investment, but some, especially small-time frackers, are pumping as much as they cam just to meet service payments on their debt! Oil-producing countries, on the other hand, have social welfare safety nets to take care of, which hikes their break-even oil price requirements considerably. Of course, some like Russia are somewhat lucky, because their internal costs are in the local currency, and shrink in relation to the world price which is in US Dollars, due to drop in the currency for whatever reasons (in the case of Russia, US sanctions causing reduced trade with Europe). Even so, some companies have gone under, other companies have shut their wells, and the daily production has dropped as a result.

Latest peak production was in July 2015. Production has been shrinking by 2% per year since.
Source: The Automatic Earth.

Now it may be that the price of oil may go back up again, if the demand trend line shown above continues. If it spikes back up far enough, the financial sector, now reeling from default by the "oil patch" companies (but not as bad as it did from the bursting of the housing bubble), may choose to invest in oil extraction and the development of oil extraction technologies again. On the other hand, they may not, and in which case a rise in production may not occur until there are lines at the gas stations. And if there has been a considerable amount of disinvestment in and neglect of the oil extraction infrastructure, the daily production rates may never see the peak attained in 2015 ever again! But then again, it might, or even exceed it. At any rate, we could be in for several cycles of price collapse, financial fallout, production drop, shortage, price spike, reinvestment, production rise, glut, and price collapse, rinse and repeat, until the physically and economically feasible oil extraction drops remorselessly.  Natural gas extraction and coal mining may accordingly drop along with it.  

In which case... voila! Supply-side peak oil becomes a reality, thanks to demand-side peak oil attained in mid-2015.

Here are Raúl Meijer's concluding thoughts (read the article) on the matter, which I believe is similar with my thoughts above on the future of fossil fuels' extraction.

1. M. King Hubbert’s forecast for US oil production and the methodology it was based on has been proven to be sound when applied to conventional oil pools in the USA. When decline takes hold in any basin or province, it is extremely difficult to reverse even with a period of sustained high price and the best seismic imaging and drilling technology in the world.
2. On this basis we can surmise that global conventional oil production will peak one day with unpredictable consequences for the global economy and humanity. It is just possible that the near term peak in production of 97.08 Mbpd in July 2015 may turn out to be the all-time high.
3. Economists who argued that scarcity would lead to higher price that in turn would lead to higher drilling activity and innovation have also been proven to be correct. Much will depend upon Man’s ability to continue to innovate and to reduce the cost of drilling for LTO in order to turn a profit at today’s price levels. If the shale industry is unable to turn a profit then it will surely perish without State intervention in the market.
4. But from 2008 to 2015, oil production actually fell in 27 of 54 countries despite record high price. Thus, while peak oil critics have been proven right in North America they have been proven wrong in half of the World’s producing countries.
5. Should the shale industry perish, then it becomes highly likely that Mankind will face severe liquid fuel shortages in the years ahead. The future will then depend upon substitution and our ability to innovate within other areas of the energy sector.

And I will add: what sorts of innovation? Wind, hydro, solar, nuclear if it weren't so dodgy, and biofuels if they didn't take food out of the mouths of the poor.

Besides, we have a soon-approaching abrupt and civilization-wrecking climate change coming up.

Totalitarian America - an Inagined Scenario.

I copied this from Srauss and Howe's The Fourth Turning Forums website, which I believe is now extinct. I proofread it and made corrections, and elaborated on it by adding the last paragraph. Basically it's a totalitarian dystopia based on a possible Ayn-Randian and Christian hard right gaining complete dominance and control in the United States -- which could be enabled by Donald Trump winning the White House.

I can see this 4T, in one of my worst nightmares, as the questionable procession from control by the Boom Right to Mafia-like enforcers of Generation X who so bungle things that the Millennial Generation uses its collectivist tendencies to turn against heirs of wealth that have become an aristocracy in all but name, religious hucksters who fool people, and gangland enforcers (which could be Bloods, Crips, and MS-13) in a violent proletarian revolution. 

The other is that America under a Hard Right regime becomes an anathema -- much like North Korea or Iran today, Iraq under Saddam Hussein, or South Africa under Apartheid, if for very different reasons, with its unique view of how to organize an economy and an anti-democratic political system. Paradoxically, the nastiest systems often have a missionary desire to spread the ideology where it is unwelcome through local chicanery or outright force, and as a result a tendency to take undue risks of international war. Just imagine what a theocratic-plutocratic America would be like to the rest of the world. 

Think of all the escaped dissidents who would end up in places like Paris, Tokyo, Moscow, Tel Aviv, New Delhi, Karachi, and Beijing.  

"I could no longer practice medicine in the United States after I refused to become a member of the (name favored church in the Christian and Corporate State)", says Mohamed S in Ankara.  

"I lost my teaching permit when the police found a copy of Das Kapital, and was fired from the University of California at Berkeley", says Dr. Linda T in Berlin. "I had been using it for material often critical of communism and the old Soviet Union, but all that the regime saw me useful for was to mine coal in Kentucky. At age 52, I know how long I would last in a coal mine, especially on short rations, but survival of people like me is no priority." 

"I lost my congressional seat in what used to be a safe seat in the Chicago area after the Constitution was amended to allow employers control of workers' votes. You know -- vote wrong, lose your job, but go to a labor camp. I got some knocks on the door at 2AM, my dog was poisoned, and I got warnings to leave while I could before I ended up like my beloved and late dog, and as a black man I felt that I would feel more comfortable in Recife" says former Congressman W. "Protect your civil liberties here in Brazil while you still can!" 

"I have returned to Mexico because work in America no longer pays enough to live on. I never expected to do so, but I didn't want my kids to have to drop out of school and become domestic servants despite doing well in school. The stuff about 'Land of the Free' has become a farce. I say this in English because I want the thugs who now rule America to hear this in the language that they know", says Maria Z., born and raised in Denver like her children, in Guadalajara. "A Mexican worker may be poor, but not as poor as an American worker who has chains instead of pay!" 

"As an exchange student from Boston (my family is still fairly comfortable, but maybe not for long -- we are Jews) attending the University of Krakow I was at first not so comfortable about being so close to a site of extreme infamy [Auschwitz] where some of my relatives perished... but I now feel safer in Poland than in Massachusetts, especially after I hear of the labor camp built in Worcester. I know that if I did complete my education at Harvard I would be heavily in debt and would have to make some abominable choices just to avoid going broke. I wish to renounce my US citizenship and begin the process of becoming a citizen of Poland", writes Sarah G. on her application for political asylum. 

"I escaped the United States when I was a teenager and am now a Russian citizen. As a gay man living in Saint Petersburg, I know full well that Russia still has on its books a law against 'homosexual propaganda' in the presence of minors. Still, I came here from Dallas because the law is not enforced very often or harshly these days as it used to be. Even if it were, people still don't hunt you down like an animal and kill you on the very spot they find you, like they do in America," says Peter T. on Russia Today. 

Clouds Tracking Further North Just as Predicted by the 'Warmists'.

Thanks to the Fossil Fuels Derivatives Beast.

The Fossil Fuels Derivatives Beast.

Yes, I'm using the Denialists' term for climate scientists and others concerned about global warming.  It ought to get the Denialists' goat to be proven wrong!  See below.

Now from the Washington Post, a new analysis of satellite photo records shows that over the past four decades, since 1983 in fact, the cloud and storm tracks have been adjusting their positions poleward.

‘The most singular of all the things that we have found': Clouds study alarms scientists

Chris Mooney - The Washington Post - 14 July 2016.

[A]ccording to leading climate scientist Veerabhadran Ramanathan — credited with discovering that chlorofluorocarbons, or CFCs, are actually a greenhouse gas, among other major findings — a new study this week showing that clouds already are shifting their distributions across the Earth, and in a way predicted by climate change models, stands out. And not in a good way. 

The study was led by Ramanathan’s Scripps Institution of Oceanography colleague Joel Norris, though Ramanathan said he was not involved in the work and didn’t know about it until shortly before publication. But Ramanathan said that the study basically confirms that there’s nothing to prevent the world from reaching the high levels of warming that have long been feared — except for our own swift policy actions, that is. 

“My reaction was, my goodness,” Ramanathan said. “Maybe the 4 to 5 degree warming, certainly we were all wishing there was some certainty that would make it go away. So I consider the findings of this paper, the data shows major reorganization of the cloud system.” 

This matters because clouds are fundamental regulators of how much solar radiation makes it to the Earth’s surface (rather than being reflected back to space by white cloud tops), and how much infrared or “longwave” radiation escapes back to space once again.

For more information, click here, here and here.

But you know, what really grinds my gears is that people are still saying that "our own swift policy actions" can "prevent the world from reaching the high levels of warming that have long been feared." How are we going to do that? According to Robertscribbler, "Current greenhouse gas levels — topping out near 408 parts per million CO2 (and 490 parts per million CO2e) this year — will need to fall in order to prevent 1-3 C of additional warming." We're approaching 2 degrees C above 1880s levels already -- and although the planet's temperature will probably retreat to give us a 1.2 deg C avearge for all twelve months this year -- Ramanathan is right that current CO2 / CO2e levels are going to ramp warming up to the 4-5 deg. C mark.  We'll need to reduce the CO2 / CO2e levels. How are we going to avert that? Plant lots of trees even as multiple demands are causing deforestation all over the planet?

We need clean fuels to replace fossil fuels now and wind and solar may not be enough. How are we going to do that?  It seems right now, despite their ongoing financial troubles (which may cause fossil fuel production to remorselessly decline by way of disinvestment over the next several years), the fossil fuel industries and their bought (mainly "conservative") politicians are in the catbird seat right now, driving our fossil fuel dependency and this whole climate mess!

HERE'S Why People Support Donald Trump.

Not because of racism. But because neoliberal economics, corporate greed and neoconservative foreign policy threaten to put them and their kids into a permanent underclass, dependent on welfare and strung out on illicit drugs.

The The Guardian - Millions of Ordinary Americans Support Donald Trump. Here's Why by Frank Rich.

Impact of Sea Level Rise in Boston Worse than Previously Thought.

Again, it's all on the ice-melt in Antarctica and the release of water due to the reduced gravity of the shrunken Antarctic ice cap. The Law of Gravity works on objects on and orbitng Earth and every other planet, tides, solar systems, galaxies, and even water around ice caps and hoards of wealth!

From The Boston Globe:

The consequences of climate change on Boston are expected to be far more calamitous than previous studies have suggested, a new report commissioned by the city says. 

In the worst-case scenario, sea levels could rise more than 10 feet by the end of the century — nearly twice what was previously predicted — plunging about 30 percent of Boston under water. Temperatures in 2070 could exceed 90 degrees for 90 days a year, compared with an average of 11 days now.

The report, by scientists from the University of Massachusetts and other local universities, has raised concerns in City Hall just two weeks after Mayor Martin J. Walsh attended a climate summit in Beijing.

The updated projections for Boston take into account new research that suggests the accelerating melt of the ice sheets covering Antarctica will have a disproportionate impact on cities along the East Coast.

http://www.bostonglobe.com/metro/2016/06/22/climate-change-could-have-even-worse-impact-boston-than-previously-expected/S6hZ4nDPeUWNyTsx6ZckuL/story.html?event=event25

For more information:

Dredd.Blog: Greenland and Antarctica Invade the United States

Ecocosmology: The Gravity of Sea Level Change

Dredd Blog: Why Sea Level Rise May Be the Greatest Threat to Civilization