"Cheap" Oil? ..like cheap PM's..dream on

[neilgin1]

WISHES, FANTASIES, DELUSIONS & DUMBASSES

The shallowness of MSM faux journalists and the utter ignorance of the American populace is a match made in delusional heaven. Kunstler takes a big old [shucks] on this party of dumbasses.


We Wish

By James Howard Kunstler
on April 29, 2013 9:07 AM






Wishful thinking now runs so thick and deep across the USA that our hopes for a credible future are being drowned in a tidal wave of yellow smiley-face stories recklessly issued by institutions that ought to know better. A case in point is the Charles C. Mann’s tragically dumb cover story in the current Atlantic magazine — “We Will Never Run Out of Oil” * — setting out in great detail the entire panoply of techno-narcissistic “solutions” to our energy predicament. Another case in point was senior financial writer Joe Nocera’s moronic op-ed in last week’s New York Times beating the drum for American “energy independence.”



You could call these two examples mendacious if it weren’t so predictable that a desperate society would do everything possible to defend its sunk costs, including the making up of fairy tales to justify its wishes. Instead, they’re merely tragic because the zeitgeist now requires once-honorable forums of a free press to indulge in self-esteem building rather than truth-telling. It also represents a culmination of the political correctness disease that has terminally disabled the professional thinking class for the last three decades, since this feel-good propaganda comes from the supposedly progressive organs of the media — and, of course, the cornucopian view has been a staple of the idiot right wing media forever. We have become a nation incapable of thinking, or at least of constructing a consensus that jibes with reality. In not a very few years, the American public will be so disappointed and demoralized by broken promises like these that they will turn the nation upside down and inside out, probably with violence and bloodshed.



Charles Mann’s Atlantic article begins by cheerleading for the mining of methane hydrates from the ocean floor. These are natural gas molecules trapped in ice formations in the muck around the continental shelves. Mann spotlights the efforts of a Japanese research ship conducting tests. Guess what: the Japanese are engaging in this because they have absolutely no fossil fuels of their own, and a failing consensus about nuclear power, and they are on a course to become the first advanced industrial nation to be forced to return to a medieval economy. That is, they are the most desperate among the desperate. You could say they’ve got nothing to lose (but a few billion of their rapidly depreciating Yen).



Methane hydrates are stable only at extreme pressures or very low temperatures. They also exist in the arctic permafrost, for instance, Siberia, where conventional natural gas drilling operations have been carried out for decades, with no contributions from methane hydrates. Undersea methane hydrate exploration projects have gone on for decades in the US, Canada, India, Russia, China, and Japan. The hope is that this so-called “hot ice” would turn out to be the gas equivalent of tar sands, which would mean at best a very expensive way to get more fossil fuels as the conventional sources dry up. That hope has dimmed in nations other than extremely desperate Japan. Like a lot of techno-wonders, the recovery of methane hydrates can be demonstrated on the “science project” scale. For now, no viable technique exists for getting commercially-scaled streams of natural gas out of methane hydrates. The Japanese themselves state that it would take at least ten years, if ever, to commercially mine methane hydrates. Japan doesn’t have ten years. It’s banking system is imploding, and without capital even the science projects will come to an end.

Charles Mann is equally rapturous about shale oil and gas. He writes:





“Today, though, fracking is unleashing torrents of oil in North Dakota and Texas–it may create a second boom in the San Joaquin Valley–and floods of natural gas in Pennsylvania, West Virginia, and Ohio. So bright are the fracking prospects that the U.S. may become, if only briefly, the world’s top petroleum producer. (“Saudi America,” crowed The Wall Street Journal. But the parallel is inexact, because the U.S. is likely to consume most of its bonanza at home, rather than exporting it.)”




This is very misleading. The US consumes roughly 19 million barrels a day. The Bakken and Eagle Ford shale formations produce about a million barrels a day combined now, and guaranteed to get a whole lot lower within the next five years. Today’s near-peak production is based on furious drilling and fracking of extremely expensive wells — known as “the Red Queen syndrome” because they are running as fast as they can to keep production up. Meanwhile, the depletion curve on shale oil is a reverse “hockey stick".

(image missing) link to article: http://www.theburningplatform.com/?p=53210


The situation is similar for shale gas, the difference being that the temporary glut of 2005 – 2012 happened because we didn’t have the means to export surplus gas from the initial burst of development and it briefly flooded the domestic market. The price of shale gas is still below the level that makes it economic to produce and when it eventually rises to that level, and beyond, it will be too expensive for its customers to buy. Shale gas is also subject to the Red Queen Syndrome.



These arguments have been well-rehearsed many times in this blog and elsewhere. But the key to understanding our energy predicament is ignored in cornucopian cases like Charles Mann’s Atlantic piece, which is the role of capital. Non-cheap oil has already worked its hoodoo on advanced industrial economies: it has already destroyed the process of capital formation. These economies were not designed to run on non-cheap oil and they can’t, and the capital is no longer there for even the research-and-development to change out the infrastructure, let alone carry out any as-yet-undesigned changes. Furthermore, there is no prospect that we can rescue the process of capital formation at the scale required to continue financing things like shale oil. The absence of real growth in the USA, Europe, and Japan has already destroyed the operations of interest and repayment of debt, and any new debt issued will never be repaid, meaning it is functionally worthless (we just don’t know it yet). These impairments of capital formation have left the major commercial banks insolvent and central banks have worked tirelessly to rescue them by issuing more “money” in the form of credit that can never be paid back.



What all this means is that the capital does not exist to run non-cheap oil economies, or to continue indefinitely the production of non-cheap oil and gas, not to mention methane hydrates and other fantasy fuels.



Joe Nocera’s op-ed in last week’s New York Times was shorter and even dumber (and lazier) than Charles Mann’s foolish Atlantic article. It was based on remarks made by Canada’s Energy Minister, Joe Oliver, who said (among other patently false and idiotic things) that Canada “has the resources to meet all of America’s future needs for oil.” Oliver was pimping for the Keystone pipeline project to transport tar sands byproducts from Alberta down to the US. Nocera swallowed everything Oliver said whole, such as “oil mined from the sands is simply not as environmentally disastrous as opponents like to claim.” Is that so, Joe? And what’s your source for that assertion? Canada’s Energy Minister? The slug at the bottom of Nocera’s column said he was invited onto the op-ed page because regular columnists Gail Collins and Nicholas Kristoff were off (or on book leave). Nocera’s column was disgracefully ignorant. The editors should send him back to the Times business section where unreality is the order-of-the-day.



Now, many people may draw the conclusion that some conspiracy is underway when the major mainstream media report the news so disingenuously, but that is just not so. The reason we, in effect, lie to ourselves incessantly is because of the master wish behind all the subsidiary wishes: we want to keep driving to WalMart forever and we can’t imagine any other way of life, let alone the way of life that the contraction of industrial economies is tending toward — which is to say a way, way downscaled and re-localized economic life centered on farming and artisanal manufacture. Yes, we are going medieval too, eventually, just like the Japanese, who will get there a little sooner than we will. It’s hard to swallow, I’m sure. That’s why we prefer the more digestible propaganda gummi bear treats like Charles Mann’s Atlantic article and Joe Nocera’s stupid op ed.



* This was the title on The Atlantic’s cover. Charle’s C. Mann’s article inside was titled “Why We Will Never Run Out of Oil.” Shame on the editors of The Atlantic.

link to the Atlantic article...I have yet to read it...i'm pretty certain what it contains.
http://www.theatlantic.com/magazine/arc ... _page=true

[neilgin1]

The Atlantic article is well worth the read, just so you can know delusion, the next time you see it.

[Saabman]

Not saying that cheap oil is around the corner or that it will be $1.00 again, but several new discovers have been made in North America which I believe could potentially(strongly) shift the market in domestic oil. Just going from memory, I believe that I heard the 3rd and 4th largest oil fields yet discovered?One I believe is in Mexico (or the Gulf of) and the other is here in the US. Again from memory, they are currently doing test holes on the in the one in Mexico (Gulf of?) and the issue with the US field is that it is very deep and new drilling techniques are being developed. In any case, potentially many years of oil production from each field.

[68Camaro]

We will not "run out" of energy in the US, but it will get increasingly more expensive, which will significantly alter our lifestyles and culture over a couple of short generations (if we make it that far).

But a medieval future for the US? Not because of lack of energy. If we go medieval it will be from the aftermath of war or a dictatorial government, or both. And expensive energy might play roles in either of those but still won't be the primary cause of either (that will be greed and/or power hunger).

[IdahoCopper]

As oil becomes more expensive, it becomes viable to extract from more expensive fields. Deeper water, deeper land wells, arctic, etc.

[coppertone]

I have 3 teenage children and am nearing the half century mark. I know that the world that my children and grandchildren will face with respect to energy availability will not be like the one I grew up in.

Although world oil production is still increasing, more and more of that energy is required by the energy industry to find, produce and bring that energy to market. I am certainly no expert but as I understand it, peak NET energy production is expected to occur in the near future, if it has not already occurred. With a growing world population and large numbers of people struggling to raise their standard of living to western standards, competition for available energy supplies will only increase (get more expensive). Although better technologies and new discoveries will certainly prodcuce additional supplies I do not believe they will be able to meet increasing demand. Prices will rise. In North America we have developed a society and a food production and distribution system that is so utterly reliant on cheap, abundant fossil fuel energy that our vulnerability to an energy crisis is truly scary!

Even if new supplies of oil and gas supplies were found we will soon hit the point where we may not be able to burn it. The idea that climate change is some left wing/liberal conspiracy is absurd. Again the world I currently live is not the same world I grew up in. I love to hunt geese, in the 70's the flocks had generally moved south of my area by mid-October, now its mid-November, great for me but the change is substantial. The irony is that as I am now looking out my window on this last day of April and I see snow everywhere. It is surreal. We should be seeding our crops but that will be weeks aways. This has not happened before. This is NOT normal.

I for one expect my children to face challenges with respect energy availability and cost that I have not faced. I hope to plant 40 acres of poor quality pasture land on my farm to trees for a future energy source for my children and their children. If I am wrong and it is not needed that is fine, they will have a place to enjoy, hunt and I will provide a home for some wild creature while getting some healthy excercise, no harm done. If it is needed then I hope I can reduce some future challenge for them.

I believe that we need to take at realistic look at our own and our childrens future and begin to make positive changes today in anticipation of a new reality.

[IdahoCopper]

The future is in resources derived from Space. Earth is finite, and for the next 10,000 years, the solar system is not finite. Sooner or later TPTB will realize that fact and the rush to exploit the vast resources in space will begin.

[scyther]

The future is in resources derived from Space. Earth is finite, and for the next 10,000 years, the solar system is not finite. Sooner or later TPTB will realize that fact and the rush to exploit the vast resources in space will begin.

Like what resources? I know there are precious metals in space, but I don't see how there could be coal or oil in space because they comer from living things...

[everything]

Fracking is a little more costly than the real easy oil, made cheaper by technology, but cheaper than tar sands, which we never heard of before, supposedly the wells won't last as long and they waste allot of natural gas, tar sands is diminishing return land, and we've entered it. I just wonder how long will the natural gas last, talk about a savior. We just go after the easy stuff first.
We got enough energy to fry ourselves anyways and people are starting to realize that climate change is real, whether man made or not.