tag:blogger.com,1999:blog-5235419263414453422.post858550509321168521..comments2024-02-23T01:30:06.101-08:00Comments on Early Warning: US Economic Recovery in the Era of Inelastic OilStuart Stanifordhttp://www.blogger.com/profile/07182839827506265860noreply@blogger.comBlogger17125tag:blogger.com,1999:blog-5235419263414453422.post-90125712114391847832014-11-29T11:21:45.523-08:002014-11-29T11:21:45.523-08:00Said another way: in the early days of oil refinin...Said another way: in the early days of oil refining, 100% of gasoline was unusable waste byproduct. No use for it until automobile came alone, and folks actually paid for the right to destroy it in their portable waste disposal units. The price was set by the need to carry it away from the refinery at the right rate so that it wouldn't collect up there. That was the history of gasoline prices in the US since day 1.fredianohttps://www.blogger.com/profile/03635675676762077736noreply@blogger.comtag:blogger.com,1999:blog-5235419263414453422.post-40117772788460542372014-11-29T11:17:00.695-08:002014-11-29T11:17:00.695-08:00A bbl of oil goes into a refinery and an equivalen...A bbl of oil goes into a refinery and an equivalent amount of mass leaves as product, from asphalt base to bunker-C to gasoline to the makins of WD-40, where the price of WD-40 is ... $90/gallon? Whatever the price of gasoline, they can only adjust the yield on a bbl of oil so much. What governs market price is the level of inventory in the tanks for all those feeds, period. They can't just sell gasoline. They can't just sell WD-40. To refine a bbl of oil..the entire bbl must go. Whatver is collecting up...the price drops. Whatever is leaving the refinery quickly..sees a price increase. Prices are determined by the need to move it all out of the refinery. There isn't a capability to store an infinite amount of any one feed. It all must go.fredianohttps://www.blogger.com/profile/03635675676762077736noreply@blogger.comtag:blogger.com,1999:blog-5235419263414453422.post-79397651300765492032009-11-25T08:11:27.417-08:002009-11-25T08:11:27.417-08:00KLR, I got data from BP SWRE 2009 at the link Stua...KLR, I got data from BP SWRE 2009 at the link Stuart provided. I used the spreadsheet link they provided, looked at the "Oil Consumption - barrels" tab. I get US 2008 - 19419 kbpd, 2005 - 20802 kbpd, difference -1383, change over 2005 -.0665 or -6.7%. I bet we're looking at different tabs or something.<br /><br />I can't quite figure out how they get their "Change 2008 over 2007" value either. For instance, for Qatar, they have an increase of 11.7% When I do (2008-2007)/2007, I get 11.5%. Their numbers are values, not calculations, so you can't see how they get there.kjmclarkhttps://www.blogger.com/profile/00490417628052004621noreply@blogger.comtag:blogger.com,1999:blog-5235419263414453422.post-8094091554265452622009-11-24T15:34:50.388-08:002009-11-24T15:34:50.388-08:00Funny, my BP data worksheet has a sum of -6.35% fo...Funny, my BP data worksheet has a sum of -6.35% for the US 2005-2008. They are very alone in this category for major oil producers, next on the list for contraction is Qatar at -3.39%. Most are showing double digit advances. Norway and Canada show minor advances.<br /><br />But many major economies had years in the last decade where they decreased their consumption of oil and still grew their GDP - France, Germany, Japan. I recall JD crowing about this on his blog, with good reason. Would be interesting to have some data about buildout of MT; maybe Alan Drake has an .xls.KLRhttps://www.blogger.com/profile/00691172491186270514noreply@blogger.comtag:blogger.com,1999:blog-5235419263414453422.post-14483347681604436952009-11-24T15:22:57.901-08:002009-11-24T15:22:57.901-08:00RE: U of Utah study mentioned by Chris
9.7!
The ...RE: U of Utah study mentioned by Chris<br /><br />9.7!<br /><br />The previous estimate was 42 (Adams 1979)<br /><br />The study will vaporize a lot of minds if the author hasn't made an error. Link to the pdf can be found <a href="http://www.springerlink.com/content/9476j57g1t07vhn2/?p=30609114c39543dab9b0fab88291b735&pi=1" rel="nofollow"> here. </a>Datamungerhttps://www.blogger.com/profile/10697373189192242333noreply@blogger.comtag:blogger.com,1999:blog-5235419263414453422.post-23453927849618193502009-11-24T14:21:00.553-08:002009-11-24T14:21:00.553-08:00Excellent. You've been missed.
I think there...Excellent. You've been missed.<br /><br />I think there's more to the OECD story. The US is 41% of the consumption of the OECD, and there's a wide range of responses in the OECD countries to the high prices of the past few years. Since '05, the US has cut consumption by 6.7% (BP; '05-'08), but the rest of the OECD only cut by 2.8%. The next five highest after the US cut consumption by 3.2%. In the past year ('07->'08), the change ranges from a 6.1% increase for Switzerland to a 6.1% decrease for the US. Even Germany saw a 4.6% increase over the past year.<br /><br />I suspect that supports what Michael said. The US will experience a significant portion of the pain. It sure doesn't look like China will be cutting back any time soon.kjmclarkhttps://www.blogger.com/profile/00490417628052004621noreply@blogger.comtag:blogger.com,1999:blog-5235419263414453422.post-18576903370336209802009-11-24T12:45:11.551-08:002009-11-24T12:45:11.551-08:00Great to see you writing again Stuart! I've mi...Great to see you writing again Stuart! I've missed your perspective. <br /><br />You may be interested in this <a href="http://unews.utah.edu/p/?r=112009-1" rel="nofollow">new study</a> from U of Utah scientist Stephen Schneider, in which he claims that a simple physical constant links global energy use to the world's accumulated economic productivity, adjusted for inflation, irrespective of population growth or standard of living. <br /><br />Also, if I may make quick plug for <a href="http://www.getreallist.com/is-the-iea-world-energy-outlook-politically-distorted.html" rel="nofollow">my take on the IEA report</a>, I believe they used the whole climate change angle as a stalking horse for their fears about peak oil.<br /><br />Looking forward to your future work! <br /><br />Cheers, <br />--CChris Nelderhttps://www.blogger.com/profile/07054816737532285895noreply@blogger.comtag:blogger.com,1999:blog-5235419263414453422.post-46315908783074057752009-11-24T10:37:34.708-08:002009-11-24T10:37:34.708-08:00An excellent "welcome back" post. If I m...An excellent "welcome back" post. If I might expand on a couple of things implied by this?<br /><br />Allocation of available oil exports between countries happens at the margin. That is, who derives the most value from an incremental barrel. In the developed countries, the incremental value is low: say, the entertainment value of a teenager getting to the mall. In the developing countries, the incremental value is higher. The changes in your oil consumption chart are to be expected, and the effect on developed countries' GDP is likely to be small.<br /><br />This also suggests to me where the "burden" is likely to fall in the US. Poor people will be hit hardest, and the rural poor in particular. The $100/hour consultant will be able to afford the commute from the suburb. The minimum wage rural worker, less so. Rural areas also provide fewer opportunities for adjustment. I think this is going to be the big "stealth" energy policy problem for the US: the rural areas can't be abandoned, but most of the usual adjustments for high oil prices aren't applicable.Michael Cainhttps://www.blogger.com/profile/01472223216496790376noreply@blogger.comtag:blogger.com,1999:blog-5235419263414453422.post-49775661796302128282009-11-24T07:32:41.522-08:002009-11-24T07:32:41.522-08:00Hi Phil - good to connect with you again, and that...Hi Phil - good to connect with you again, and that's a great catch!Stuart Stanifordhttps://www.blogger.com/profile/07182839827506265860noreply@blogger.comtag:blogger.com,1999:blog-5235419263414453422.post-1476774933180709302009-11-23T23:54:17.545-08:002009-11-23T23:54:17.545-08:00nice Stuart.. insightful and convincing analysis. ...nice Stuart.. insightful and convincing analysis. but in your new incarnation you are quite a moderate :-) Even the IEA agrees with you now:<br /><br /><a href="http://anz.theoildrum.com/node/5990" rel="nofollow">International Energy Agency calls 'Peak' on OECD Oil Demand</a><br /><br />You are optimistic that increasing GDP oil efficiency is due to internet. Is it possible that the trend was growth of financial sector and asset price bubble that is now in decline too? or is last data point recent enough to suggest otherwise?Phil Harthttps://www.blogger.com/profile/10667425838981158188noreply@blogger.comtag:blogger.com,1999:blog-5235419263414453422.post-69906020516259953192009-11-23T21:34:18.864-08:002009-11-23T21:34:18.864-08:00Greetings and thanks for the comments guys. In re...Greetings and thanks for the comments guys. In response to Datamungers initial paranthetic question - yeah, it's real GDP (chained $2005 as done by the BEA themselves).Stuart Stanifordhttps://www.blogger.com/profile/07182839827506265860noreply@blogger.comtag:blogger.com,1999:blog-5235419263414453422.post-47589318256497680252009-11-23T18:59:44.680-08:002009-11-23T18:59:44.680-08:00Stuart,
First, welcome back! I think your analysi...Stuart,<br /><br />First, welcome back! I think your analysis is spot on, the oil not consumed by the OECD will be absorbed by emerging economies and large net exporters providing subsidies to their domestic market. The chart showing spot oil prices and supply is quite striking clearly showing that the market is extremely tight. The question is how low can the OECD consumption go? a 4%/year decline in consumption seems extremely damaging for an eventual economic recovery. The IEA is predicting a floor around 40 mbpd in 2015 for the OECD consumption.Khebabhttps://www.blogger.com/profile/18250952707070950440noreply@blogger.comtag:blogger.com,1999:blog-5235419263414453422.post-81563167926256298782009-11-23T18:27:14.508-08:002009-11-23T18:27:14.508-08:00Yes, there are lots of fuel efficiency gains to ha...Yes, there are lots of fuel efficiency gains to had!<br /><br />However, the last couple of years gasoline consumption per vmt hasn't dropped much (diesel has fallen much more)which may indicate that businesses are doing much better than households on the efficiency front.<br /><br />[But I can wait for your next post]<br /><br />Anyway... I'm wondering if without further policy action the economy is structured such that it responds by giving up jobs rather than having consumers become oil efficient. i.e. people without jobs are forced to sharply curtail consumption while people with jobs carry on as usual enjoying (along with the developing world) the lower oil prices the recession & jobless bring.<br /><br />Glad you are back btw. :-)Datamungerhttps://www.blogger.com/profile/10697373189192242333noreply@blogger.comtag:blogger.com,1999:blog-5235419263414453422.post-23644533633328008112009-11-23T18:09:18.886-08:002009-11-23T18:09:18.886-08:00Stuart - fantastic that you're blogging on the...Stuart - fantastic that you're blogging on these matters again, as we're really at a major turning point in history with peak oil, climate change, and massive shifts in the transportation industry afoot. <br /><br />Rapier tried to suss out whether grains and sugars were doing the US energy trade balance situation any good: <a href="http://www.google.com/url?sa=t&source=web&ct=res&cd=2&ved=0CAoQFjAB&url=http%3A%2F%2Fi-r-squared.blogspot.com%2F2009%2F10%2Fethanol-and-petroleum-imports.html&ei=1jsLS5GXJITAsQONp6ioAw&usg=AFQjCNEUtWDOL8eVLDUCWEHe4wfccbJV5Q&sig2=XKlGFsyj0e_oh2gi-WiL1A" rel="nofollow">R-Squared Energy Blog: Ethanol and Petroleum Imports</a> Stupid downturn in demand buried that signal. Much of the commentary was niggling over btus; I've tried to chart the potential impact of the RFS over the next decade - forget energy content, on a volume basis ethanol should simply displace gasoline, with these issues of fuel line corrosion and decreased performance just a headache we drivers can deal with, no? Or is there a ceiling on non-pipeline transportation for ethanol that we'll run into before we're out of arable land?<br /><br />This is a nice intro to this subject you've posted - I take it you'll start to break down oil into its various components in the next installment? Anyone who read your TOD pieces on transportation remembers that gasoline consumption had rebounded in the US from its '79 high in '86, after all. <br /><br />I was struck by the data on <a href="http://ddl.me.cmu.edu/ddwiki/index.php/CAFE#CAFE_Standards_for_Passenger_Car" rel="nofollow">Corporate Average Fuel Economy</a> in this dedicated wiki; like you they've sussed out actuals for fuel economy, by what metric I'm not sure. This may be of use, I'm very keen on what's happening with that 4% efficiency wedge, given Obama's big promises. Dave Cohen points out that these are mostly carrots instead of sticks: <a href="http://www.aspousa.org/index.php/2009/05/obama-tackles-the-liquid-fuels-problem/" rel="nofollow">Obama Tackles the Liquid Fuels Problem :: ASPO-USA: Association for the Study of Peak Oil and Gas</a>. <br /><br />Again, welcome back!KLRhttps://www.blogger.com/profile/00691172491186270514noreply@blogger.comtag:blogger.com,1999:blog-5235419263414453422.post-80711828938657661552009-11-23T17:46:42.098-08:002009-11-23T17:46:42.098-08:00This is what I've been trying to say for some ...This is what I've been trying to say for some time, but I could never have mustered the concise data to prove it to skeptics. Kudos!<br /><br />And welcome back to blogging. It <i>is</i> a compulsion, isn't it?Engineer-Poethttps://www.blogger.com/profile/06420685176098522332noreply@blogger.comtag:blogger.com,1999:blog-5235419263414453422.post-37558728831607146692009-11-23T14:27:06.886-08:002009-11-23T14:27:06.886-08:00IIRC, fuel efficiency did increase around 4% a yea...IIRC, fuel efficiency did increase around 4% a year in the late 70s early 80s. Given that we now also apparently have a lift from the GDP/VMT ratio improving, it seems like it probably would be possible to grow the economy despite that kind of decline in oil consumption. However, it would take more of a concerted effort than has been made so far.Stuart Stanifordhttps://www.blogger.com/profile/07182839827506265860noreply@blogger.comtag:blogger.com,1999:blog-5235419263414453422.post-28911842724898734912009-11-23T13:29:53.695-08:002009-11-23T13:29:53.695-08:00Looking at the data since 1973, I can't find a...Looking at the data since 1973, I can't find a period where real GDP has grown while oil consumption has fallen 4%ish. (Except 1981 which just followed a recession in '80 and preceded something nasty).<br /><br />Thanks for looking at vmt versus (Real?) GDP. Interesting.Datamungerhttps://www.blogger.com/profile/10697373189192242333noreply@blogger.com