Via press release: a forecast study of investor patterns from UC Davis.
Stock prices suggest a 90-year gap
At the current pace of research and development, global oil will run out 90 years before replacement technologies are ready, says a new University of California, Davis, study based on stock market expectations.
The forecast was published online Monday (Nov. 8) in the journal Environmental Science & Technology. It is based on the theory that long-term investors are good predictors of whether and when new energy technologies will become commonplace.
“Our results suggest it will take a long time before renewable replacement fuels can be self-sustaining, at least from a market perspective,” said study author Debbie Niemeier, a UC Davis professor of civil and environmental engineering.
Niemeier and co-author Nataliya Malyshkina, a UC Davis postdoctoral researcher, set out to create a new tool that would help policymakers set realistic targets for environmental sustainability and evaluate the progress made toward those goals.
Two key elements of the new theory are market capitalizations (based on stock share prices) and dividends of publicly owned oil companies and alternative-energy companies. Other analysts have previously used similar equations to predict events in finance, politics and sports.
“Sophisticated investors tend to put considerable effort into collecting, processing and understanding information relevant to the future cash flows paid by securities,” said Malyshkina. “As a result, market forecasts of future events, representing consensus predictions of a large number of investors, tend to be relatively accurate.”
Niemeier said the new study’s findings are a warning that current renewable-fuel targets are not ambitious enough to prevent harm to society, economic development and natural ecosystems.
“We need stronger policy impetus to push the development of these alternative replacement technologies along,” she said.
Additional information:
Full text of study, “Future Sustainability Forecasting by Exchange Markets” — http://pubs.acs.org/journal/esthag (paywall)
Comments above about the peak always rolling back, and reserves continuing to increase are clearly based on ignorance of the facts. Hubbert made the first peak oil prediction in 1956, msinly for the USA, and predicted a range of dates based on then uncertainty abnout reserves. His prefered date was 1970, and guess what. USA production peaked in 1970. Since then major discoveries have been made in the Fulf of Mexico and Alaska, and technology has been developed to exploit Athabasca oil sands, the Baaken shales and tertiary recovery. All of these have only served to slightly slow the rate of decline. Conventional oil reserves world wide have been in decline for more than 2 decades, with production more than double discovery during that time. The last big bump in reserves, about 5 years ago was when Canada decided to reclassify oil sands as reserves, it was not due to new discovery. there have been no “giant” discoveries since 2003. Production increases since 2004 are “all liquids” increases due to natural gas liquids recovery and refinery recovery, and some biofuel production. Conventional oil increases have been almost entirely heavy sour crude for which there is quite small refinery capacity. Light sweet crude is already in terminal decline.
Existing conventional oil production declines about 4%/yr, is accelerating, and must be offset by bringing new capacity on stream. All known new projects at this time will not offset decline past 2013, and only that late if all the projects perform as well as planned, which is rarely the case. Growing reserves of non conventional oil and tertiary recovery are meaningless, because they only increase stocks, not flows. Peak oil is almost here, and that is “baked in the cake”. The big risk is sharp declines well before 2030, when maximum reserves contact wells water out. Saudi Arabia has been using MRC almost exclusively for nearly 2 decades. Most of OPEC has been claiming flat to slightly up reserves for about 3 decades, with constant production and almost no new discoveries, so their claimed reserves are certainly overstated. The world has been on an undulating or bumpy production plateau since late 2004, with the highest bump in Q3 2008. The terminal decline from the plateau starts by late 2013, at the latest. However, if “ignorance is bliss”, keep on believing.
“”””” Jim says:
November 9, 2010 at 11:34 am
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George E. Smith says:
November 9, 2010 at 9:25 am
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Wow, George. Looks like you did an incredible amount of research on thorium (NOT!).
Take a look at http://energyfromthorium.com/2010/05/03/new-job-with-teledyne-brown-engineering/ “””””
No I didn’t ! Where the heck did you get that idea. I simply gave a brief non-verbatim precis of what I just caught in passing while watching a foreign T&V presumably news pprogram; and what two people had to say about it.
I didn’t and don’t intend to spend another minute on researching it. If it happesn it will happen with or without me.
PS I don’t think I said before that I started out as a Nuclear Physicist; found it very interesting; but too confining because of the security issues around it (about which I don’t complain; just decided to not choose that as my long term career.)
I believe I said it was their words and not mine !
Read “maximum reservoir contact”. Typing too fast.
This idea is not very well thought out & totally ignores the laws of supply & demand. If we truly hit a peak (or more likely, we can’t supply the daily demand – should occur before the peak), the price of oil will skyrocket to ??? (fill in your number) & alternative forms of energy will A) become cost competitive / economic & B) tons of money will pour into alternative energy as there will be substantial profits to be made in that sector. To assume the pace of development will stay constant in the face of the inability to supply energy with current sources is just simply wrong.
The planet is constantly replacing it’s own oil supplies. Oil is not going to run out. We just need to drill where it is. Even if oil ran out, we still have an overabundance of coal and natural gas.
The control freaks are always coming up with these manufactured fairy tails to scare people so they are willing give up more of their money, rights, and freedoms.
I would love to see what Saudi Arabia looks like when it runs out of oil.
Burn all the fossil fuels you want, the plants love it.
While reading about the spreading desert areas a while ago, here’s a quote I found:
“Desert weed, if farmed, could shorten gas lines. Dr. Melvin Calvin studies a common California shrub called a gopher plant, Euphorbia lathyris. The latex it yields can be refined into crude oil and gasoline. Dr. Calvin, who won a Nobel Prize for his photosynthesis research, estimates the production cost at $30 a barrel, a price that seemed noncompetitive…until recently.”
NatGeo mag. November 1979 p.617
One further thought – the issue is not one of “when the oil runs out”. that is very far in the future. At present production rates Athabasca sands will not run out before 150 years. The issue is peak production and the world adjusting to a decreasing supply of oil. Total Exports from the oil exporting countries have been in decline since 2005, which is what has been pushing up prices. At current prices, most of these suppliers are producing flat out, but almost all of them subsidise domestic consumption at a price in the order of 50 cents/gal, and all of them have increasing domestic consumption, not offset by increasing production. Only the world economic meltdown, accompanied by oil demand destruction, especially in OECD prevented a major problem to now. With Chindia demand growing rapidly, and OECD demand recovering, look for prices north of $150./b in 2012, possibly followed by another temporary demand decline, and north of $200./b by the end of 2014. Substitutes aren’t the issue either. The issue is the economic impacts of a major scarce resource, especially on food production (Leibigs Law).
I thank God for the complete and total economic collapse of the USA so the subsidy money can get cut off for everything.
If I understand the article correctly it says that today’s alternatives to oil will not be economically feasible until 90 years after the oil runs out.
90 years, much less 90 years after the oil runs out is the same as “NEVER”.
More accurately, article’s lede should be “Long term investors believe today’s alternatives to oil will NEVER be economically feasible.”
Clathrates and abiogenic oil!! And you guys think warmers have a problem with religious beliefs!
2150-that’s about the time Warp Drive and Anti-matter reactors will be around…
J Ferguson & Ben D;
“Wouldn’t you agree that it isn’t really the amount of energy required for extraction, processing, and delivery, but the cost of that energy?”
Nope.
That is the point. It isn’t about the financial (i.e. “dollar” cost of the energy). It is about the ENERGY cost of the energy. The dollar cost is simply an expression of the (real) energy cost. (Money is nothing more than stored energy.) You can substitute other, i.e. cheaper, sources of energy to extract oil, coal or natural gas, but ultimately there is always an energy cost to the extraction process. If natural gas is cheaper than pumping and processing crude, then why are you wasting time with crude? SELL THE NATURAL GAS you control, because there will ultimately be more of a demand for that.
Think about how markets operate. Sooo, you go to natural gas, then that becomes expensive to extract (energy wise and financially). You go to coal liquification, etc., etc. They all end up in the same place. There is an energy cost to extracting any fossil fuel, and eventually, when it zeros out, you are done. Yeah. You could use geothermal or hydroelectric to pump oil, but why are you selling oil at a premium given the tremendous amount of energy it costs to get it out? You are better off putting that geothermal energy into the grid and encouraging people to drive electric cars. Maybe we will find highly efficient means of extracting oil, coal and gas. If we do, why not simply use that technology to supplant everything we’re doing now? It’s still energy.
Other commodities are different. You could theoretically continue to extract gold as long as the price goes up, putting in as much energy as you could find while the price was right. Commodities other than fossil fuels bare a different relationship than energy for energy. (It is scary to think about what happens to food prices as the dollar cost of energy goes up.) Ultimately, once EROEI is equal, it makes no sense to do anything but sell the energy you already have or find sources other than fossil fuels.
When do we get there? I don’t know, but the exponential function continues to operate and ACCELERATE. That’s what exponential functions do. That is why we now have 6.5 or 7 billion people in the world – all seeking energy. There were only about 3.5 billion when I was in college 40 years ago. So, we’ve nearly doubled in 40 years. In the absence of a world-wide pandemic or nuclear holocaust, will we double again in 20?
Jay
Murray Duffin says:
November 9, 2010 at 12:24 pm
Clathrates and abiogenic oil!! And you guys think warmers have a problem with religious beliefs!
yeah, what he said. peak oil is just another scam to take your money and freedom.
50 years ago the dinosaurs bones crowd told russia they had no oil. now russia is the number 2 producer of oil in the world. not only have they found oil in russia, but several moons in the solar system as well. hydrocarbon from dinosaurs, on…hyperion?
http://www.oilgeopolitics.net/Geopolitics___Eurasia/Peak_Oil___Russia/peak_oil___russia.html
DirkH says:
November 9, 2010 at 12:34 pm
DirkH says:
November 9, 2010 at 11:57 am
“This explains why the CRU is partially oil-founded.”
Sorry, typo – funded, not founded.
founded is still correct!
*****
George E. Smith says:
November 9, 2010 at 12:04 pm
*****
Why did you post this garbage, then? As you admit, you didn’t research it. So you post it anyway, knowing there is no basis in fact for it? Getting bored? What?
peak oil is just another scam to take your money and freedom.
50 years ago the dinosaur bones crowd told russia they had no oil. now russia is the number 2 oil producer in the world. besides russia, they have also found hydrocarbons on numerous moons around the solar system…let’s see, dinosaurs on…hyperion?
http://www.oilgeopolitics.net/Geopolitics___Eurasia/Peak_Oil___Russia/peak_oil___russia.html
ZT says:
November 9, 2010 at 8:32 am
“The date is generally 30-40 years from now, always has been, always will be.”
Yep, kinda like the bar that has the “free beer tomorrow” sign up and it’s still up today cause tomorrow never comes and there is never any free beer. Kind of surprised, though, since UC Davis is such a conservative place! Knew a professor from there back in the 60’s. He was into sensitivity training. Nice guy. Smoked too much grass, though, which diminished his cognitive abilities somewhat. Davis was never, and still ain’t, Cal Tech.
allright. one post appears and one post dissapears…twice
WUWT?
http://www.oilgeopolitics.net/Geopolitics___Eurasia/Peak_Oil___Russia/peak_oil___russia.html
[I have no idea. 8<) Robt]
commieBob “We have enough natural gas to last … depends on how you count it but it is a rather long time.”
Global shale gas reserves are estimated to be 456 trillion cubic meters
http://www.bloomberg.com/news/2010-09-23/low-emission-shale-gas-to-discourage-nuclear-carbon-capture-chatham-says.html
world energy use
2007 495 quadrillion btu
2035 739 quadrillion btu
http://www.eia.doe.gov/oiaf/ieo/highlights.html
Using 10^15 for a quadrillion, shale reserve 456 tr cu m = 2.7 tr boe = 14.9 * 10 ^ 18 btu, equivalent to 20.1 years’ world energy use [2035 level]
[1 boe = 5.55 m btu = 6000 cu ft gas = 170 cu m gas
Please check the calcs.
NB. That’s shale gas only (not natural gas (187 tr cu m ~8yrs), oil, coal, uranium, thorium, etc), vs all energy use.
Over 2/3 rds of the world’s proven oil reserves are heavy crude, tar sands, bitumen. There is a Canadian company called Ivanhoe (disclosure: I own a few thousand $$$ of their stock) that has developed a way of turning that heavy crude into medium to light crude (allowing it to be shipped by pipeline and processed in a refinery). Their method has none of the drawbacks of previous methods:
There is no requirement for natural gas or rare earth metals in the process.
Waste product generated (coke) is burned as part of the cycle to power the operation, with waste heat used to generate steam.
The steam can then be pumped underground to reduce the viscosity of the oil, allowing it to be pumped to the surface. This eliminated the need to tear apart the landscape with earth moving equipment to get at the oil.
They already have an operation in Ecuador with another waiting for permits in Canada. The process requires that oil be over $40 per barrel for the Ecuador project to be viable.
We aren’t running out of oil any time soon. I am not saying we shouldn’t be developing other sources (Gas to liquids and thorium power come to mind), but don’t count petroleum disappearing anytime soon.
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Jim G says:
November 9, 2010 at 12:57 pm
“Davis was never, and still ain’t, Cal Tech.”
#
I investigated them decades ago when I still wanted to be a wildlife biologist or an ichthyologist. Took one look around and went running for the hills. Scary place but not as scary as Berkley!
Crock, meet S**t!
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Smokey says:
November 9, 2010 at 11:34 am
Oil reserves are not the problem. The reason we’re still hooked on foreign suppliers is almost entirely due to political obstructionism by eco-luddites.
#
You nailed it on the head with that statement! I’d like to add that Political machinations have so distorted the market, that the natural interactions between supply, demand, and investment, no longer work. That means this entire study is invalid.
DesertYote says:
November 9, 2010 at 11:06 am
“Just a silly question; suppose that we stop using petroleum based fuels for transportation and energy, what are we going to do with the stuff? I mean it is not good for anything else, that is why we burn it.”
DesertYote try this on for size:
A partial list of products made from Petroleum (144 of 6000 items)
One 42-gallon barrel of oil creates 19.4 gallons of gasoline. The rest (over half) is used to make things like:
Solvents
Diesel fuel
Motor Oil
Bearing Grease
Ink
Floor Wax
Ballpoint Pens
Football Cleats
Upholstery
Sweaters
Boats
Insecticides
Clothesline
Curtains
Food Preservatives
Basketballs
Soap
Vitamin Capsules
Antihistamines
Purses
Shoes
Dashboards
Cortisone
Deodorant
Footballs
Putty
Dyes
Panty Hose
Refrigerant
Percolators
Life Jackets
Rubbing Alcohol
Linings
skis
TV Cabinets
Shag Rugs
Electrician’s Tape
Tool Racks
Car Battery Cases
Epoxy
Paint
Mops
Slacks
Insect Repellent
Oil Filters
Umbrellas
Yarn
Fertilizers
Hair Coloring
Roofing
Toilet Seats
Fishing Rods
Lipstick
Denture Adhesive
Linoleum
Ice Cube Trays
Synthetic Rubber
Speakers
Plastic Wood
Electric Blankets
Glycerin
Tennis Rackets
Rubber Cement
Fishing Boots
Dice
Nylon Rope
Candles
Trash Bags
House Paint
Water Pipes
Hand Lotion
Roller Skates
Surf Boards
Shampoo
Wheels
Paint Rollers
Shower Curtains
Guitar Strings
Luggage
Aspirin
Safety Glasses
Antifreeze
Football Helmets
Awnings
Eyeglasses
Clothes
Toothbrushes
Ice Chests
Footballs
Combs
CD’s & DVD’s
Paint Brushes
Detergents
Vaporizers
Balloons
Sun Glasses
Tents
Heart Valves
Crayons
Parachutes
Telephones
Enamel
Pillows
Dishes
Cameras
Anesthetics
Artificial Turf
Artificial limbs
Bandages
Dentures
Model Cars
Folding Doors
Hair Curlers
Cold cream
Movie film
Soft Contact lenses
Drinking Cups
Fan Belts
Car Enamel
Shaving Cream
Ammonia
Refrigerators
Golf Balls
Toothpaste
Gasoline
I wonder how the smart investors positioned themselves to take advantage of that lengthy switch from wood to coal, then coal to oil? They must have had remarkable foresight to have foreseen just how “slowly” the market found substitutes….
It’s amazing the things that people, even educated people, can find that seemingly correlate – but don’t. I think this fits rather nicely into the round file as a prognostication of substance.