Hello, I’m Ray. Join me for thoughts on Energy, fitness, politics, and Washington DC life
I happened to be in the office and caught the President live as he addressed the recent mass shooting in Oregon. If you haven't seen it, you really should watch it. It's a powerful moment in his presidency...
Read MoreArt Berman is out with a new deck: "The North American Unconventional Revolution & The 2014-2015 Oil Price Collapse" (pdf) and it's a great review of US shale, Saudi/OPEC response, and the great price fall over the past year.
As always, Art is out to tell you some facts you don't often see in the headlines:
That sentence might not give you cause for concern... but it should.
How about that, they actually gave Adam Conover a TV show. Conover is best known for his Youtube videos on the CollegeHumor channel under the same name "Adam Ruins Everything." The videos use a mix of comedy, history, and science to dispel widespread misconceptions about everything we take for granted.
The comedy part of Conover's program comes from the fact that when we really think about some of the routine parts of our lives... many of them are sort of ridiculous. Why do we still vote on Tuesdays, why has no one changed that? Why do we have car dealerships? What other consumer good has a random middleman stuffed in the middle between producer and consumer? If you've ever read Paul Keegan's 2014 article about the war between auto dealers and the website TrueCar or the on-going battle between my home state of Michigan and Tesla Motors on how Tesla can sell their product to consumers, you'd be right to think that are current system is sort of bonkers.
Or even much more basic customs of day-to-day life. To this day, I freeze in silence when someone near me sneezes because I once made the mistake of learning the history of the phrase "God bless you!" - now I'm constantly torn between not saying anything and genuinely feeling horrible because it's such an expected part of American culture.
The masterclass of this "our everyday life is ridiculous" concept are the weekly rants on John Oliver's show, which should absolutely earn Oliver a much deserved Emmy. Conover's program won't be on that level, but it should still highlight some of the odd things about everyday life. Things we might not want to think about... but we should.
Here are a couple of my favorite videos from Conover on Youtube:
Adam's earliest work about wedding rings ends with the depressing and true line "... but you'll still end up buying one." That's just how deeply this - one of the most successful marketing campaigns in history - is tied into our culture. Maybe our grandchildren will be able to evolve past this. Until then... rings for everyone!
Discuss tipping with friends and expect to get into an argument, especially if they work in the service industry. We all know why we tip, because servers get horrible pay if we don't - and that's just cruel. But how did we get here? How is it simply OK for restaurants to pay workers wages that guilt tips from customers to make up the rest? Lots has been written on this including "Tipping Is an Abomination" by Brian Palmer in Slate and another piece by Brandon Ambrosino in Vox demanding we get rid of it.
Short version: Getting rid of tipping won't be easy, and is a long-term challenge. But if we get to 2050 and we're still tipping in restaurants, it's because society was too unwilling to deal with an obvious problem right in front of us.
An incredibly clear explanation of how laziness becomes a form of journalistic bias: https://t.co/vWSl0fcbKN pic.twitter.com/wR50QjJr5X
— Matt Pearce (@mattdpearce) August 18, 2015
Cheers to Jon Stewart on his final Daily Show yesterday. His closing speech is well worth reading and remembering.
“The good news is this. Bullshitters have gotten pretty lazy, and their work is easily detected, and looking for it is kind of a pleasant way to spend the time...
So I say to you tonight, friends. The best defense against bullshit is vigilance. So if you smell something, say something.”
Jon Stewart hosts “The Daily Show with Jon Stewart” #JonVoyage. (Brad Barket/Getty Images for Comedy Central)
David Hughes and the Post Carbon Institute are out with a quick must read "Shale Gas Reality Check," an update to their "Drilling Deeper" report released last fall. You might remember that shale industry group Energy in Depth posted a critical response to Drilling Deeper, and I had an absolute blast responding to that.
"The future production of shale gas plays is a function of well quality variation by area, drilling rates, decline rates and number of available drilling locations. Although much is made by industry of the role of technological improvements in increasing the amount of gas recovered per well, an analysis of the country’s largest shale gas play, the Marcellus, shows that after a period of growth in the 2012 to early 2014 period, well productivity is declining in the play overall and in the sweet spot counties" Hughes writes.
And on over-optimistic EIA projections, Hughes adds "...we are led to believe that shale gas will be even more abundant in the future than projected just a year ago, setting the stage for a robust LNG export industry, and greater industrial and power sector use, all at relatively low prices. Getting it wrong has very serious implications for energy policy and future energy security..."
You might have missed it, so here's economics writer Noah Smith's recent tweetstorm related to his post "Free-Market Ideology and the Burden of Proof." I've highlighted Smith's work before on his Peak Oil writings and his latest post is also great and I hope you check it out.
Policy choices should be guided by data and evidence...
Read MoreA new free online course, Making Sense of Climate Science Denial, begins April 28, 2015 courtesy of edX and the University of Queensland Australia.
From the course description: "This course will give you the tools to identify, understand, and respond to climate facts and climate myths. We'll look at the psychology, we'll explain the science, we'll examine the mistaken arguments that distort that science. This will equip you to distinguish information from misinformation. You'll learn how to respond to climate myths by fighting sticky myths with even stickier facts."
Course participants will learn:
Jonathan Fahey's Associated Press headline was nothing if not memorable: "Oil Council: Shale won't last, Arctic drilling needed now." The article goes on to describe a new report from the National Petroleum Council prepared by an internal committee for Arctic research. The chairman of the committee was Rex Tillerson, CEO of Exxon Mobil.
Just in case you're thinking, "But wait, the oil industry said shale would last for decades and decades before peaking," it's worth taking a step back to highlight the parties at work here...
Read MoreIf you ever have a few hours free and you need a good video overview to develop a more realistic view of oil (and a window into the pessimistic side of the Peak Oil Debate held by people like me), you can't go wrong by choosing Steven Kopits early 2014 talk or by choosing any of Art Berman's talks on shale like his great 2013 talk to the Houston Geological Society (HGS). Or Art's recent 2015 update to the HGS embedded above.
These presentations will give you great background to re-think common oil and shale industry hype and insight into factors that don't often make the news. Art's talks in particular tend to focus on the little discussed aspects of shale profitability. The simple fact is that oil production continues to cost more and more money, requiring higher oil prices to breakeven and larger amounts of debt to stay afloat. When the money and investors dries up, production is soon to follow.
This talk is the first time Art has publicly used a term that's sometimes associated with him, even though he never actually said it until now. He called shale a Ponzi Scheme. Talk is talk and hype is hype, but in the end, shale just has to work in a financially sustainable way, and it simply doesn't. Big production gains can only mask that for awhile, but eventually investors will catch on, then the house of cards will tumble down.
“In this article I outline and analyse various explanations for why the price of oil has fallen so dramatically in recent months and present some considered but tentative hypotheses about what we can expect from the oil markets in coming years. I also hope to challenge the naive conclusion – drawn all-too-hastily in the mainstream media – that the drop in price somehow debunks the analytical framework of the ‘Peak Oil’ school...
Those who claim that the effects of cheap oil are ‘clearly positive’ are at best being simplistic and are at worst just plain wrong....
The fall in prices... undermines the oil industry by scaring off capital investment in an age when the costs of establishing and drilling new fields is relentlessly on the rise, due to declining energy returns on investment. Cheap oil therefore is likely to retard mid-to-long term production, setting the scene for a foreseeable mid-range supply crunch that will soon enough push prices back up. ”
Samuel Alexander's paper "The Paradox of Oil: The Cheaper It Is, The More It Costs" is an excellent review of modern Peak Oil thought. It's well worth reading both as a review of important concepts and for the impressive list of references at the end.
The paper describes what's sometimes referred to as the "Goldilocks Zone" for oil production - there's danger on both oil price extremes, the price can't be too low or too high, it needs to be just right.
Sure, there are some out there making bold claims that oil is going fall to $10 or $20. But oil producers are businesses. They won't just happily produce away regardless of price and profit. Just as investors won't continue to pump money into ventures that don't provide an adequate return on investment.
The cure for low oil prices is always low oil prices. Just as the cure for high oil prices is always high oil prices.
And remember to revisit Steven Kopits' talk from this time last year. If producers were having that much trouble at $100 oil, you can imagine how they're doing at half that.
Co-working superstar WeWork is preparing to launch its first residential venture in the Crystal City neighborhood of Arlington, VA - just outside of Washington DC. The project, which has taken on the unofficial names of "WeWork Residential" and “WeLive” is the renovation of an older office building into 250 micro-apartments.
How important is building community in an apartment complex? And how might WeWork's special blend of co-working magic make this project a step-up from traditional apartments.
In this piece I want to take a look at what we know about the WeLive project itself, look back at some of my own apartment and housing experiences, and finally have some fun brainstorming how WeLive might change the micro-apartment game forever...
Read More“...the output of the average well drilled in the Bakken slumps by 85 percent over the first three years of production... by comparison, the production decline at Ghawar, the world’s largest conventional oil field in Saudi Arabia, is about 5 percent per year. “The problem is that all shale plays ramp down much faster than conventional oil fields,” said Hughes, pointing out that steep decline curves are inherent with shale oil fields and yet rarely mentioned in breathless discussions of the riches of the Bakken and Eagle Ford.”
From a longer profile of David Hughes by Jeremy Miller titled "Statistical Realism: David Hughes crunches unpopular numbers for the shale oil boom"
Remember, if you ever hear a politician preaching an "all of the above" energy policy and that we can't "pick winners and losers" - what they're really advocating is business as usual. And they're advocating for avoiding difficult choices.
Because our policies absolutely prioritize certain fuels over others.
If someone ever, really, advocated for a true free market in energy, where no one receives subsidies, tax breaks, or special deals - that's a deal the renewable energy lobby would accept in a heartbeat, and a deal the fossil fuel lobby would violently reject.
That's the tradeoff. We subsidize fossil energy because to do otherwise would raise the cost of fossil energy. But the higher cost of fossil energy would make renewables far more competitive and speed their adoption.
As is the case for many policy decisions, it's a choice of if you want the pain now in terms of the economic damage of higher energy prices, or the pain later in terms of greater energy transition challenges and climate impacts.
“One thing that I would point out is that it’s very important for people to be skeptical and anticipate that people will be misleading to the public. Some of the misinformation that’s out there is not accidental. I think there’s quite a bit that’s put into the public discourse in order to have a political effect. It’s supposed to be wrong, but effective.
What our research shows is that if people are aware of the possibility that they might be misled ahead of time, then they’re much better at recognizing corrections later on.”
That's a quote from Stephan Lewandowsky, a psychologist at the University of Bristol and co-author of The Debunking Handbook. It is taken from an interview of Lewandowsky titled "How to debunk false beliefs without having it backfire."
The quote above speaks to a point I often try to drive home: That some misinformation is not accidental.
My very first post on this blog examined what I considered the worst and most misinforming energy chart of 2013. Part of the story is to examine the chart and understand WHY it's misinformation. But the next question, the question rarely asked, is the WHY of the chart itself. You have to go out of your way to produce the chart like that. Someone has the intent to make the chart like that. Someone signs off on it and commands the graphics staff to make the chart like that. The question is why?
Here on the blog I also often discuss the changing definition of "oil" over time. And two classic articles by Chris Nelder and Kurt Cobb examine the differences between how we used to discuss oil data previously and how that has changed. And it wasn't industry groups changing the presentation of data to bolster numbers - this was the EIA and the IEA themselves, organizations that hold almost universal trust from a public that would never question their data or motives. The result of the change is the well-known talking-point that the United States is now the number one producer of oil. Is that talking-point true? Again, it all depends on how you choose to define oil.
The latest piece this week from Cobb actually looks at the growing movement to go around the EIA and IEA in pursuit of energy data (and a couple of weeks ago, Cobb also looked at the dangers that arise when EIA forecasts are wrong - as they frequently are).
The question again, is why. Why change the definition of oil to include various other liquids? What was the catalyst over the past 15 years that caused and explains this change? Satisfactory answers to these questions are rare.
It's like the old-saying says: Sometimes you have to revert to a child-like mind and be willing to ask WHY five times in order to get to the truth of a matter.
Merchants of Doubt (2015) - A documentary that looks at pundits-for-hire who present themselves as scientific authorities as they speak about topics like toxic chemicals, pharmaceuticals and climate change.
“One of the most interesting people I met was a woman named Nancy Sullivan, a scientist at NIH who has spent a decade working on a vaccine for a disease that had never had an outbreak of more than 100 people, that was over in Africa, that no one really knew about. She’s laboring away in a lab for a decade trying to build this vaccine that no one really cared about, to be honest. And all of a sudden, Ebola was a big global problem. And the vaccine she spent a decade working on was a critical part of the response. The president went to her lab at NIH, went to the bench she’s been working at, saw her notebook with her notes from when she first discovered this vaccine, a little notation in her notebook where she’s just written in the margins, “Yahoo!” Seeing her fill these little pipettes and tubes and all these things, do this work, you know, it was just really inspiring. And knowing that there are just people out there doing this work quietly in labs, no one really knows if their work’s going to matter to anyone; they’re just doing it because of their dedication to science and medicine and trying to find cures—it was really amazing.”
From Michael Grunwald's fascinating extended interview with Ron Klain on the White House Ebola effort.
In December, I posted my thoughts on the US Ebola response.
Like many, I only recently heard of the passing of William Catton Jr, author of the 1982 book "Overshoot: The Ecological Basis of Revolutionary Change."
Richard Heinberg and John Michael Greer have both written excellent remembrances of Catton:
Greer writes of the one time he had the chance to meet Catton, a 15-minute conversation over dinner at the 2011 ASPO-USA conference. Since I had a hand in planning that conference in Washington DC, I'm happy to have had a small part in that meeting.
And it seems fitting to revisit Catton's talk from that conference in the video below. Through the large help of the offices of Congressman Roscoe Bartlett and Congressman Mike Honda (who were both in attendance), we were able to secure the Congressional Auditorium at the U.S. Capitol Visitor's Center inside the U.S. Capitol as our venue for the first day of the conference.
From this esteemed stage, Catton spoke of lessons learned over a long life and of visions for the future.
William R. Catton, Jr - Professor Emeritus, Dept. of Sociology, Washington State University;
An analysis of the fundamental trends underlying the Peak Oil and resource depletion issue, and the implications for the economy, energy security, and global stability.
Every once in awhile I think it's useful to preserve the times where people drop tons of great knowledge on Twitter before it's lost forever in the Twitter void, as I did before with a David Roberts flurry on climate change and a Chris Nelder tweetstorm on Peak Oil. This time it's for Gregor Macdonald who produced a series of 21 tweets on tight oil and the vastly under-appreciated issue of well age.
Check out all of the tweets below the fold. And notice that he also references another must read article: John Kemp's recent Reuters column, "U.S. oil production will be falling by end of 2015"
Read More
WSJ letter: If greens really believe fracking is wrong, then they shouldn't use any products derived from oil & gas http://t.co/wa3e6x4HV3
— Steve Everley (@saeverley) December 30, 2014I always get a chuckle out of the "Stop-Using" strawman argument. In short it's the line of thinking that says that if you're opposed to fossil fuel production than you shouldn't be allowed to use the products of fossil fuels.
And you hear versions of this from time to time. There's the fake outrage people have when they discover an environmentalist using plastic bags at the grocer. Or the fake outrage people have when they discover the shocking truth that Al Gore, former Vice President of the United States, lives in a large house or occasionally travels in an airplane.
I wrote about this before in a piece titled "No, You Can't Just Pretend That People Hate Fossil Fuels"
Notice that environmentalists never make the opposite claim: That if someone opposes solar power, then they are hypocrites if they do not instantly stop using all the products of solar power. These of course would include all plant and animal life and... oh yeah... fossil fuels.
It's always easy to spot when an arguer is walking into strawman territory when their claim becomes person-centered as opposed to issue-centered. All of these discussions are about people. They aren't about fossil fuels or solar power, they're misinformation about a person's claim combined with an attack on the person making the (now re-imagined) claim.
Products from Fossil Fuels
Just because a person is concerned with the financial sustainability of fracking, doesn't automatically mean they're opposed to fracking. Just because a person is concerned about potential environmental damages of fracking, doesn't mean they are opposed to fossil fuel production. Just because a person is concerned with climate change and the need to reduce emissions, doesn't mean they lack appreciation for the benefits and advantages fossil fuels and modern technology bring to the world.
We have to guard against living in a world of absolutes, and recognize that the ability to see multiple perspectives isn't being hypocritical, it's exercising a strong maturity of thought.
Adult thinking about these issues challenges us to walk the difficult path and find the nuanced middle ground. Nothing in policy is ever simple. There are always hard choices. There are always tradeoffs. Anyone that tells you otherwise is lying to you.
I touched a little on Arthur Berman's views in a recent article on why break-even price is a sort of silly metric to focus on during the oil price slide. In a new interview with Oilprice.com, Art expands on those thoughts.
First, Art's easy to digest quote on the current oil situation:
"The current situation with oil price is really very simple. Demand is down because of a high price for too long. Supply is up because of U.S. shale oil and the return of Libya’s production. Decreased demand and increased supply equals low price."
On break-even prices (emphasis mine):
"We’ve read a lot of silly articles since oil prices started falling about how U.S. shale plays can break-even at whatever the latest, lowest price of oil happens to be. Doesn’t anyone realize that the investment banks that do the research behind these articles have a vested interest in making people believe that the companies they’ve put billions of dollars into won’t go broke because prices have fallen? This is total propaganda.
... smart people don’t invest in things that break-even. I mean, why should I take a risk to make no money on an energy company when I can invest in a variable annuity or a REIT that has almost no risk that will pay me a reasonable margin?
Oil prices need to be around $90 to attract investment capital. So, are companies OK at current oil prices? Hell no! They are dying at these prices. That’s the truth based on real data. The crap that we read that companies are fine at $60/barrel is just that. They get to those prices by excluding important costs like everything except drilling and completion. Why does anyone believe this stuff?
... the real question is “when will people stop giving these companies money?” When the drilling slows down and production drops—which won’t happen until at least mid-2016—we will see the truth about the U.S. shale plays. They only work at high oil prices. Period."
Finally, numerous analysts have suggested that technological advances caused the drop in oil price, and that Peak Oil was proven wrong - not so fast, Art claims:
"Who said that technology is responsible for increasing production? Higher price has led to drilling more wells. That has increased production. It’s true that many of these wells were drilled using advances in technology like horizontal drilling and hydraulic fracturing but these weren’t free. Has the unit cost of a barrel of oil gas gone down in recent years? No, it has gone up. That’s why the price of oil is such a big deal right now.
Domestic oil prices were below about $30/barrel until 2004 and companies made enough money to stay in business. WTI averaged about $97/barrel from 2011 until August of 2014. That’s when we saw the tight oil boom. I would say that technology followed price and that price was the driver. Now that prices are low, all the technology in the world won’t stop falling production.
Many people think that the resurgence of U.S. oil production shows that Peak Oil was wrong. Peak oil doesn’t mean that we are running out of oil. It simply means that once conventional oil production begins to decline, future supply will have to come from more difficult sources that will be more expensive or of lower quality or both. This means production from deep water, shale and heavy oil. It seems to me that Peak Oil predictions are right on track.
Technology will not reduce the break-even price of oil. The cost of technology requires high oil prices. The companies involved in these plays never stop singing the praises of their increasing efficiency through technology—this has been a constant litany since about 2007—but we never see those improvements reflected in their financial statements. I don’t doubt that the companies learn and get better at things like drilling time but other costs must be increasing to explain the continued negative cash flow and high debt of most of these companies.
The price of oil will recover. Opinions that it will remain low for a long time do not take into account that all producers need about $100/barrel. The big exporting nations need this price to balance their fiscal budgets. The deep-water, shale and heavy oil producers need $100 oil to make a small profit on their expensive projects. If oil price stays at $80 or lower, only conventional producers will be able to stay in business by ignoring the cost of social overhead to support their regimes. If this happens, global supply will fall and the price will increase above $80/barrel"
Definitely read the full interview for Art's thoughts on global shale development, renewables, and natural gas.
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