# Peak Oil -New definition



## peakbagger (Dec 4, 2020)

I remember the long threads from years back about Peak Oil. The definition then was the world was going to run out of oil and civilization would collapse as the price of oil went sky high. These days Peak Oil is still in the news but the definition has now changed that the demand is dropping so rapidly that there is still going to be plenty of oil in the ground but not enough demand to make it worth pumping it.

Who would have thought?


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## SidecarFlip (Dec 4, 2020)

Covid is the primary driver of the lower consumption right now.  Smart people are being hermits.  Dumb people are getting the virus and dying.  I know where I stand, do ypu?


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## brenndatomu (Dec 4, 2020)

Yah, imagine that, too much oil...oil/gas, coal, wood...it was all placed in/on this blue ball as a resource for us to use...but if us humans could just stop using it, we can stop climate change...riiiigghht...


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## semipro (Dec 4, 2020)

brenndatomu said:


> ...but if us humans could just stop using it,


Like any other limited resource, it's not a matter of stopping our use, it's more a matter of how we use it, how fast we use it, what impact it has, and whether our ecosystem can handle the waste.  
I truly believe we're going to look back one day and ask "what the heck were we thinking burning this stuff?"


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## Sawset (Dec 4, 2020)

There also was  a time of "peak wood" (or whatever to call it) just prior to coal and the industrial revolution. Lots of alarm bells then too. Wood was in short supply with a bleak future ahead, till coal use took over. Is now any different, peak oil, bleak outlook, electric taking over (coal, but also hydro and nuclear).


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## begreen (Dec 4, 2020)

brenndatomu said:


> Yah, imagine that, too much oil...oil/gas, coal, wood...it was all placed in/on this blue ball as a resource for us to use...but if us humans could just stop using it, we can stop climate change...riiiigghht...


They said that once about whale oil too. Didn't work out great after awhile. Wood, regenerates in a relatively short 50 yr or so cycle. That is many magnitudes less than millions of years old carbon. There is a difference between using any resource and abusing it.

The addiction to oil is a relatively new phenomenon. When power and transportation no longer need to come from carbons stored millions of years ago then the demand will drop considerably. Agriculture is also starting to make a transition to a more regenerative phase.


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## Sawset (Dec 4, 2020)

Would electric not be abused? Tesla, 2.3s 0-60. That's still burning up something somewhere.


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## begreen (Dec 4, 2020)

Sawset said:


> Would electric not be abused? Tesla, 2.3s 0-60. That's still burning up something somewhere.


Absolutely yes. I have never bought into the ludicrous need for that level of acceleration.


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## begreen (Dec 4, 2020)

In the news today. Denmark just pulled the plug on new drilling. 









						Denmark set to end all new oil and gas exploration
					

The European Union's largest oil producer plans to stop extracting fossil fuels by 2050.



					www.bbc.com


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## ABMax24 (Dec 4, 2020)

Sorry, but I disagree with the premise of this thread, a 9% reduction in global oil consumption is relatively small given the wide-sweeping lifestyle changes in the past year due to Covid. The US EIA is predicting only 3% less consumption for 2021 when compared with 2019, pretty much business as usual.





__





						Short-Term Energy Outlook - U.S. Energy Information Administration (EIA)
					






					www.eia.gov


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## begreen (Dec 4, 2020)

ABMax24 said:


> Sorry, but I disagree with the premise of this thread, a 9% reduction in global oil consumption is relatively small given the wide-sweeping lifestyle changes in the past year due to Covid. The US EIA is predicting only 3% less consumption for 2021 when compared with 2019, pretty much business as usual.
> 
> 
> 
> ...


Could be right, demand growth from China and India is a major factor, but then again many current forecasts are based on past data. OPEC's forecasts are down 1 BB/day from last year's forecast. We shall see.








						OPEC cuts long-term forecast for oil demand growth, sees 'continued disparity’ in climate policy
					

OPEC said worldwide oil demand was expected to increase by nearly 10 million barrels per day over the long term.




					www.cnbc.com


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## ABMax24 (Dec 4, 2020)

begreen said:


> In the news today. Denmark just pulled the plug on new drilling.
> 
> 
> 
> ...



That's not quite correct, Denmark has stopping issuing new licenses so new "lands" can't be explored and developed, existing licenses can still be explored, drilled and developed.

Part of this is because only one company was interested in acquiring new licenses, probably because the remaining "lands" had little economic value.

Besides the 100,000 bpd Denmark produces is a drop in the bucket, I was working on a SAGD site this spring that is 12,000 bpd, and it was only one of about 20 such facilities in a 60 mile radius.


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## SidecarFlip (Dec 4, 2020)

At my age, I'm not concerned at all actually.  Just topped off my 1000 gallon bulk tank.  I figure the price of diesel is about to go up...appreciably.  One thing to remember, the price of fuel goes up for us (farmers) we pass that cost onto you (consumer).  Viscous circle isn't it?  Lets not even get into plug in electric cars.  People conveniently forget where the power comes from to power their 'green' machines. that in reality aren't green at all.  Just a 'feel good' thing.

I always feel good when I start up one of my turbocharged diesel tractors.  Love that sound


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## ABMax24 (Dec 4, 2020)

begreen said:


> Could be right, demand growth from China and India is a major factor, but then again many current forecasts are based on past data. OPEC's forecasts are down 1 BB/day from last year's forecast. We shall see.
> 
> 
> 
> ...



But that's still less than a 1% reduction.

Quite frankly the best outcome to foster a  reduction in oil demand is a spike in oil prices. My guess is this will happen sometime in 2022 or 2023 as life returns to "normal", and after the recovery from the next stock market correction, which I would expect sometime in mid 2021.


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## ABMax24 (Dec 5, 2020)

SidecarFlip said:


> Lets not even get into plug in electric cars.  People conveniently forget where the power comes from to power their 'green' machines. that in reality aren't green at all.  Just a 'feel good' thing.



There's a massive difference in CO2 emissions between a combined cycle natural gas powerplant operating at >60% efficiency to charge an EV battery and a gasoline powered car that operates at sub 30% efficiency.


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## SidecarFlip (Dec 5, 2020)

ABMax24 said:


> There's a massive difference in CO2 emissions between a combined cycle natural gas powerplant operating at >60% efficiency to charge an EV battery and a gasoline powered car that operates at sub 30% efficiency.


Like I said, don't much care really.  I like my V8 Suburban too.

Far as the petroleum correction, try May or June next year  I'm thinking 4 bucks a gallon for weasel pee ethanol and 8 for diesel (on road), off road will be about 6 and all I use is off road anyway.

That is for the US. Far as your per liter cost, I haven't a clue and don't want to know 'cause I'm not visiting anyway.


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## peakbagger (Dec 5, 2020)

Hindsight is 20/20 but most of us will not live long enough to see enough time span to see the curve consistently trended down. We already are seeing weather shifts associated with changed climate.  The big oil companies, are all dumping long term reserves and many of them are making decisions now to reduce their fossil investments and shifting to other investments.  Yes there is a Covid blip in the system but many predictions are its going to make a long term shift in fuel demand.

Transportation fuels is a big part of demand and with the rapid improvement in batteries anyone who is still doing a routine commute is going to look hard at an electric even if they are still commuting. Its highly likely the new fuel economy standards for trucks passed during the last administration will go back in effect and that is going to raise the cost of new fossil trucks and viable electric trucks are going to be showing up in showrooms in the next two years. https://news.yahoo.com/automakers-prep-stronger-mileage-standards-174706314.html

Toyota is up to 400 mile range in their hydrogen vehicles and that is basically electric efficiency and low carbon impact in a fuel that can be refueled out of a pump.  The firms that sell gas turbines are switching their fleet over to be capable of running on hydrogen as they see the writing on the wall. RIght now hydrogen is mostly coming from fossil but there has been some major improvements in green hydrogen to the point where its getting close.

There are gigawatts of off shore windturbine projects just waiting to be deployed off the east coast, they got delayed by the current administration but " a stroke of pen" by a new one is all that is needed to rescind the roadblock and once they go in, they are not coming out. Major banks and financial firms across the board have stopped long term lending for large fossil power plants including gas as their analysis is there is risk that the plants  will economically stranded long before the payments are stopped being due.


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## Easy Livin’ 3000 (Dec 5, 2020)

brenndatomu said:


> Yah, imagine that, too much oil...oil/gas, coal, wood...it was all placed in/on this blue ball as a resource for us to use...but if us humans could just stop using it, we can stop climate change...riiiigghht...


Yep, placed here all for us.

If you are going to be this way, learn the story and lesson of the first two who ate the forbidden fruit and were cast out, and study the teachings of the magic man in the second book. Don't just pick the parts that make you think it's all about you.  And maybe the apple is intended to be a metaphor for fossil fuels, among other things.

I'm not religious and don't intend for this to be a religious discussion.  That said,  im sure a student of valuable lessons, and there are valuable lessons for humanity in that book that I do truly believe.  Greed, gluttony,  and hubris are most certainly proscribed as bad there.


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## Sawset (Dec 5, 2020)

Easy Livin’ 3000 said:


> Greed, gluttony, and hubris are most certainly proscribed as bad there.


On my way home from work there is an intersection to stop at. Just past it is a 3/4mi long hill to climb, then pretty much smooth from there on. Most times I just ramp up the rpm to such and such, move along, get it done, as most others do. And occasionally having to avoid the race car drivers who like to test their skills, but rarely. One time I stopped behind one of those teslas. Nice car. Very rare around these parts. It took off like a shot and was gone out of sight in seconds. What transpired was a stupid joke. Dozens of cars turning into arshol mania trying to punch it to the top. I'm all for fine tuning what we have, making the world a better place, enjoying the benefits of a cleaner world, leaving it better than we found it. But oh joy, looking forward to the increased performance, and that 60% vs 30% efficiency being wasted immediatly.


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## Easy Livin’ 3000 (Dec 5, 2020)

Sawset said:


> On my way home from work there is an intersection to stop at. Just past it is a 3/4mi long hill to climb, then pretty much smooth from there on. Most times I just ramp up the rpm to such and such, move along, get it done, as most others do. And occasionally having to avoid the race car drivers who like to test their skills, but rarely. One time I stopped behind one of those teslas. Nice car. Very rare around these parts. It took off like a shot and was gone out of sight in seconds. What transpired was a stupid joke. Dozens of cars turning into arshol mania trying to punch it to the top. I'm all for fine tuning what we have, making the world a better place, enjoying the benefits of a cleaner world, leaving it better than we found it. But oh joy, looking forward to the increased performance, and that 60% vs 30% efficiency being wasted immediatly.


Yes, we tend to do this, it's all part of the condition.  Another example is buying low fat food, and feeling justified in eating lots of it, just switching the kind of calories.  I suspect most electric cars will have acceleration capacity far above the ice cars they are replacing.  And I suspect that there will be plenty of folks who won't be able to handle it and end up in the ditch, or worse.  Although I understand they are building technology to stop or at least greatly reduce the accidents.


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## DBoon (Dec 5, 2020)

ABMax24 said:


> US EIA is predicting only 3% less consumption for 2021 when compared with 2019,


US EIA predications are historically laughably bad - just look at reports for any year in the last 15 years predicting growth of solar and wind (renewables). Always wrong, by huge amounts. Nearly all of their predictions are based on very simplistic trend continuance. They are incapable of predicting when the knee of the demand curve may occur (either up or down). 

I'm not saying that they won't be right, but don't take their predictions at face value. This could be the knee of the curve for oil demand...or may not be. We'll know when it is behind us. 

As the Saudis have been reported to say "the stone age didn't end because the world ran out of stones". Simple presence of oil, even at low prices, does not guarantee stable or increasing demand.


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## DBoon (Dec 5, 2020)

SidecarFlip said:


> People conveniently forget where the power comes from to power their 'green' machines.


I don't conveniently forget anything about the source of power for my electric car - I know it comes from my 15 kW solar array. I know that because I plug it in to charge when it is sunny and producing power. And if I didn't, that solar power output is offsetting other power generation - the power is not being wasted. 

20% of US power comes from renewables (hydro, solar, wind). 20% comes from nukes. 20% comes from coal. The balance is largely natural gas. It varies state by state. It's a lot cleaner than that in upstate NY (85% nuclear, hydro or wind. 

What was true of the grid 15 years ago (coal supplied 50% of US electricity) is not true today. And that is true of nearly every state, including most historically 90%+ coal-sourced electricity states.


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## Easy Livin’ 3000 (Dec 5, 2020)

DBoon said:


> I don't conveniently forget anything about the source of power for my electric car - I know it comes from my 15 kW solar array. I know that because I plug it in to charge when it is sunny and producing power. And if I didn't, that solar power output is offsetting other power generation - the power is not being wasted.
> 
> 20% of US power comes from renewables (hydro, solar, wind). 20% comes from nukes. 20% comes from coal. The balance is largely natural gas. It varies state by state. It's a lot cleaner than that in upstate NY (85% nuclear, hydro or wind.
> 
> What was true of the grid 15 years ago (coal supplied 50% of US electricity) is not true today. And that is true of nearly every state, including most historically 90%+ coal-sourced electricity states.


Yes, the tired and false talking points about centralized energy generation being as bad as a bunch of ices spewing their own pollution is, well, tired.


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## Sawset (Dec 5, 2020)

We get a formal report every year from the farmer renting land for growing crops. It's been about 12yrs now that the report includes the micro nutrient sulpher being added to balance requirements from soil tests. Prior to that, tests showed neutral to an abundance of sulpher. Hmm, low atmospheric sulphur?, wonder how that happened.


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## Easy Livin’ 3000 (Dec 5, 2020)

Sawset said:


> We get a formal report every year from the farmer renting land for growing crops. It's been about 12yrs now that the report includes the micro nutrient sulpher being added to balance requirements from soil tests. Prior to that, tests showed neutral to an abundance of sulpher. Hmm, low atmospheric sulphur?, wonder how that happened.


Is low atmospheric sulphur a good thing or a bad thing for you?


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## SidecarFlip (Dec 5, 2020)

DBoon said:


> I don't conveniently forget anything about the source of power for my electric car - I know it comes from my 15 kW solar array. I know that because I plug it in to charge when it is sunny and producing power. And if I didn't, that solar power output is offsetting other power generation - the power is not being wasted.
> 
> 20% of US power comes from renewables (hydro, solar, wind). 20% comes from nukes. 20% comes from coal. The balance is largely natural gas. It varies state by state. It's a lot cleaner than that in upstate NY (85% nuclear, hydro or wind.
> 
> What was true of the grid 15 years ago (coal supplied 50% of US electricity) is not true today. And that is true of nearly every state, including most historically 90%+ coal-sourced electricity states.


I'm happy for ya and I find you laughable.  You bother to consider the useful life of your panels?  Bother to take into account the they degrade around 1-2% yearly?  Bother to consider what the cost of replacing them or disposing of them is or the fact that they are considered hazardous waste and must be disposed of in an approved landfill at substantial cost (to you)?  I bet not.  People are short sighted.  I guess it you want an array destroying your landscape, have at it.  Wonder where the panels were made and where the rare earth minerals came from.  Bet it wasn't here either.

Better hang on tour shorts, it will only get rougher and more costly as time goes on.  Glad I'm an old fart.

My cousin has Tesla, the fancy AWD SUV one.  I've driven it, it's fast.  Do I want one, never.  Every time he comes to visit, first thing I have to do is plug it into the 220 shop power 'cause no charge stations around here.  My philosophy is, what blows your dress up don't blow mine up.

I have solar panels on my RV so I'm guilty as charged as well but I use them to keep the batteries charged, not as a prime source of power.


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## Easy Livin’ 3000 (Dec 5, 2020)

SidecarFlip said:


> I'm happy for ya and I find you laughable.  You bother to consider the useful life of your panels?  Bother to take into account the they degrade around 1-2% yearly?  Bother to consider what the cost of replacing them or disposing of them is or the fact that they are considered hazardous waste and must be disposed of in an approved landfill at substantial cost (to you)?  I bet not.  People are short sighted.  I guess it you want an array destroying your landscape, have at it.  Wonder where the panels were made and where the rare earth minerals came from.  Bet it wasn't here either.
> 
> Better hang on tour shorts, it will only get rougher and more costly as time goes on.  Glad I'm an old fart.
> 
> ...


And all the fossil fuel infrastructure doesn't degrade?  Interesting.


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## SidecarFlip (Dec 5, 2020)

Easy Livin’ 3000 said:


> Is low atmospheric sulphur a good thing or a bad thing for you?


Pretty soon the gummit will tax farmers (me) for cow farts.....    Then, I'll sell of my cattle like most farmers will and the cost of your grocery store meat will skyrocket.  Cause and effect or action and reaction.  I won't be here to enjoy the fruits of the labors of enviromentalists and I'm glad of that.  We could very well turn into a Soylent Green society, recycling is everything right?


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## Easy Livin’ 3000 (Dec 5, 2020)

SidecarFlip said:


> Pretty soon the gummit will tax farmers (me) for cow farts.....    Then, I'll sell of my cattle like most farmers will and the cost of your grocery store meat will skyrocket.  Cause and effect or action and reaction.  I won't be here to enjoy the fruits of the labors of enviromentalists and I'm glad of that.  We could very well turn into a Soylent Green society, recycling is everything right?


Well, seafood has already become too expensive for many people.  

Beef isn't expensive enough to account for it's true costs.  Good thing they are making synthetic beef now.  And I understand CAFOs are on their way out.  

Probably better to sell out while you still can.  Those beeves of yours might become a stranded asset like much of the oil that's left in the ground is likely to be.

Those damn environmentalists!


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## Sawset (Dec 5, 2020)

Easy Livin’ 3000 said:


> Is low atmospheric sulphur a good thing or a bad thing for you?


I would say neutral regarding agriculture. More of an interesting observation than anything from that end. For other things it may be a substantial benefit. But having a direct impact on daily life, tangible and easily measured, not really requiring much debate, and having an effect no matter how remote the location - interesting observation.


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## woodgeek (Dec 5, 2020)

SidecarFlip said:


> Pretty soon the gummit will tax farmers (me) for cow farts.....    Then, I'll sell of my cattle like most farmers will and the cost of your grocery store meat will skyrocket.  Cause and effect or action and reaction.  I won't be here to enjoy the fruits of the labors of enviromentalists and I'm glad of that.  We could very well turn into a Soylent Green society, recycling is everything right?



No worries. I switched to Impossible Burger in 2019. People I serve it to can't believe its not beef. Yum.  

As for predictability, um, people talking about global warming have been predicting the exact current scenario for more than a decade.  Thanks Obama!  Renewables get stupid cheap, grows exponentially, everything electrifies in stages.  This has been the official policy plan since around 2012.  All y'all are not reading the right sources.

EIA predictions aren't bad, they are legally REQUIRED to be bad.  As a govt agency, they are not allowed to predict future energy policy.  So their predictions are required to assume that current energy regs and renewable incentives (that all have sunsets, and need to get renewed) all sunset in 1-3 years.  And that fossil subsidies (which don't have sunsets) will continue forever.  And there will be no future laws or incentives for renewable power building on the existing ones.  THAT is why they are bad.  By law.

Independent analysts (like at Bloomberg) have been predicting global Peak Oil Demand in the 2025-2030 for close to a decade now.  Yup, that's global, as in including the developing world, India and China.  (China has way more electric cars than the US BTW).

The oil majors took a few more years to adjust their forecasts, and all of them now ALSO predict global peak oil demand around 2030 plus or minus.  Except one, Exxon.  They are fudging their projections at this point, and hiding behind the EIA, saying their projections predict less fossil use than the EIA does, so there!  Garbage in, Garbage out.

2019 models by some predict peak oil demand before 2025.   The covid oil demand blip might have pulled the peak back to 2019, but I think it more likely that oil demand will rebound, and limp slightly higher than 2019 in a few years, before starting its slow decline.

And I expect the market cap of the oil majors will be basically zero well before that. XOM is already down 50% from their 2010s average price, has a lower market cap than 'Zoom' and was delisted from the SP500. Following in the tracks of the coal companies 10 years ago. The Market likes a growth business, and hates a shrinking one.


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## semipro (Dec 5, 2020)

Sawset said:


> We get a formal report every year from the farmer renting land for growing crops. It's been about 12yrs now that the report includes the micro nutrient sulpher being added to balance requirements from soil tests. Prior to that, tests showed neutral to an abundance of sulpher. Hmm, low atmospheric sulphur?, wonder how that happened.


I'm guessing that the primary contributors to atmospheric sulfur have been coal and petroleum fuel burning, and volcanism. 
We're burning less coal (at least in the US) and have been working to remove sulfur from petroleum fuels so I'd expect a decrease.  There's not much we can do about volcanism. 
While some sulfur deposition in soils may be good for crops, sulfur in the air results in the formation of sulfuric acid, generally not a good thing.


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## semipro (Dec 5, 2020)

DBoon said:


> 20% of US power comes from renewables (hydro, solar, wind). 20% comes from nukes. 20% comes from coal. The balance is largely natural gas. It varies state by state. It's a lot cleaner than that in upstate NY (85% nuclear, hydro or wind.
> 
> What was true of the grid 15 years ago (coal supplied 50% of US electricity) is not true today. And that is true of nearly every state, including most historically 90%+ coal-sourced electricity states.


And there's lots of potential for improvement with increased grid efficiency and more renewables coming online.  
Not so for fossil fuels and the infernal combustion engines that burn them.


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## peakbagger (Dec 5, 2020)

_You bother to consider the useful life of your panels? Bother to take into account the they degrade around 1-2% yearly? Bother to consider what the cost of replacing them or disposing of them is or the fact that they are considered hazardous waste and must be disposed of in an approved landfill at substantial cost (to you)? I bet not. People are short sighted. I guess it you want an array destroying your landscape, have at it. Wonder where the panels were made and where the rare earth minerals came from. Bet it wasn't here either._

I guess you have some misconceptions. I covered them awhile back but since they are common I will do it again. Yup they degrade, everything does, actual experience is the degradation factor stated by manufacturers are worst case, actual field measurements on installed arrays generally are far less. Worse case is add a few panels to the string. The currently type of panels used are not very hazardous, far less than a car battery and systems are in place to deal with car batteries as well as scrap cars. The frames are typically aluminum, there is a pretty good existing recycling network in place all ready. The front panel is tempered glass. Glass is readily recyclable. bonded to the glass are the silicon chips, silicon is basically refined beach sand. The wire traces are basically conductive metal tabs with solder and there may be some copper bus in the junction box. Realistically a typical household appliance has about the same level of toxics. There are recycling techniques in place but currently most panels are recycled for reuse as there are many that are still putting out viable power 25 to 30 years since they were made. I agree if you want to dispose of it in a landfill you will pay the going rate to dispose of an appliance. My local landfill charges $65 a ton and ton of panels is lot of panels once you knock off the frames. Ideally the frames get knocked off, the junction boxes get removed as a typical HDPE waste stream, then the silicon with the wafers are broken up and the metallic traces are seperated from the chunk glass.

Where were the panels made? Just like almost every product out there its made where its cheapest to make them, no different than any other product. Set trade policy to make them in the US and they will be made in the US.  There really are no rare earth materials used in the current composition solar panels so I really cant answer where they come from.

As for ruining the landscape, that is a public policy decision. A typical house roof will pretty well cover the needs of a typical house. Put in place public policy to put arrays on all buildings and degraded areas and the need for large solar farms goes away.


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## semipro (Dec 5, 2020)

SidecarFlip said:


> I guess it you want an array destroying your landscape, have at it.


Here's how I protect my vehicles and destroy my landscape with solar PV


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## Easy Livin’ 3000 (Dec 5, 2020)

semipro said:


> Here's how I protect my vehicles and destroy my landscape with solar PV
> View attachment 268572


Horrific!  Well, at least you don't have one of those cancer causing windmills destroying the view, too!


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## ABMax24 (Dec 5, 2020)

woodgeek said:


> And I expect the market cap of the oil majors will be basically zero well before that. XOM is already down 50% from their 2010s average price, has a lower market cap than 'Zoom' and was delisted from the SP500. Following in the tracks of the coal companies 10 years ago. The Market likes a growth business, and hates a shrinking one.



Zero market cap won't happen as long as these oil companies continue to make a profit and pay dividends. Although the market is sometimes irrational and often narrowminded, Tesla being a prime example of this as it's valuation makes absolutely no logical sense. Fund managers won't simply ignore dividend paying oil stocks.


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## woodgeek (Dec 5, 2020)

ABMax24 said:


> Zero market cap won't happen as long as these oil companies continue to make a profit and pay dividends. Although the market is sometimes irrational and often narrowminded, Tesla being a prime example of this as it's valuation makes absolutely no logical sense. Fund managers won't simply ignore dividend paying oil stocks.



Sure.  XOM has been losing money for three quarters, and borrowing money to pay that fat dividend.  Of course, even IF oil prices rise above $60/bbl and they start making a profit again, that dividend will be an albatross around their necks.  Pay it, or watch people dump the stock.

Exxon lost a mint in Alberta in the 80s and 90s.  And was  late to the fracking party.  And bought in just as the real big money ended.  And has higher production costs than the sovereigns.  And was busted by the SEC for their fishy bookkeeping, amortizing their fields over much longer periods than the other majors, and just took a huge writedown over that.  Without their BS projections of ever growing global demand lifting all boats, they look weak as chit.  Why do YOU think SP500 delisted them?  Do you think they will be relisted?

The coal majors used to be behemoths.  Their business model unassailable, they kept the lights on in the US.  SP500 royalty.  Fat dividends. Then $300B in market cap went poof in a few years, when the coal demand projections went poof, and thus their future implied value.  Some are still in business, shadows of their former selves, the rest are bankrupt and gone.


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## semipro (Dec 5, 2020)

Easy Livin’ 3000 said:


> Horrific!  Well, at least you don't have one of those cancer causing windmills destroying the view, too!


Not yet, but it's in the plans.


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## Easy Livin’ 3000 (Dec 5, 2020)

woodgeek said:


> Sure.  XOM has been losing money for three quarters, and borrowing money to pay that fat dividend.  Of course, even IF oil prices rise above $60/bbl and they start making a profit again, that dividend will be an albatross around their necks.  Pay it, or watch people dump the stock.
> 
> Exxon lost a mint in Alberta in the 80s and 90s.  And was  late to the fracking party.  And bought in just as the real big money ended.  And has higher production costs than the sovereigns.  And was busted by the SEC for their fishy bookkeeping, amortizing their fields over much longer periods than the other majors, and just took a huge writedown over that.  Without their BS projections of ever growing global demand lifting all boats, they look weak as chit.  Why do YOU think SP500 delisted them?  Do you think they will be relisted?
> 
> The coal majors used to be behemoths.  Their business model unassailable, they kept the lights on in the US.  SP500 royalty.  Fat dividends. Then $300B in market cap went poof in a few years, when the coal demand projections went poof, and thus their future implied value.  Some are still in business, shadows of their former selves, the rest are bankrupt and gone.


I think your analysis is sound. 

 There will be some people clinging to the past, as they always do.  What I don't understand is the loyalty to oil from people who aren't investors, executives, royalty recipients, etc.   More lately, farmers who sell corn for ethanol are stakeholders, too.

 I've worked on ice engines for over 30 years, they are horrible, complicated, dirty things.  And they require transmissions, also horrible, complicated, dirty things.  And oil enriches our mortal enemies.  Just doesn't make sense to me.


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## semipro (Dec 5, 2020)

Easy Livin’ 3000 said:


> I've worked on ice engines for over 30 years, they are horrible, complicated, dirty things.


I worked as an auto mechanic for 10+ years and totally agree.  I also am a big DIYer and don't like to depend on others to get things done.
Having an electric vehicle has been damn near nirvana.  It's fun and cheap to drive, runs on sunlight, starts every time, and requires little maintenance.
It's honestly hard to convey how good it feels to own and drive an EV.
Everyone should try it.  We'd all be better off.


----------



## semipro (Dec 5, 2020)

Easy Livin’ 3000 said:


> There will be some people clinging to the past, as they always do.


This I just don't get.  
We will move forward.  We will evolve.  It's a natural progression.  Any movement backwards is soon overtaken by advancement. 
Embracing innovation and looking to a better future is so much more practical, rewarding,...and fun.


----------



## ABMax24 (Dec 5, 2020)

woodgeek said:


> Sure.  XOM has been losing money for three quarters, and borrowing money to pay that fat dividend.  Of course, even IF oil prices rise above $60/bbl and they start making a profit again, that dividend will be an albatross around their necks.  Pay it, or watch people dump the stock.
> 
> Exxon lost a mint in Alberta in the 80s and 90s.  And was  late to the fracking party.  And bought in just as the real big money ended.  And has higher production costs than the sovereigns.  And was busted by the SEC for their fishy bookkeeping, amortizing their fields over much longer periods than the other majors, and just took a huge writedown over that.  Without their BS projections of ever growing global demand lifting all boats, they look weak as chit.  Why do YOU think SP500 delisted them?  Do you think they will be relisted?
> 
> The coal majors used to be behemoths.  Their business model unassailable, they kept the lights on in the US.  SP500 royalty.  Fat dividends. Then $300B in market cap went poof in a few years, when the coal demand projections went poof, and thus their future implied value.  Some are still in business, shadows of their former selves, the rest are bankrupt and gone.



The problem with your analysis is you're making generalizations based on the example of one company. Most companies don't operate as Exxon does. Of course there will be companies that fail, but also those that succeed, this has been how the oil industry has operated since it's inception, this is nothing new or shocking. If Exxon fails another company will takeover its assets and likely operate them at a profit. There are companies that specialize in this sector of the oil and gas industry, CNRL being a prime example in Canada as they buy "unprofitable assets" at an extreme discount, reduce costs of production and return those production areas books to the black.

There's an issue with trying to compare oil and gas to coal in it's versatility of use, the vast majority of coal was consumed by industry, primarily in power generation and steel making. Oil and gas is far more widespread, it covers every sector of transportation, electricity generation, and heating in some form or another, lubrication, and all the modern materials that use petroleum as a feedstock for their production. Shutting down a 100 coal powerplants makes a massive difference on coal demand, you'd have to replace hundreds of millions of petroleum powered vehicles to have anywhere near the same effect.


----------



## semipro (Dec 5, 2020)

woodgeek said:


> No worries. I switched to Impossible Burger in 2019. People I serve it to can't believe its not beef. Yum.


Same here. 
In fact, it tastes so much like beef that I'm never quite sure what we're getting when we order it at a restaurant.  
They could easily serve us beef and we'd never know - maybe our cholesterol numbers or chances of getting colon cancer would elevate.


----------



## woodgeek (Dec 5, 2020)

ABMax24 said:


> The problem with your analysis is you're making generalizations based on the example of one company. Most companies don't operate as Exxon does. Of course there will be companies that fail, but also those that succeed, this has been how the oil industry has operated since it's inception, this is nothing new or shocking. If Exxon fails another company will takeover its assets and likely operate them at a profit. There are companies that specialize in this sector of the oil and gas industry, CNRL being a prime example in Canada as they buy "unprofitable assets" at an extreme discount, reduce costs of production and return those production areas books to the black.
> 
> There's an issue with trying to compare oil and gas to coal in it's versatility of use, the vast majority of coal was consumed by industry, primarily in power generation and steel making. Oil and gas is far more widespread, it covers every sector of transportation, electricity generation, and heating in some form or another, lubrication, and all the modern materials that use petroleum as a feedstock for their production. Shutting down a 100 coal powerplants makes a massive difference on coal demand, you'd have to replace hundreds of millions of petroleum powered vehicles to have anywhere near the same effect.



Meh.  Oil is versatile?  Its used as a transportation fuel and some chemicals, many of latter can be made from biomass feedstocks at marginally higher cost. Coal is used for process heat/power, and in steelmaking, and a few other things.  Looks the same to me.

When coal demand dropped only slightly, the overly leveraged coal companies, who had shady valuations based upon assets in the ground went poof.  All that was required was the realization that the coal in the ground would never be extracted.  Similarly, the oil cos are valued relative to their underground assets.  Climate science says those assets mustn't be removed, therefore, they are actually worthless.  Another company comes in and buys those assets at a discount?...they are still staying in the ground and worthless.

Its called the Carbon Bubble.

In reality, oil will be used for a long time.  Just less and less.  And the total amount remaining to be extracted can prob be handled by existing very low cost, conventional onshore production, from fields held by sovereigns, not the majors.  The sovereigns know this and will keep the price low enough to drive any competitors out of production all the way down the post peak curve.  The majors know this too, and this is why their exploration efforts are rapidly trending towards zero.  They are going to make what money they can from existing fields, until the music stops playing.


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## ABMax24 (Dec 5, 2020)

woodgeek said:


> Climate science says those assets mustn't be removed, therefore, they are actually worthless.  Another company comes in and buys those assets at a discount?...they are still staying in the ground and worthless.



Worthless to whom?

Something I can extract from the ground, and sell to someone else for a profit is not the definition of worthless.

Even if 2019 was the peak year for oil demand, which almost every source says won't happen for at least another 10 years, there is still an absolutely massive amount of oil left to be extracted for the next fifty or so years. Somewhere around 100 million bpd will have to come from somewhere over the next decade and then start its slow decline. In the next decade many known reserves will be depleted, and we will use more oil in those 10 years than the 20 years between 1960 and 1980. 

Don't get me wrong I'm not advocating for the further use of oil and gas, but I don't see the magical answer or indication that has seen us past the point of peak oil which is the topic of this thread.


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## woodgeek (Dec 5, 2020)

@ABMax24, I think we agree a lot of oil will still be extracted, for a lot of money.

The only source I see calling a peak after 2030 are the more conservative of the oil majors.  Many other independent analysts are putting it closer to 2025.

And given the time required to extract a conventional field, that means new conventional fields TODAY are risky or losers to develop.

And high multiples enjoyed by oil companies in the past are harder to justify TODAY.


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## SpaceBus (Dec 6, 2020)

Easy Livin’ 3000 said:


> Horrific!  Well, at least you don't have one of those cancer causing windmills destroying the view, too!


Do people hate them that much? I saw a bunch up close (I touched the base) a few years ago and found them to be quite mesmerizing. We sat underneath the blades and watched them turn for a while, I think there's a video on my smartphone somewhere. Didn't seem like a big deal to me, but I also don't have to see or hear them.


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## SpaceBus (Dec 6, 2020)

ABMax24 said:


> The problem with your analysis is you're making generalizations based on the example of one company. Most companies don't operate as Exxon does. Of course there will be companies that fail, but also those that succeed, this has been how the oil industry has operated since it's inception, this is nothing new or shocking. If Exxon fails another company will takeover its assets and likely operate them at a profit. There are companies that specialize in this sector of the oil and gas industry, CNRL being a prime example in Canada as they buy "unprofitable assets" at an extreme discount, reduce costs of production and return those production areas books to the black.
> 
> There's an issue with trying to compare oil and gas to coal in it's versatility of use, the vast majority of coal was consumed by industry, primarily in power generation and steel making. Oil and gas is far more widespread, it covers every sector of transportation, electricity generation, and heating in some form or another, lubrication, and all the modern materials that use petroleum as a feedstock for their production. Shutting down a 100 coal powerplants makes a massive difference on coal demand, you'd have to replace hundreds of millions of petroleum powered vehicles to have anywhere near the same effect.


Sounds like CNRL is a dirtbag company. The assets they bought were unprofitable to start with and if they reduce the cost of production that usually means less pay for employees. I don't actually know if they are dirtbags, but...


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## SpaceBus (Dec 6, 2020)

ABMax24 said:


> Worthless to whom?
> 
> Something I can extract from the ground, and sell to someone else for a profit is not the definition of worthless.
> 
> ...


Major lending institutions have already spoken on oil and natural gas. No more loans for fracking and that's just the start. The oil in the ground is a net loss if it costs more to extract, if it is extracted at all, than it is actually valued at.


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## DBoon (Dec 6, 2020)

SidecarFlip said:


> Lets not even get into plug in electric cars. People conveniently forget where the power comes from to power their 'green' machines. that in reality aren't green at all. Just a 'feel good' thing.


What's with the personal attack, Sidecarflip? Seems a bit out of line. You made a statement about "people" - don't stereotype. Get to know who is who, what they are doing and why. Not everyone who has an electric car is rich and drives a Tesla. Some of us drove Chevettes, Saturns  SL and Chevy Sonics for 30+ years and then splurged on a big time Chevy Bolt. Maintenance costs are lower, and running costs are 1/3 for electric versus gas (if I was buying electric from the utility, compared to a car that got 40+ mpg). I'm saving money. 

Yeah, I invested some up front to do that, but I am able to weather this economic storm requiring very few cash outlays right now. I also get the satisfaction of knowing that my money is not going to countries that pump oil and fund terrorist organizations. My asthmatic lungs (and those like them) appreciate that there is less pollution in the air. And oh yeah, I won't deny it, I do believe climate change is happening and I'd like to do something to give the best possible planet to my nieces and nephews (and their kids). There are lots of shades of green. 

I won't bother to respond about all your wrong assumptions about anything solar PV and peakbagger covered it pretty well, in any case. 



SidecarFlip said:


> My philosophy is, what blows your dress up don't blow mine up.


Sounds like a reasonable approach to me. I'm still searching for the comment I made where I must have told you to sell your diesel tractors and trade-in your pickup truck for something that plugs-in. I can't find it, so maybe you can jog my memory.


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## DBoon (Dec 6, 2020)

ABMax24 said:


> Something I can extract from the ground, and sell to someone else for a profit is not the definition of worthless.


I've read that the break even price for US majors is on the order of $50/bbl. If oil stays at current prices forever ($45-50/bbl), then there is no business case for owning their stock and expecting appreciation on it and no business case for them drilling new wells. Essentially, at current oil prices the US majors should just pump from the ground while making no new investments. Any lack of willingness to do this on their part is an indication that they don't yet believe oil prices will stay at $45/bbl due to declining demand. 

What we are seeing at Exxon Mobil now is a foreshadowing of what is to come. Stock price going nowhere, reduced capital investments, and their management's hope that things will turn around, so they keep investing something in new wells. In another 5 years, they will know that oil usage is in a downward decline by 2030, and new investments will stop. They will take the billions they spent per year and just pay it out in dividends. 

They will look a lot like Frontier telephone company - a business that has telephone lines that fewer and fewer people want to pay $60/month for anymore and they just make no investments and pay a 9% dividend. 

If the Saudis can pump for $3/bbl, then the last oil used will come from under Saudi deserts.


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## DBoon (Dec 6, 2020)

Just to keep the facts straight, Exxon Mobil was removed from the Dow Jones Industrial Average, not the S&P500. 


			https://www.cnbc.com/2020/08/25/exxon-mobil-replaced-by-a-software-stock-after-92-years-in-the-dow-is-a-sign-of-the-times.html
		


Still, considering they were the highest valued publicly-traded company in the world not that long ago, that is pretty amazing.


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## andym (Dec 6, 2020)

Easy Livin’ 3000 said:


> There will be some people clinging to the past, as they always do. What I don't understand is the loyalty to oil from people who aren't investors, executives, royalty recipients, etc. More lately, farmers who sell corn for ethanol are stakeholders, too.


I think what compels most people to hang onto fossil fuels is two fold. One being that this is normal. It is all we've known. It is ingrained in us. Think of the initial change  from horses to tractors for an illustration.
Secondly is a reluctance to accept or even an outright mistrust of all the so called studies and science that says going carbon free is possible. Each side blames the other for biased claims and paid research. This defaults many people back to point one.


semipro said:


> This I just don't get.
> We will move forward.  We will evolve.  It's a natural progression.  Any movement backwards is soon overtaken by advancement.
> Embracing innovation and looking to a better future is so much more practical, rewarding,...and fun.


Nothing personal here, but a third reason is that too many (if not all) of the big name climate activists have a 'progressive' and 'innovative' agenda that extends far beyond electrifying cars etc. I'm all for innovation, but what kind of innovation are we talking about and at what cost to the lower class American? You only have to follow a few major news stories relating to Covid crackdowns in NY, CA, etc. These are some of the same people who are big time promoting the carbon-free agenda. Let's not 'progress' or 'evolve' to the point of totalitarianism and socialism. There are too many people promoting the destruction of the fundamental values that made America the best nation in the world. Too often they are the same people heavily promoting 'fixing' the climate. That's what scares the average conservative American away. Again I've got nothing personal against anyone here.


----------



## SpaceBus (Dec 6, 2020)

andym said:


> I think what compels most people to hang onto fossil fuels is two fold. One being that this is normal. It is all we've known. It is ingrained in us. Think of the initial change  from horses to tractors for an illustration.
> Secondly is a reluctance to accept or even an outright mistrust of all the so called studies and science that says going carbon free is possible. Each side blames the other for biased claims and paid research. This defaults many people back to point one.
> 
> Nothing personal here, but a third reason is that too many (if not all) of the big name climate activists have a 'progressive' and 'innovative' agenda that extends far beyond electrifying cars etc. I'm all for innovation, but what kind of innovation are we talking about and at what cost to the lower class American? You only have to follow a few major news stories relating to Covid crackdowns in NY, CA, etc. These are some of the same people who are big time promoting the carbon-free agenda. Let's not 'progress' or 'evolve' to the point of totalitarianism and socialism. There are too many people promoting the destruction of the fundamental values that made America the best nation in the world. Too often they are the same people heavily promoting 'fixing' the climate. That's what scares the average conservative American away. Again I've got nothing personal against anyone here.



This country was made "great" by the labor of slaves and otherwise near slaves. Railroads were laid by immigrant laborers that would work all day for near nothing and do the most dangerous work in the tunnels. The foundations of agriculture and industry were built by literal imported African slaves. The poverty caste of America is what made this country powerful, which is an exploitation by the capitalist caste. Make no mistake, renewable energy will put _less money _into the pockets of the oligarchs of this country and the world. How will the Saudi Royal family stay in power if they can't exploit African immigrants in the oil fields? 

You fear totalitarianism and socialism, but we already live in a Communist Oligarchy with two political factions that are bought by the leaders of industry. The democrats and republicans are one in the same and all work towards the same goals: profit. There are exceptional members among both parties, but they are  both 99% full of corrupt, bought politicians. Everyone says they voted for Trump because he is an "outsider" and "different", but he is just another rich white dude running politics like Biden and Bush Jr. Even Obama was just as ruthless and cold as Bush Jr and largely continued the policies left behind by the Bush Regime.


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## ABMax24 (Dec 6, 2020)

SpaceBus said:


> Sounds like CNRL is a dirtbag company. The assets they bought were unprofitable to start with and if they reduce the cost of production that usually means less pay for employees. I don't actually know if they are dirtbags, but...



There's lot of ways to cut costs without cutting wages, once the equipment exists it's pretty cost effective to workover wells and streamline infrastructure to cut costs. The oil and gas industry is the highest paying in Canada, particularly for blue-collar jobs, CNRL is on par with the other majors in this regard.



SpaceBus said:


> Major lending institutions have already spoken on oil and natural gas. No more loans for fracking and that's just the start. The oil in the ground is a net loss if it costs more to extract, if it is extracted at all, than it is actually valued at.



Yes that's what you read online and on the news, in practice that's not what happens. All the bank has to do is lend money to any fund that then invests the money in oil and gas. There's also a lot of anti-oil unions that send their pension money to oil companies for high returns, the Ontario Teachers Pension being one of them, "do as we say, not as we do" I guess.

Even if financial institution lending does stop the industry won't, companies will be taken private by the ultra rich, making them richer yet, or by the Chinese, shipping more domestic profits overseas. Go ahead and advocate for this if you want, but I won't advocate for creating more economic disparities within society, or for increased foreign ownership of our companies or resources.


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## tbear853 (Dec 6, 2020)

The climate was changing before man knew the concept, it'll change until the sun dies, Earth will be a burnt out cinder in a cold space (_if not consumed_) after Sun goes "boom".


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## begreen (Dec 6, 2020)

ABMax24 said:


> That's not quite correct, Denmark has stopping issuing new licenses so new "lands" can't be explored and developed, existing licenses can still be explored, drilled and developed.
> 
> Part of this is because only one company was interested in acquiring new licenses, probably because the remaining "lands" had little economic value.
> 
> Besides the 100,000 bpd Denmark produces is a drop in the bucket, I was working on a SAGD site this spring that is 12,000 bpd, and it was only one of about 20 such facilities in a 60 mile radius.


Though small as a country,  Denmark is the largest oil producer in the EU. In addition to ceasing licensing new sites, they intend to cease all oil and gas activities within the next 30 years. It's a decisive step when a country decides to be a front-runner, even if they are not the largest.


----------



## begreen (Dec 6, 2020)

tbear853 said:


> The climate was changing before man knew the concept, it'll change until the sun dies, Earth will be a burnt out cinder in a cold space (_if not consumed_) after Sun goes "boom".


That's akin to saying cars have always killed people, we should do nothing to improve their safety.


----------



## tbear853 (Dec 6, 2020)

begreen said:


> That's akin to saying cars have always killed people, we should do nothing to improve their safety.


  No Sir!   
Cars are man's idea, like anything man creates, he's free to continue to improve it to suit his purpose.


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## begreen (Dec 6, 2020)

tbear853 said:


> No Sir!
> Cars are man's idea, like anything man creates, he's free to continue to improve it to suit his purpose.


So is the enormous excess of greenhouse gases manmade. It appears we agree then. We need to take responsibility and improve the reduction of output of these gases from mankind's activities.


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## tbear853 (Dec 6, 2020)

begreen said:


> It appears we agree then.


 Don't see that.


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## begreen (Dec 6, 2020)

History. We've known this for quite a while.


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## andym (Dec 6, 2020)

SpaceBus said:


> This country was made "great" by the labor of slaves and otherwise near slaves. Railroads were laid by immigrant laborers that would work all day for near nothing and do the most dangerous work in the tunnels. The foundations of agriculture and industry were built by literal imported African slaves. The poverty caste of America is what made this country powerful, which is an exploitation by the capitalist caste. Make no mistake, renewable energy will put _less money _into the pockets of the oligarchs of this country and the world. How will the Saudi Royal family stay in power if they can't exploit African immigrants in the oil fields?
> 
> You fear totalitarianism and socialism, but we already live in a Communist Oligarchy with two political factions that are bought by the leaders of industry. The democrats and republicans are one in the same and all work towards the same goals: profit. There are exceptional members among both parties, but they are  both 99% full of corrupt, bought politicians. Everyone says they voted for Trump because he is an "outsider" and "different", but he is just another rich white dude running politics like Biden and Bush Jr. Even Obama was just as ruthless and cold as Bush Jr and largely continued the policies left behind by the Bush Regime.


I mostly agree with your assessment of politics. However I think you are missing some aspects of history. The slave trade was indeed a horrible travesty. All Americans should regret it. But is there any nation that can boast of a clean history? And the majority of the immigrant workers were happy to come here to work for cheap wages. Ever hear of the Irish potato famine? There has been and always will be rich 'oppressors' taking advantage of the poor workers. Socialism only enhances that. But America is unique in that an immigrant can come legally with nothing more than his clothes and in his own lifetime become a successful even wealthy business man. That never has happened under socialism or communism. The real problem in America's workforce today is not wealth inequality or big corporations, it's a lack of willing workers. But now I'm getting away from the original topic. 
Begreen: are you implying that wildfires are solely a result of carbon polution?


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## begreen (Dec 7, 2020)

Capitalism v socialism is an artificial construct. There are many shades in between, often successful. It is predatory capitalism that is at risk.

andym, I don't recall saying anything about wildfires.


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## begreen (Dec 7, 2020)

begreen said:


> andym, I don't recall saying anything about wildfires.


But now that you brought it up. Note that of the 20 largest wildfires in CA that 17 of them have been in the last 2 decades. The question is not what started them, but why they keep getting bigger. This is the same question asked in WA , CO and OR state, Australia, Russia, Brazil, etc. and the answer is not that someone isn't out there raking the forest.


			https://www.fire.ca.gov/media/11416/top20_acres.pdf
		


But this is a diversion from the original thread. Oil consumption is down, it has not been a good year. If the working from home trend continues and more large corps stop renewing office space leases, then the decline will continue. Especially when overlaid with the passing of ICE propelled transportation. Oil companies have seen this coming. They are investing deeply in new plastics refineries as a push to increase consumption in that market. But this too is receiving international pushback.


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## andym (Dec 7, 2020)

begreen said:


> andym, I don't recall saying anything about wildfires


You didn't. The background on the quotes you posted appeared to illustrate that. Or did I miss something. You are correct that it is off topic though.


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## begreen (Dec 7, 2020)

andym said:


> You didn't. The background on the quotes you posted appeared to illustrate that. Or did I miss something. You are correct that it is off topic though.


I'm not the creator of the piece, though I think an indication of scale is what was intended. What started the fires is not as important as why the scale and frequency are growing so rapidly this century.


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## tbear853 (Dec 7, 2020)

begreen said:


> But now that you brought it up. Note that of the 20 largest wildfires in CA that 17 of them have been in the last 2 decades. The question is not what started them, but why they keep getting bigger.  *... etc ...*


Poor forest management, squandering funds, population growth into what was wilderness.  Used to be they had more frequent but smaller fires that tended to keep forest floors clearer of dry debris.  Now, since people have increasingly populated the forest, they don't allow the smaller fires, debris accumulates, then fires that occur grow huge fast.  

Maybe more use of brush rakes is in order California?

Also, as I was reminded, lately droughts.


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## SpaceBus (Dec 7, 2020)

tbear853 said:


> Poor forest management, squandering funds, population growth into what was wilderness.  Used to be they had more frequent but smaller fires that tended to keep forest floors clearer of dry debris.  Now, since people have increasingly populated the forest, they don't allow the smaller fires, debris accumulates, then fires that occur grow huge fast.
> 
> Maybe more use of brush rakes is in order California?



That is just one of many theories. The drought is currently the leading contributor to the size of the forest fires. The ground is much dryer than it would be without humans living on it. Drought plus humans depleting water makes for the worst forest fire conditions possible. If anything the leaf litter helped hold more water in the thin layer of soil. Maine had a drought this summer, but water was still to be found in the soil when we dug into the leaf litter in a forest that is largely similar to those in CA.


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## tbear853 (Dec 7, 2020)

SpaceBus said:


> That is just one of many theories. The drought … etc … Maine had a drought this summer, but water was still to be found in the soil when we dug into the leaf litter in a forest that is largely similar to those in CA.


Drought …….. I meant to include that as well.    Without drought, a lot of the Midwest wouldn't have blown away 80 years ago. 

They also have those hot dry high winds blowing eastward up the slopes in Ca.  that don't help.


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## begreen (Dec 7, 2020)

It's not just CA, but globally. The wildfires in Alaska, Colorado, Oregon, Australia, Siberia and the Amazon have been huge and the size of them keep growing. Much of this area burned is wilderness, not managed forest. 








						It’s Not Just the West. These Places Are Also on Fire. (Published 2020)
					

Extreme temperatures and more severe droughts, the result of human-caused climate change, have created a world that’s ready to burn.




					www.nytimes.com


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## SpaceBus (Dec 7, 2020)

tbear853 said:


> Drought …….. I meant to include that as well.    Without drought, a lot of the Midwest wouldn't have blown away 80 years ago.
> 
> They also have those hot dry high winds blowing eastward up the slopes in Ca.  that don't help.


The winds are another good point since we are still in El Nino. The dust bowl drought may have been partially caused by the destruction of native grasses, but the drought did lead to the wheat and other shallow rooting plants to die off and let the dry soil blow away. Not quite comparable to the CA disaster, but another example of human caused climate change. To my knowledge most of the development in the majority of CA did not require clear cutting the forest since the land is mostly desert and was pretty much empty.


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## semipro (Dec 7, 2020)

tbear853 said:


> The climate was changing before man knew the concept, it'll change until the sun dies, Earth will be a burnt out cinder in a cold space (_if not consumed_) after Sun goes "boom".


I totally agree but also believe that to the extent possible we need to take care of what we've been given to provide for our kids and theirs.
I'm not content with throwing my hands in the air and saying we can't do anything about it.   I'd like to save the world (for humans) as long as we can.
If you mean to imply that we can't change anything I'd ask that you reconsider that.
Have a look at the timeline at the link below.  It's entertaining if nothing else. (the graphic is really tall so you need to click the link to see it all)
And I'd ask you to keep in mind that how fast change occurs is even more important than the total amount of change. For lack of a better comparison right now, consider fertilizer application.  A little at a time is beneficial, too much at once kills.
https://xkcd.com/1732/


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## SpaceBus (Dec 7, 2020)

The image does not have enough resolution to zoom in and read it.


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## semipro (Dec 7, 2020)

SpaceBus said:


> The image does not have enough resolution to zoom in and read it.


I think I fixed it.  I was editing it when you were looking at it.


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## SpaceBus (Dec 7, 2020)

semipro said:


> I think I fixed it.  I was editing it when you were looking at it.


I wish it went further back, but it does really make the point.


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## tbear853 (Dec 7, 2020)

I saw the blm deal and promptly closed it.  I'm done here.


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## SpaceBus (Dec 8, 2020)

tbear853 said:


> I saw the blm deal and promptly closed it.  I'm done here.


Way to out yourself on the internet.


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## tbear853 (Dec 8, 2020)

SpaceBus said:


> Way to out yourself on the internet.


How so?


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## semipro (Dec 8, 2020)

tbear853 said:


> I saw the blm deal and promptly closed it.  I'm done here.


When I read this my first thought was honestly "Bureau of Land Management?"
I would have shared the graphic using a different link if I'd known there was political stuff there.


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## begreen (Dec 8, 2020)

NOAA report on the massive arctic wildfires in Siberia:








						Vast wildfires in Siberia linked to warming Arctic
					

WASHINGTON (AP) — This year's vast wildfires  in far northeastern Russia were linked to broader changes in a warming Arctic, according to a <a href="https://arctic...




					apnews.com


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## begreen (Dec 8, 2020)

SpaceBus said:


> The winds are another good point since we are still in El Nino.


Did you mean La Niña? We are still in a La Niña cycle that started in Aug/Sep 2020.





						ENSO and Global Seasonal Climate Updates
					

The El Niño/Southern Oscillation has a major influence on climate patterns in various parts of the world. This naturally occurring phenomenon involves fluctuating ocean temperatures in the central and eastern equatorial Pacific, coupled with changes in the atmosphere. Scientific progress on the...




					public.wmo.int
				



.


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## SpaceBus (Dec 8, 2020)

begreen said:


> Did you mean La Niña? We are still in a La Niña cycle that started in Aug/Sep 2020.
> 
> 
> 
> ...


Thank you for the correction.


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## begreen (Dec 8, 2020)

We're the first to feel the effects of the ENSO cycles out here so we tend to follow them. They also affect fishing so change is noteworthy.


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## SpaceBus (Dec 8, 2020)

begreen said:


> We're the first to feel the effects of the ENSO cycles out here so we tend to follow them. They also affect fishing so change is noteworthy.


It affects this side as well. We really felt the El Nino our first winter in Maine (2018-2019) with a lot of ice, frozen rain, sleet, etc. I'm hoping this year is more snow and less ice like last year. I definitely don't pay attention as much as someone on your side of the world, so I do appreciate the correction.


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## begreen (Dec 8, 2020)

So far things have been warmer than average here.


semipro said:


> I think I fixed it.  I was editing it when you were looking at it.


That works. Put in other terms, the earth is about 4.6 billion years old, let's scale that down to 46 years. In that context, we have been on this planet for 4 hours. The industrial revolution began a minute ago.


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## Easy Livin’ 3000 (Dec 9, 2020)

begreen said:


> So far things have been warmer than average here.
> 
> That works. Put in other terms, the earth is about 4.6 billion years old, let's scale that down to 46 years. In that context, we have been on this planet for 4 hours. The industrial revolution began a minute ago.



Normally this illustration of time relativity is used by climate change deniers to claim that humans are irrelevant to the earth's condition, but I know that isn't your intent.  

It's remarkable that we've been able to do so much damage in such a short amount of time, and have built the capability to wipe everything out in just a few hours.  And now have so little willingness to fix what we've done.  The problem is illustrated all the time throughout this short human history, and is on full display now- those with bad intent are willing to go to any length to get what they want, and those with good intent require impending annihilation before they will fight back with the same resolve.  Not humankind's finest quality.   Pertinent so close to December 7, a date that is a stark reminder of this "reluctant hero" nature.

Take the combination of the number of people and the rapid advance of technology, throw in some insatiable greed and the completely irrational belief that some all powerful being out in space only wants the best for us, and you have the recipe for an unhappy future.  

There is reason for hope, though.  Hopefully that is not also irrational.


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## SpaceBus (Dec 9, 2020)

Easy Livin’ 3000 said:


> Normally this illustration of time relativity is used by climate change deniers to claim that humans are irrelevant to the earth's condition, but I know that isn't your intent.
> 
> It's remarkable that we've been able to do so much damage in such a short amount of time, and have built the capability to wipe everything out in just a few hours.  And now have so little willingness to fix what we've done.  The problem is illustrated all the time throughout this short human history, and is on full display now- those with bad intent are willing to go to any length to get what they want, and those with good intent require impending annihilation before they will fight back with the same resolve.  Not humankind's finest quality.   Pertinent so close to December 7, a date that is a stark reminder of this "reluctant hero" nature.
> 
> ...




If you give a person a problem and there are two answers and one of them is to do nothing, most folks will choose doing nothing. You can't pay someone to care, but you can definitely pay someone not to care.


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## semipro (Dec 18, 2020)

This seems like it might be a big deal. 









						Exclusive: A $5 billion foundation literally founded on oil money is saying goodbye to fossil fuels
					

The Rockefeller Foundation, a 107-year-old philanthropy built by oil tycoon John D. Rockefeller, is breaking up with fossil fuels in an effort to save the planet.




					www.cnn.com


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## mcdougy (Nov 26, 2021)

ABMax24 said:


> But that's still less than a 1% reduction.
> 
> Quite frankly the best outcome to foster a  reduction in oil demand is a spike in oil prices. My guess is this will happen sometime in 2022 or 2023 as life returns to "normal", and after the recovery from the next stock market correction, which I would expect sometime in mid 2021.


We haven't had the stock market correction yet......when's the next guess? The markets have continued to reach ATH.  Are we In the roaring 20's right now and the floor will drop soon?


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## ABMax24 (Nov 26, 2021)

mcdougy said:


> We haven't had the stock market correction yet......when's the next guess? The markets have continued to reach ATH.  Are we In the roaring 20's right now and the floor will drop soon?



I wish I had that crystal ball.

I'm banking on a period of stagnation before a correction will occur, I think consumer sales over black friday and Christmas will be underwhelming, interest rates are rising along with inflation, governments (especially Biden) are dead set on trying to artificially push down oil prices as a last ditch effort to curb inflation. I think the realization is coming that stock markets are hitting ATH's because of an increased money supply and not because of an increase in actual value.

I didn't think world leaders were dumb enough to increase money supplies by the amounts they have, which has continued to kick the can down the road in regards to a market correction. The unfortunate thing is inflation will be overshadowed in the media by the discovery of the latest Covid variant, and the money printers will remain set to max while the economy comes last yet again to other priorities.


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## mcdougy (Nov 26, 2021)

ABMax24 said:


> I wish I had that crystal ball.
> 
> I'm banking on a period of stagnation before a correction will occur, I think consumer sales over black friday and Christmas will be underwhelming, interest rates are rising along with inflation, governments (especially Biden) are dead set on trying to artificially push down oil prices as a last ditch effort to curb inflation. I think the realization is coming that stock markets are hitting ATH's because of an increased money supply and not because of an increase in actual value.
> 
> I didn't think world leaders were dumb enough to increase money supplies by the amounts they have, which has continued to kick the can down the road in regards to a market correction. The unfortunate thing is inflation will be overshadowed in the media by the discovery of the latest Covid variant, and the money printers will remain set to max while the economy comes last yet again to other priorities.


With that......reward continues to shadow risk of the markets? Keeping money in the markets may continue to be the way to go for personal  financial security. The slippery slope continues. Want to watch something interesting.....watch the 1hr show called The Power of the Fed on pbs. It should be on YouTube.


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## begreen (Nov 26, 2021)

The oceans are absorbing the heat at an alarming rate. It has been said to be the equivalent of 5 Hiroshima atomic bombs a second currently. This mind-boggling number is unfathomable but in graph form it's clearly a bad trend. The consequences are showing up for us this month. On the coast the small town of Quilayute has seen over 40" of rain so far this month. The average for November is 20". Another 10" is expected there before the month ends.  The city of Vancouver is completely cut off from the rest of Canada due to massive floods wiping out all road and rail transportation routes. Last summer a pufferfish washed up on a beach in Vancouver. Normally they are not seen north of San Diego. 









						Oceans are warming at the same rate as if five Hiroshima bombs were dropped in every second | CNN
					

The world's oceans are now heating at the same rate as if five Hiroshima atomic bombs were dropped into the water every second, scientists have said.




					www.cnn.com


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## ABMax24 (Nov 26, 2021)

mcdougy said:


> With that......reward continues to shadow risk of the markets? Keeping money in the markets may continue to be the way to go for personal  financial security. The slippery slope continues. Want to watch something interesting.....watch the 1hr show called The Power of the Fed on pbs. It should be on YouTube.



Yeah that's my thoughts, a person can't afford not to have their money invested, inflation will erode it away quickly. Keeping money in the stock market is a brilliant plan, until it isn't....


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## clancey (Nov 27, 2021)

I think you all have a bad attitude...and politics are making it worse at least for me...I agree with all of you and we need to just get wiser and there are many things to worry about and one personal thing for me is 5 G---talking about warming things...give this thread a ending real soon...clancey


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## woodgeek (Nov 28, 2021)

I don't have a crystal ball, but I have read a lot of studies on US stock returns over the last several decades.

Its clear that something like index investing (buying the whole market) is a no-brainer stupid way to go, and beats inflation by ~5% per year long term, in effect doubling your investment in real terms in like 15 years or so. On average.

People who try to time the market do worse than buy and hold.  Consistently.  People that do stock picking (without timely real technical or insider info) also lose money relative to buy and hold.  Consistently.

The conundrum is 'how can the market go up and up forever?'  A very reasonable question.  Stocks go up because the economy grows faster than inflation, due to higher per capita money AND higher productivity AND due to population growth.  Those factors together get you close to the 5% real figure (above) long-term.

In practice, the (indexed) market between recessions goes up more like 8% real on average, doubling in real terms in about 5-6 years rather than 15 years!  This is NOT sustainable.  

Corrections (>10% drops) happen a lot, for a lot of reasons, and are impossible to time, and they are short lived (like months) so they are easy to survive and pass quickly.  Corrections bounce back, even severe ones like 1987.

The major issue is genuine recessions.  The major drops during real recessions reset those 8% gains to 5% long-term gains. If you invest a lump sum right before a recession drop, it will take you years to get back your money.  If you retire based on assets valued right before a recession, then maybe you can not afford to be retired like you thought, and take years to catch up or go broke in an edge case. 

If you could time just the recession drops, you COULD make 8% returns forever, but this is very hard.  That is the only crystal ball you need or want.

As for the present, yeah, valuations look high, esp in tech.  Productivity is super high right now.  Demographics in the US look great. Both of these factors support the 5% base growth rate, and were not the case btw 10-15 years ago.  We will certainly have little bumps with COVID waves (as for the 18 mos, during the build up of the wave), and corrections can ALWAYS happen.  

But the only question is will there be a true recession.   Buying and job creation are through the roof (which looks like we are super far from a recession), but sentiment is nearly as bad as 2009 (which suggests were are in a recession).  So which do you believe more?  I happen to think the sentiment suppression is politics- (and thus media-) driven (on both sides of the aisle) and the economy is booming. 

Ofc a lot of recessions are triggered by spikes in oil prices.  But I don't see that happening here, since it looks like oil is already dropping (ofc it could spike again, who knows) AND bc the share of the economy going to pay for oil is tiny compared to decades ago.

I'm not saying the economy is booming at a level to justify current valuations, but enough that a recession is nowhere in sight.  Risk on, and enjoy the 8% returns (and don't sweat the dips).


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## stoveliker (Nov 28, 2021)

I'm surprised to see "productivity is high", given the shortages due to supply chain issues. I don't have data though.

The rest of your story is the reason I consistently buy each time a paycheck comes in. When the stocks are cheap (e.g. after a correction), it means I buy more because I spend the same amount. When stocks are expensive, I buy relatively less for the amount of money.


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## woodgeek (Nov 28, 2021)

So, what DO I worry about? China!

No, not China invading anywhere, but I guess that could happen.

Nope.  I am worried about Chinese real estate having a housing bubble.  They have been pumping up a huge housing bubble to make up for shortfalls in economic growth since the Great Recession.  By various metrics it is currently way worse (like 2-3X worse relative to the rest of the economy) than the US case in 2007!

Mind you, the current Xi regime is POPULAR.   It is authoritarian (and scarily so to US eyes).  But the Chinese people are less wary of such things and they have seen a level of economic improvement since 1980 that looks like that in the US from 1800 to 2000  Think about that.  Almost 200 years of economic advancement in the memories of most of those living!  And the regime is totally taking credit for that, (and the fact that there were ZERO recessions during that time) and saying it is bc they are BETTER at economics (via central planning) than the West.  And based on the evidence of their eyes...many people just believe it. And so Xi can get away with anything.  Only a very small number understand the global factors that made such growth possible.

But the last 10-15 years have been fake growth from an epic housing bubble.  How long can they keep it going?  How can they unwind it?  What does regime change look like?  How does an unpopular regime act?

Fun fact: China does NOT have a social security (or state retirement) system at all.  People used to save for retirement by having lots of kids to care for them.  Now they don't have that, so they have real estate investments (mostly high rise apartments) that have sky high valuations that they plan to sell as needed in retirement.  Except those valuations are probably fake!

So IMO China could go 'poof' in a month, a year or a decade.  And that can trigger (IMO) a US stock market reset.  And will be hard to predict.


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## woodgeek (Nov 28, 2021)

stoveliker said:


> I'm surprised to see "productivity is high", given the shortages due to supply chain issues. I don't have data though.



Productivity Chart

Many people have left the labor force since March 2020.   Economic output has rebounded much more than the number employed.  This means more $$$ per employee, which is productivity.

Supply chain problems are largely bc of understaffing at the current level of demand and production.  The people who are working are scrambling.  And asking to be paid more for said scrambling.


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## peakbagger (Nov 28, 2021)

I liked John Bogles advice, an individual investor cannot beat the market in the long term. All he can do is try to match the markets return and how to do that is index investing. Bogle founded Vanguard the biggest investment firm in the business and the only big one that is not owned by shareholders, the shareholders ar the investors. Their expense ratios are the lowest in the business unless some other firm decides to drop rates on one or two funds to steal them away from Vanguard. Vanguard also has various policies that keep out the frequent traders. I managed my own investments for years and did okay but I was lucky with the market and rarely traded. About 3 years ago I handed them off to Vanguard Personal Financial Services, they do the investing and are far better at keeping my portfolio balanced than I was plus they keep track of the tax implications of sales and transfers far better than I do.   That means my highs are not as high but my lows are not as low when the market drops. It is the lowest cost investment management out there. No front or back end loads, no commissions. All I pay is .003% of the actively managed portfolio.  If its not actively traded like reserve funds, the dont charge commissions on that portion. They factor all my investments including non Vanguard and when I retire they will help me maximize tax efficiency. 

Its sad when I hear folks having their investments managed by other firms like Edward Jones. They are paying a bundle and the brokers who are running it make great commissions.  Good for the broker but not so good for the investor. The usual reason is they like their broker. Most retail brokers like Edward Jones recruit car salesman instead of folks with financial degrees. Its a bit less personal with Vanguard, I get plenty of reports and can one on one with my advisor anytime I want to. BTW my advisor is Fiduciary which is an important thing to ask anyone handling investments. As a fiduciary they have to act on the client's behalf, not the brokers or the company.


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## UpStateNY (Nov 28, 2021)

In 1972 I was interviewed for a book called the Student Perspective.   In 1972 I was quoted saying,  " In 2020 we will run out of oil and why isn't the government doing  something about it now."    Wow who would of predicted in 1972 we would find enough oil to pollute the atmosphere enough to cook the  entire earth.  In 2018 my wife and I were in Venice, Italy where the day time temps were well above 100 F degrees, which as a real problem for tourism.


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## SpaceBus (Nov 28, 2021)

peakbagger said:


> I liked John Bogles advice, an individual investor cannot beat the market in the long term. All he can do is try to match the markets return and how to do that is index investing. Bogle founded Vanguard the biggest investment firm in the business and the only big one that is not owned by shareholders, the shareholders ar the investors. Their expense ratios are the lowest in the business unless some other firm decides to drop rates on one or two funds to steal them away from Vanguard. Vanguard also has various policies that keep out the frequent traders. I managed my own investments for years and did okay but I was lucky with the market and rarely traded. About 3 years ago I handed them off to Vanguard Personal Financial Services, they do the investing and are far better at keeping my portfolio balanced than I was plus they keep track of the tax implications of sales and transfers far better than I do.   That means my highs are not as high but my lows are not as low when the market drops. It is the lowest cost investment management out there. No front or back end loads, no commissions. All I pay is .003% of the actively managed portfolio.  If its not actively traded like reserve funds, the dont charge commissions on that portion. They factor all my investments including non Vanguard and when I retire they will help me maximize tax efficiency.
> 
> Its sad when I hear folks having their investments managed by other firms like Edward Jones. They are paying a bundle and the brokers who are running it make great commissions.  Good for the broker but not so good for the investor. The usual reason is they like their broker. Most retail brokers like Edward Jones recruit car salesman instead of folks with financial degrees. Its a bit less personal with Vanguard, I get plenty of reports and can one on one with my advisor anytime I want to. BTW my advisor is Fiduciary which is an important thing to ask anyone handling investments. As a fiduciary they have to act on the client's behalf, not the brokers or the company.


Indeed, Vanguard is a great company to invest with, and I have investments with them.


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## stoveliker (Nov 28, 2021)

Actually, in the 1970s many already were warning about the warming effect  of CO2 on the global climate.


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## stoveliker (Nov 28, 2021)

woodgeek said:


> Productivity Chart
> 
> Many people have left the labor force since March 2020.   Economic output has rebounded much more than the number employed.  This means more $$$ per employee, which is productivity.
> 
> Supply chain problems are largely bc of understaffing at the current level of demand and production.  The people who are working are scrambling.  And asking to be paid more for said scrambling.



I understand what you mean by productivity. However, you mentioned this related to total economic output ("Stocks go up because the economy grows faster than inflation, due to higher per capita money AND higher productivity AND due to population growth." - all are factors in total economic output). 

So let me rephrase: Given supply chain issues, I am surprised that economic output is up (leading to stocks being high).


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## begreen (Nov 28, 2021)

stoveliker said:


> So let me rephrase: Given supply chain issues, I am surprised that economic output is up (leading to stocks being high).


The correlation is not direct. Stocks are high in part because there are few other places for money to invest and get a meaningful return.


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## peakbagger (Nov 28, 2021)

The fed has been printing and pumping money into the economy for many years to prop up the stock market. Good for stock holders but the traditional buyer of bonds, the elderly and pensions have either been nailed by interest rates kept artificially low or forced into the stock market which has been on roll over the long term but choppy on occasion for the short term.  The problem with pumping all this money in the market is inflation and an ever balooning deficit.  At some point that becomes a real problem.


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## ABMax24 (Nov 28, 2021)

Just wait until interest rates start to rise, how will this affect those with margin accounts? Could this ever cause a large enough drop to trigger margin calls on accounts?

What happens to the economy when interest rates increase and disposable income disappears, and is instead used just to pay interest on enormous sums of debt?

We have an economy built on ever increasing debt, at some point, in some way or another, this trend must end.


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## mcdougy (Nov 29, 2021)

Quantitative Easement..........I notice that the show I mentioned previously is not available anymore on video (which I find interesting why it was taken down?) ......but it is available as a podcast.....if you search" Frontline" which is the name of the show the podcasts are available and this episode is called "The power of the fed"  ....It is worth a listen if your interested in what is a major cause of the current market situation and the effects it has on most people. We are in uncharted territory and the effects of Quantitative easement long term are unknown but definetly a possible disaster in the waiting.
 I would post a link for the podcast but I can't figure out how to do it......


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## begreen (Nov 29, 2021)

stoveliker said:


> Actually, in the 1970s many already were warning about the warming effect  of CO2 on the global climate.


The effects of the industrial age were noticed early on. The greenhouse effect was first discovered by Fourier in 1824. This theory was further refined in 1896 by Svante Arrhenius who noted that CO2 was a particularly good greenhouse gas. In 1938 Guy Callendar first gathered numerical data and published figures showing that between 1890 and 1935, the Earth had warmed by about half a degree Celsius.


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## stoveliker (Nov 29, 2021)

I know. I mentioned Arrhenius in another post. Was not aware of Fouriers contribution to (also...) this issue. (If this is the same Fourier as the one of the well-known math discoveries.)


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## SpaceBus (Nov 29, 2021)

I think humans were impacting climate before the industrial age. Huge forests were cut down and burned for metallurgical purposes prior to and during the bronze age. Obviously this influence was not as pronounced as what happened when coal came into the picture.


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## begreen (Nov 29, 2021)

stoveliker said:


> I know. I mentioned Arrhenius in another post. Was not aware of Fouriers contribution to (also...) this issue. (If this is the same Fourier as the one of the well-known math discoveries.)


Yes.








						How Joseph Fourier discovered the greenhouse effect
					

That’s Maths: French physicist’s study of heat conduction led him to analyse why Earth was so warm




					www.irishtimes.com


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## woodgeek (Nov 29, 2021)

In ice cores, they can see the dip in CO2 when the European forests regrew after the Black Death in the 1300s.


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## EbS-P (Nov 30, 2021)

I’m going to post this. I just had time to skim it.  Seems plausible and supports my thinking that OPEC has no incentive to increase capacity.  But I think there are a lot of speculation.  








						Gas could hit $5 a gallon – here’s how | WRAL TechWire
					

Gas prices have been top of mind for many Americans, leading to concerns about the economy. Now, JPMorgan Chase says the oil price spike is just getting started.




					www.wraltechwire.com


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## woodgeek (Nov 30, 2021)

EbS-P said:


> I’m going to post this. I just had time to skim it.  Seems plausible and supports my thinking that OPEC has no incentive to increase capacity.  But I think there are a lot of speculation.
> 
> 
> 
> ...



Meh.  My Volt uses 93 octane and the price has been over $4 for awhile now.  But I fill up (8 gallons) less than once a month so it hardly matters.

Huh.  Actually, I think OPEC does have two incentives to increase capacity... 

(1) Competition: When the price of oil get higher, other producers 'turn on'.  For example, the 'frackers' in the US, and the tight oil people in the Permian basin in Texas, both came of age and drilled their holes when oil was expensive.  Their breakeven is poorly defined (some holes are easier than others), but a lot of them can make money at current prices.  At $100 or certainly $150 they can make stupid money and drill a lot of holes.  And then that boosts US output for years, and depresses prices.  Ofc, oil is a 'boom and bust' cycle... investors in the near future of $100 oil might lose their shirts when it dives to $50 next year, but many investors will probably still line up.

(2) Demand destruction: High prices reduce demand.   The reason the US is full of pickups and SUVs is bc of cheap oil over the last decade.  Not to even mention EV adoption.  If you see a gas price spike, people will switch.  I switched from heating oil to a heat pump when oil prices spiked 2005-2007, and that is 1300 gal/year of demand that is never coming back.

OPEC knows this.  This is why they have tried to keep oil in a range $50-$80/bbl for the last 10 years.  Not to say there can't be a spike up (like the one down last year), but they won't let it last very long.  As for their hypothetical 'low' spare capacity (I read the article) demand destruction above $100 gal will take care of that.


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## ABMax24 (Nov 30, 2021)

Right now we are paying $5.30/gallon for gas, diesel is about $5, yet every dealer in town has cars and small SUVs on the lot, but good luck getting your hands on a one ton truck right now, especially if you want anything other than white paint.

I'm sure the is some demand destruction at $5/gal, but if you can afford a $100k truck an extra couple grand a year in fuel doesn't matter much.


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## woodgeek (Dec 2, 2021)

Back to the topic....

The shale and tight oil drillers in the US are NOT jumping at current prices...

Article: https://commoditycontext.substack.com/p/shale-lackluster-oil-recovery

This supports the idea that prices could rise above $80 for 'longer'.

One narrative is that Wall Street has been burned by the last couple 'busts', and is now shy to pour money on the oil patch.  The other narrative is that these companies are not being managed the same aggressive way as before (or are not being mismanaged).


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## ABMax24 (Dec 2, 2021)

woodgeek said:


> Back to the topic....
> 
> The shale and tight oil drillers in the US are NOT jumping at current prices...
> 
> ...



The most aggressive oil companies are typically small to medium sized juniors, and they often rely heavily on credit to fund their development programs. Credit/investment dollars are hard to come by these days, and it is well known that interest rates are on the rise. Most of the companies I work for are taking advantage of the current price hike to pay down debt and remove the ability to obtain credit as a factor in their future growth.

As you've pointed out that means there won't be a sudden rush of new supply to control oil prices. 

Western Canada is currently drilling with 160 active rigs, a far cry from the 500+ that would normally be seen at these oil prices.


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## peakbagger (Dec 2, 2021)

Prior to the innovations that restarted the US domestic drilling, OPEC would establish a range of what was acceptable prices to plan their budgets on. Since many of the producers were marginally stable countries included in the desired price was the cost to placate their populations. The unrest in Venezuela is tied to the sale price of oil. When Chavez came into power oil prices were high so he diverted the money to the poor to keep his popularity up, when the rpcies dropped to increased US production, the cash cushion was spent and the various parties in the country ave been fighting over the scraps. Unfortunately, they drove out the oil majors who ran the fields and oil infrastructure so even without an embargo their output and cash flow has dropped.

OPEC really needs $80 to $100 to prop up their regimes and they are not going to go out of their way to help the US after the US dropped crude prices for several years, its payback time.


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## begreen (Dec 2, 2021)

woodgeek said:


> Meh. My Volt uses 93 octane and the price has been over $4 for awhile now. But I fill up (8 gallons) less than once a month so it hardly matters.


Gas locally is > $4, but fillups are so rare that I don't worry about the cost. Our 2018 Volt runs on regular and due to Covid our travel has been greatly reduced. This year for the first time the car turned on the engine for all driving in order to burn up gas in the tank that was getting old. That took me by surprise.


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## DBoon (Dec 3, 2021)

Not to add more fuel to the fire (pun intended), but my Chevy Bolt costs me $0 in oil and essentially $0 incremental in fuel costs (uses pre-paid electricity from solar PV arrays). On long drives, I am amazed at the opportunities for free or very reduced cost charging (granted, some of these can be a little unreliable). There is a DCFC in Gettysburg that costs me $2 for 1 hour, free fast chargers in and around Williamsburg, VA where my mom lives and free Level 2 chargers near many shopping centers where my sister lives in Northern VA. Availability to them is great in off hours and decent in peak hours. Of course, this situation won't last forever, and were I to drive other long routes, I would not be so lucky. But it is pretty nice driving by all the gas stations with gas at $3.50/gal and not having to care about that anymore. 

It does seem that oil drilling investment might be much more limited in the next 10 years with most oil majors viewing their existing oil fields as cash cows to take a lot of money from with little investment put into new fields.


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