Celsus

Hi Zar, Ruy Lopez,

Ok, just a brief note on the oil first. Oil production estimates are based on current rates of extraction and estimated reserves. They aren't absolutely certain, of course, but I can't imagine them being off by a whole century for Iraq or Kuwait.

For example, the newest oil producer, Sudan, had proven reserves at 262.1 million barrels of oil in 2001--estimates of the total reserves are around 3 billion barrels, and production is an estimated 209,000 barrels per day. Consider, that as of 1992, the World's reserves were estimated at just over 1 trillion barrels, 68% of which comes from MENA (and which Sudan may now contribute an additional ~0.3%).

OPEC 1992 estimates (i.e. Pre-Sudan):

In millions of barrels:
North America: 32,354
US: 26,250
L.America: 140,248
Former USSR: 57,000
W.Europe: 22,404.6
MENA: 703,323
Asia & Far East: 47,300.3
Oceania: 2,277.5

World: 1,032,695 (million barrels)

That's still a lot of oil.

I'm not a technological optimist, and I'm not saying that we shouldn't care about renewable energy. What I am saying is that the 5-15 year decline in oil production is not as serious as to create a US economic decline, or worsen what is supposedly a long slow downturn as posted by Ruy Lopez. More on K-waves later.

Joel

Koyaanisqatsi

That would be your assessment and by no means my own. If you'll recall from the sections you selectively edited, I was very careful to detail that this seems to me to be the case, based upon the points I raised.
[*] It is a fact, for example, that there exists a "ruling elite."
[*] It is not just documented, but calls for congressional investigation are still pending on the "financial allegiance to oil industries" via, for just two primary examples, the Halliburton and Enron scandals for arguably the two top members of that ruling elite (President Bush and Vice President Cheney) as well as questions surrounding the financial allegiance to oil industries of our "National Security Advisor; the Secretary of Energy; the Secretary of the Interior; the Secretary of the Army; The Chairman of the National Economic Council; the White House Chief of Staff; the Vice President's Chief of Staff..." due to the fact that they "...all either came from the energy industry, owned stock in the energy industry or did legal or lobbying work for energy-related industries." (Begala, 2002).

Which prompted Newsweek to declare: "Not since the rise of the railroads more than a century ago has a single industry placed so many foot soldiers at the top of a new administration." (Newsweek, 5/14/01)

All of which went to my point regarding the conflicts of interest these allegiances raise in a debate about the efficacy of instigating a war in an area rife with clear and present conflicts of interest.
[*] There is no evidence to suggest that this will be in any stretch of the imagination a "just war." Carpet bombing an entire country in order to kill one man simply because he has not fully complied with UN resolutions is not justifiable in the slightest, especially considering the fact that he is contained and can make no aggressive action.

The fact that he is a brutal, murdering dictator does not mean that killing thousands (if not hundreds of thousands or even millions) of innocent people either directly or through "collateral damage" constitutes a "just war," especially considering the ostensible motive Bush, Inc. is spinning regarding the "threat to peace." There is no greater threat to peace than war and we're the ones instigating it.

How do you consider killing thousands of people to possibly stop one man from maybe killing thousands of people, sometime in the unknown future, "just?"
[*] The "imperial desires" have been historically demonstrated again and again and again. Indeed, there used to be a term specially created to define and justify those "imperial desires." Remember "Manifest Destiny" from your history class?
[*] If Bush instigates this war (as he is already doing), then it will indeed be an "imperialist dictation of war" in both function and perception by the so called "rogue states" that were being discussed prior, thereby confirming the primary reason anti-American terrorists strap bombs to their children.

America doesn't have a corner on the market of "national sovereignty" you know?

Not to mention the fact that Bush does not have the support of the majority of the people on this globe, as well as the governments of Germany, France and Russia all make this unprecedented action an "imperialist dictation of war."
[*] There is no way in this instance to "justify murdering civilians" in order to oust one man, just because he is hindering compliance to a UN resolution, as I argued previously and gave my support to that argument.

Perhaps if you were to have actually addressed my arguments instead of lifting things out of context in a sophomoric attempt to dismiss their legitimacy, you would have seen what my position was based upon and there might actually have been some grain of substance to your post.

Well, all you've demonstrated so far is your incredible inability to address my arguments, so you've instead resorted to telling me what it is I "apparently assume and accept."

Let me know when you have an actual counter-argument of some nature, yes?

Well, isn't that remarkable! You address none of my arguments, then tell me what it is I "apparently assume and accept," concluding that my "mind is made up," so you won't have to fulfill any burden of counter-argumentation. How convenient for you.

Let me try it with you.

You addressed none of my arguments, so you are incapable of countering them. You know this to be true, so you pathetically attempted to marginallize my position by claiming I would be too confused by "the facts," of which you present none. I won't try to confuse you with intelligent deconstruction, as you obviously have been brainwashed by the rightie's propaganda and respond in the only manner available to you; fallacy.

How's that sit with you?

Zar

Celsus,

You see, right there is the crucial issue. I am doubtful that an analysis which assumes a constant rate of extraction until the last drop is going to be of much use. It seems from what I have read that the bell-shaped curve describing the rise-peak-fall of extraction rates is widely accepted and the most relevant way to view our capacity to consume oil. What is most in dispute is when this peak will occur, not whether it will, and whether the slack can be taken up by other sources of oil, such as the shale, sands and deep-ocean sources.

This way over-simplified and very crude graphic will illustrate the point. The black areas are "oil fields" and the red bars represent a unit rate of extraction. The numbers under the first row are just crude indicators of the "reserves" in each field. The three stages illustrate decreasing maximum extraction for the entire "system" of oil fields:



What we see here is the idea that even as reserves are still 65% of what they were at the start, you can still only consume 50% of the oil per unit of time than you did before. So the reason extraction rate is king is because although you may have significant oil reserves remaining, you cannot pull the oil out of the earth any faster than a certain capacity at a given well. So, you can't simply transfer the apparatus from a dry well to a viable well to keep extraction constant. The physics of the well make this impossible. When talking about world peak, you literally have no where else to turn because new discovery rates fall toward zero and maximized rates of depletion continue, so that the number of active wells decreases over time.

Celsus

Zar,

I'm not saying that extraction rates won't decline faster than reserves. What I am disputing is that physical shortages of oil are not likely to affect the global economy in the next 10-15 years. Of course, OPEC cutting production by choice is quite another matter, and if price hawks get a stronger say, then that is definitely possible. Regardless, this has little to do with a K-wave.

Joel

Zar

Joel,

If you agree about the extraction rates issue, then you must be in disagreement about when peak oil will occur (i.e., a time frame longer than the 10-15 years Ruy Lopez is presenting.) Otherwise, you would seem to be in contradiction with yourself, because you cannot both agree about the importance of extraction rates and also continue to assert exactly what you have said previously about oil reserves where you are assuming current extraction rates.

The issue is that modern civilization is humming along at the peak of what is possible in terms of extraction rates. It is all downhill from there. Indeed, in 50, 75, 100 years, there would still be oil, but it could only be consumed at rates closer to the very beginning of the petroleum-based economy, which could not sustain the world as it is now at all. Many changes would be forced upon us. Again, we'd need to be a lot more efficient in our usage by then to maintain our way of life in any semblance or move to a new energy supply by then.

Celsus

Zar,

Yes, most MENA experts agree that an oil crisis for the smaller oil-producing countries will hit in 20-30 years' time. Not in 5-15. As for the larger ones, see the first list I gave: The crisis will be within the last quarter of that time frame. Notice that the UAE isn't exactly suffering from oil production crisis, but is rapidly diversifying (or at least attempting to) its economy.

Joel

Edited to add: and global production, which would be the only significant impact on the US economy, is not expected to reach crisis for a good number of years longer.

Zar

Okay, well I'll keep reading up on that then. Thanks for the talk.

Celsus

One last thing (sorry!)

If OPEC were to cut supply in order to raise prices again (as it did with the oil shocks of '73 and '79), then these estimates of how long oil production will last will increase further. Supply has high elasticity with respect to oil. For example, the Iranians cut production by some 2 million barrels per day after the Revolution. Of course, this might contribute to Ruy's long-wave decline eh?

Joel

Zar

Joel,

Along those lines I have thought that the decline, when it happens, would be a stairstep and not a smooth slope. Perhaps this would decrease the angle of the slope, but I'm not sure if it would give us a smoother ride down or not, with fluctuating, sputtering economies, like a rubber ball bouncing down a hallway. This doesn't seem like a pleasant or elegant wind-down of the petroleum economy. Its really hard to say, and other factors like technological breakthroughs or substitute fuel readiness are unpredictable but potential life-savers here. The transistion could still be remarkably smooth or really rough depending on the choices made and luck we run into.

Celsus

Hi Ruy Lopez,
I don't understand you point. The US economy, being extremely globalised, and 5-6 times the size of its nearest European counterparts, will have to be affected by aggregate production, globally. See my discussion with Zar on oil, since I wasn't very clear when I first stated my point.
Well best of luck to you then. I don't think anyone in academia is hunting for these waves though--perhaps a Nobel prize is in the offering?
I have serious problems with this analysis here. Firstly the wholesale price index sounds to me a lot like inflation rate--you'll notice that the recent ascents ('73 and '79) are directly correlated with the OPEC oil shocks I have mentioned. What this means is problematic for your theory: If oil production declines, then prices will go up, and of course, the CRB index will rise again. It will not work the way you are portraying: i.e. that oil production is declining, worsening the decline of the economy. Secondly, is the problem of stagflation brought by oil hikes: The US economy was not in ascent during this period, although prices were. Hence, the Kondratieff wave seems to be wrong on this count.

Secondly, the K-wave is unable to explain the effects of WWII. This is the problem with drawing correlation without explaining causation. The important question is: is it really cyclical? If it is, the "why?" that follows is immediately relevant. As your chart shows, the CRB/PPI clearly illustrates the Postwar boom, but this is not supposed to occur according to the K-wave. The 1949 trough is significantly undermined by the 1951 peak of the CRB.
No problems with this correlation, but bonds are inversely related to interest rates, and as I have mentioned, interest rates do not equate to how well the economy is doing. This sort of correlation would be convincing if we still subscribed to the Phillips curve, but I can't imagine anyone does without noting all the possible exceptions to it.
No problems here, except that trough to trough is supposed to be a 55 year cycle, but the chart seems to have prolonged the decline. Why?
It's not that bad. The index has merely returned to 1996 levels, and you might expect it to go down a little further with the dotcom bubble bursting. But it certainly doesn't represent a major downturn yet. Of course, for those of us (like me) looking for jobs, we're still cursing and swearing.
This reads to me like an apologetic for selective use of evidence. I also don't think you understand what I mean by methodology. I mean: what are your criteria and principles you use in selecting data and drawing conclusions? You also suddenly mention the Kuznets curve (rise and fall in income inequality as per capita income increases), which I don't see any correlation with the Kondratieff wave, and, might I add, like the Phillips curve, is also under some amount of fire (although the environmental Kuznets curve is another matter).

This is not an indictment on you, but I'm beginning to suspect that you are using very dated sources.

Joel