Andrii-zvorygin Peak-oil Meeting Transcript — August 6, 2026

00:00:01 SPEAKER_UNKNOWN: Greetings in the love and light of the infinite Creator.

00:00:03 SPEAKER_UNKNOWN: I'm Andrii Zvorygin.

00:00:04 SPEAKER_001: Joined here today with Jean Laherrère, Roger Bentley, Dan, and Gail Fairbairn, and we're going to begin with a presentation from Jean and Roger about the forecast updates for world oil.

00:00:20 SPEAKER_001: And then Arthur Berman should join us for the second hour on adaptive oil markets.

00:00:28 SPEAKER_001: And Gail may also tell us about how affordability ties into reality.

00:00:36 SPEAKER_001: Okay, Roger, would you like to introduce yourself?

00:00:39 SPEAKER_001: I'll start off myself.

00:00:42 SPEAKER_001: I've been very privileged to work with Jean Laherrère and with Colin Campbell from the early days of the reports they did with Petro-Consultants on oil and gas.

00:00:57 SPEAKER_001: Very privileged.

00:00:58 SPEAKER_001: Worked about thirty years.

00:01:00 SPEAKER_001: Jean longer than me, and my background was physics and chemistry, then solar energy, and then oil.

00:01:09 SPEAKER_001: And I'm still writing papers, helping Jean write his.

00:01:13 SPEAKER_001: Okay, Jean, perhaps you introduce yourself, Jean briefly?

00:01:19 SPEAKER_001: Well, first, I'm an old man; today ninety-five years old.

00:01:25 SPEAKER_001: Ninety-five years old, so you can see I've been working on oil for a long, long time.

00:01:35 SPEAKER_001: I started with the discovery of the largest oil field and gas field in Africa: Asimissa Wood and Asela Well, in 1956.

00:01:51 SPEAKER_001: Also, so I moved from two different places, and I went to Australia.

00:02:01 SPEAKER_001: I was there five years—five years, five years.

00:02:04 SPEAKER_001: I was living there working with Colin Campbell, and now [I'm] in Austria.

00:02:09 SPEAKER_001: But I like to make art, and for me, you understand...

00:02:18 SPEAKER_001: Okay.

00:02:19 SPEAKER_001: Only when you see on the graph.

00:02:22 SPEAKER_001: Okay, thank you.

00:02:23 SPEAKER_001: All right.

00:02:23 SPEAKER_001: So Roger, here's the first slide.

00:02:28 SPEAKER_001: Thank you.

00:02:28 SPEAKER_002: Thank you, Andrew.

00:02:30 SPEAKER_002: So yes.

00:02:31 SPEAKER_002: So this is a report—a big report that Jean has done on world fossil fuels: all the fossil fuel forecasts to 2150.

00:02:43 SPEAKER_002: We'll go through it; it's fairly short.

00:02:46 SPEAKER_002: Jean says he was head of exploration techniques.

00:02:49 SPEAKER_002: The big report exists.

00:02:51 SPEAKER_002: It's on ASPO France website, and I and three others are helping him write a paper—submitting a cut-down paper on the same thing.

00:03:03 SPEAKER_002: Roger, may I stop?

00:03:05 SPEAKER_002: Sorry to stop you.

00:03:06 SPEAKER_002: You see: most of the reports in the past were data by volume.

00:03:11 SPEAKER_002: For the first time, it was data by weight.

00:03:14 SPEAKER_002: It is completely different.

00:03:16 SPEAKER_002: Yes; that's why I think this report is different from what I did in the past.

00:03:23 SPEAKER_002: Very, very good.

00:03:24 SPEAKER_002: Thank you, Jean.

00:03:25 SPEAKER_002: That is a very good point.

00:03:27 SPEAKER_002: So he says most of his studies in the past were by volume—barrels of oil and so on, cubic feet of gas—and now he's doing weight, which makes it more comparable.

00:03:38 SPEAKER_002: So very good.

00:03:41 SPEAKER_002: Can we just go back to the previous one, Andrew, briefly?

00:03:46 SPEAKER_002: Yes; because there he is...

00:03:48 SPEAKER_002: He was theory: Jean was an associate consultant at Petro Consultants, and those first three reports (1994 to 1996) were groundbreaking.

00:04:00 SPEAKER_002: Petro Consultants existed before IHS Energy turned into S&P Global.

00:04:08 SPEAKER_002: And the important point: Petro Consultants had decided they would share oil consultancy data, and almost asked people like Jean to be associate consultants to write these really landmark reports.

00:04:23 SPEAKER_002: So they were absolutely solidly based on really good data, and you can see three major reports there: petroleum potential; supply of oil and gas potential—really, really good.

00:04:37 SPEAKER_002: And out of that came the really famous landmark paper by Colin Campbell and Jean Laherrère, "End of Cheap Oil."

00:04:45 SPEAKER_002: The End of Cheap Oil (Scientific American), which has, of course, turned out to be completely correct, as we will show.

00:04:53 SPEAKER_002: And then there's some other papers—many on the ASPO website—which John [Laherrère] has written over the years.

00:05:00 SPEAKER_002: But as he says, this one on fossil fuels is the first to be weight-based, not volume-based.

00:05:08 SPEAKER_002: And then you've got some other papers there that are in press and in train.

00:05:12 SPEAKER_002: Okay, thank you.

00:05:13 SPEAKER_002: Next slide, please.

00:05:16 SPEAKER_002: So this is the main conclusion from the main report: extraordinary figures that you'll be presenting.

00:05:25 SPEAKER_002: You've got historical production data from a dataset that ASPO France has been collecting—historical production from 1900 to 2150.

00:05:36 SPEAKER_002: It's a wonderful thing; you don't normally see charts quite so long, but Jean is a chart expert, and you can see it's in gigatons (by weight).

00:05:49 SPEAKER_002: Coal [in black] goes up and peaks—in Jean's analysis—which we'll discuss later—about now, 2025.

00:06:00 SPEAKER_002: Oil—the green line—went up in the seventies and then went down with the oil shocks of the seventies.

00:06:07 SPEAKER_002: Gail Tverberg and others are all well aware of this; it has gone up again and is shown here: oil going over the top and down.

00:06:17 SPEAKER_002: Likewise gas (conventional gas, to be fair), and also in this model is brown coal—the kind we mine—oil shale [in green].

00:06:30 SPEAKER_002: It's been significant but not a huge amount.

00:06:33 SPEAKER_002: And then coal bed methane.

00:06:36 SPEAKER_002: So that's...

00:06:36 SPEAKER_002: We'll go into it later; look at that graph again later on—but that's the main message: they're all more or less at peak,

00:06:45 SPEAKER_002: and we'll discuss which ones are resource-limited peaks (and that's important) versus those reflecting costs and so on.

00:06:57 SPEAKER_002: So let's go to the next slide, please.

00:06:59 SPEAKER_002: Thank you, Andrew.

00:07:01 SPEAKER_002: Here's a wonderful chart from Jean using Hubbert linearization.

00:07:06 SPEAKER_002: Hubbert linearization was developed by M.K. King Hubbert:

00:07:13 SPEAKER_002: if a mineral or resource is following a logistic curve in its cumulative production (one that goes up exponentially and then through an inflection point before going down exponentially), then as Hubbert showed,

00:07:33 SPEAKER_002: if you plot on this graph—annual production divided by cumulative production on the y-axis, and cumulative production on the x-axis—and it's following perfectly... well,

00:07:46 SPEAKER_002: actually it never does because of course it starts at zero while logistic curves start at minus infinity, so it can't follow that to begin with.

00:07:55 SPEAKER_002: But pretty soon, if it is following a logistic curve for the cumulative production of that mineral or resource, then you start to get this strange straight line here—amazingly,

00:08:05 SPEAKER_002: global oil production has been a straight line for many years, all pointing to a limit: production will cease when there's no more production left.

00:08:18 SPEAKER_002: You've used up your ultimate resources when you reach 400 gigatons of oil; and importantly—and never to be forgotten by Andrea [Zvorygin] and everybody else—you actually go over the midpoint halfway through.

00:08:33 SPEAKER_002: So you might have lots (and lots) of oil, coal or chromium left, but once you pass the midpoint it starts declining.

00:08:42 SPEAKER_002: That's the background number that Jean generated with one of his wonderful graphs.

00:08:49 SPEAKER_002: And then the next slide shows what that says about world output: so Jean takes those 400 gigatons—as you can see, actually around 390 gigatons—and shows that cumulative production goes up (on the purple curve).

00:09:09 SPEAKER_002: You've already gone past the inflection point and are going over the top.

00:09:13 SPEAKER_002: And again with global oil: you had the 1970s production peak right down because prices shot up—as we'll look at later—then prices went back for a while, then [production] went over the peak.

00:09:27 SPEAKER_002: So this is all oil (global).

00:09:32 SPEAKER_002: But if you look just at conventional oil—that subset—in fact since 2005, marginal barrels have been non-conventional oils and NGLs.

00:09:46 SPEAKER_002: This had four effects: it put up the price of oil; increased decline rates; more CO₂ emissions per average barrel; and lower energy return on investment (EROI).

00:09:58 SPEAKER_002: Charlie Hall's favourite important parameter—energy return on energy invested—which Andrew's workshops have discussed many times and will discuss in future.

00:10:10 SPEAKER_002: So that's global oil.

00:10:12 SPEAKER_002: And here we go: let's look now at conventional oil.

00:10:16 SPEAKER_002: Here's a lovely chart from the IEA (International Energy Agency), produced late 2025 showing total production 2000 to 2024 of global oil by IEA definitions, with onshore conventional (dark blue), shallow water (lighter blue),

00:10:39 SPEAKER_002: deepwater (darkest blue).

00:10:42 SPEAKER_002: You put all those together and you can see that global production of conventional oil—those three combined: onshore, shallow offshore, deepwater offshore conventional—actually reached a plateau in 2005.

00:10:56 SPEAKER_002: So in 2005 it plateaued to about 2008 and has been declining since.

00:11:03 SPEAKER_002: And we did a lovely little survey with some people at the London Energy Institute; not one of them—all experts—not one knew that global conventional oil had reached maximum and was in decline.

00:11:16 SPEAKER_002: Not one!

00:11:18 SPEAKER_002: Wow.

00:11:18 SPEAKER_002: So, what do we produce now?

00:11:20 SPEAKER_002: We've still been producing more oil—as you can see—but most of it has been natural gas liquids (NGLs).

00:11:27 SPEAKER_002: Some [data] only goes to 2024: light tight oil mostly in America; some in Canada and other places; then there's extra-heavy oil, tar sands.

00:11:40 SPEAKER_002: But global conventional oil plateaued from 2005 to 2008 and has been declining since—that's the "other oils" we've produced.

00:11:49 SPEAKER_002: And this is a lovely IEA plot.

00:11:53 SPEAKER_002: Okay—is that all clear, Andrew?

00:11:55 SPEAKER_002: Clear enough?

00:11:56 SPEAKER_002: Yeah.

00:11:56 SPEAKER_002: Next slide, please.

00:12:00 SPEAKER_002: So one more on the conventional oil base: similar chart produced some time ago combining global shift data.

00:12:07 SPEAKER_002: If you want to know anything about oil, go to globalshift.co.uk website.

00:12:12 SPEAKER_002: Again, the nice thing about this is we added the price of oil so you can see that for many years—the real terms price—oil was only $20–$25 a barrel for a long time (1925).

00:12:29 SPEAKER_002: This chart covers 100 years; then suddenly there were the shocks of the seventies.

00:12:35 SPEAKER_002: I lived through them: first increase in '73, and second in '78.

00:12:40 SPEAKER_002: Thank you, Andrew, for pointing it out.

00:12:43 SPEAKER_002: Then prices fell back but importantly did not fall to previous levels because we are now producing more difficult oil—North Sea oil in the UK,

00:12:53 SPEAKER_002: Alaska oil—we're producing more expensive oil—and then we hit 2005 with global conventional oil plateauing; prices shot up again: $80–$90 a barrel.

00:13:07 SPEAKER_002: They went as high as $140 and came down—but we're still twice what they were before.

00:13:15 SPEAKER_002: So the crucial thing on price: fifty years at only about $25/barrel, then first oil shocks destroyed economies but left us with more expensive oil for about twenty years;

00:13:31 SPEAKER_002: then after 2005 we hit end of plateau of global conventional oil—prices went up again—and now we're at seventy or eighty dollars a barrel.

00:13:41 SPEAKER_002: It's a new world.

00:13:42 SPEAKER_002: That's the simple message that ninety-five percent of all energy analysts have missed: they haven't got it into their heads,

00:13:49 SPEAKER_002: and here you see quite clearly NGLs going up (and a little bit of biofuels at top), but conventional oil flat as flat as a pancake.

00:14:02 SPEAKER_002: Okay, thank you, Andrew—is that all clear everybody?

00:14:04 SPEAKER_002: Any questions so far?

00:14:08 SPEAKER_002: Okay; I'll push on.

00:14:10 SPEAKER_002: So that was oil.

00:14:10 SPEAKER_002: Now we do the same thing for conventional natural gas: another splendid Jean Laherrère chart—another Hubbert linearization saying if global natural gas cumulative production were following a logistic curve it would give you a straight line,

00:14:31 SPEAKER_002: and here it does indicating something like 190 gigatons (billion tons) going in that direction.

00:14:45 SPEAKER_002: If you take that ultimate—that's total amount to be produced—it indicates the world total for that commodity.

00:14:54 SPEAKER_002: Then we go to next slide please.

00:14:58 SPEAKER_002: And this is what it says for natural gas production: once again peak about now—fairly interesting; peak of just about everything is about now.

00:15:09 SPEAKER_002: That takes the ultimate recoverable resource (URR) at 175 gigabarrels.

00:15:17 SPEAKER_002: There's cumulative curve going up and turning over, annual production curve up then down.

00:15:24 SPEAKER_002: And crucially Jean in these models sees decline constrained by URR—that's constraint—and he sees decline as roughly symmetric to increase (not exactly).

00:15:41 SPEAKER_002: Metrics don't know how it goes exactly but as we all know the crucial point isn't really climb; it's going over top and back down—where society changes.

00:15:52 SPEAKER_002: Good chart from Jean March, 2026.

00:15:56 SPEAKER_002: Let's look briefly at another: natural gas plant liquids (NGPLs).

00:16:02 SPEAKER_002: It's always tricky for Jean to separate out natural gas from fields where production happens in plants specifically—the U.S.

00:16:15 SPEAKER_002: changed its rules years ago—but again indication there may be nearly 40 gigatonnes of NGPL produced ultimately—and

00:16:27 SPEAKER_002: if true we've still got way to go up;

00:16:30 SPEAKER_002: haven't reached peak yet (peak isn't till 2030 or something like that—maybe 2040).

00:16:41 SPEAKER_002: So it goes up because you can keep getting more gas and increase amount with your plants.

00:16:52 SPEAKER_002: And as shown in other graphs NGLs have indeed been key part of what we've produced since conventional oil plateaued.

00:17:03 SPEAKER_001: So what's difference between NGLs and NGPLs?

00:17:08 SPEAKER_002: NGLs are produced at formal gas plants; the gas comes up from well—not an oil well—and some condenses right at surface as pressure/temperature change, effectively becoming petroleum (natural gas liquids) which is separated off.

00:17:32 SPEAKER_002: Sometimes counted in oil production sometimes not—that just happens naturally—but you've got to reduce pressure a bit and suddenly out come plantless roots [NGLs] sent away under that pressure.

00:17:46 SPEAKER_001: So they're kind of like lighter hydrocarbons: naphtha, natural gas—those kinds of molecules.

00:17:56 SPEAKER_002: Yes; okay thank you Dan—you know more about this than I do—I have to admit.

00:18:03 SPEAKER_002: Next slide please.

00:18:07 SPEAKER_002: Okay sure—that was NGPLs.

00:18:09 SPEAKER_002: Now we're looking at shale gas.

00:18:10 SPEAKER_002: Now I will warn you: information on conventional oil and gas is very solid with long straight lines in Hubbert curves—thirty,

00:18:24 SPEAKER_002: forty years of convincing data—but now moving to products like shale gas then coal where you aren't seeing those long straight lines yet John—you happy?

00:18:40 SPEAKER_002: Yes man.

00:18:41 SPEAKER_002: So now we're looking at more indicative info not as solid as conventional stuff but if look here there's a few years' straight line seeming indicate 16 gigatons—who knows where going with shale gas production?

00:18:59 SPEAKER_002: Not allowed in UK; not allowed in lots of European countries—how to do it elsewhere?

00:19:08 SPEAKER_002: China looked hard found some—but tough old road being shale producer outside America.

00:19:16 SPEAKER_002: America lovely place:

00:19:23 SPEAKER_002: everybody owns minerals underneath farm land nowhere else true sadly government owns them Roger somebody actually done horizontal drilling fracking for shale requires right geology—for example lot want drill California but so faulted fractured can't pressurize

00:19:43 SPEAKER_002: system only certain places possible What's your take Dan how far around world will go?

00:20:01 SPEAKER_002: Who who I think great opportunity Australia greater Russia two big ones Yeah Okay Very interesting mean talk UK Geological Survey haven't done yet to-do list if horizontally frac under North Sea might be possible good

00:20:24 SPEAKER_002: question Keep going nearly there Andrew So that shale gas and if HL ultimate URR 16 gigatons then what get world coming back Dan saying know other places look rules different not everywhere geologically sound Jean

00:20:50 SPEAKER_002: certainly says basis sees probably shale gas also about peak so about now globally plenty more but goes down slowly at peak-ish Okay Now switch oil gas third last fossil fuel kerogen brown coal careful lot

00:21:54 SPEAKER_002: tons thousands gigatons modern constraints pollution CO2 costs here straight lines ambiguous 130–150 gigatons Same Hubbert plot data Aspo France mind adding Roger remember guys brown coal lignite yes high water content two-thirds not carbon I

00:22:10 SPEAKER_002: Dan didn't know thank you educate knew wasn't dark black coal coals graded by weight carbon Yes Next entry hard coal nice HL graph ambiguous lots narrow seams deep under sea England same Ruhr Germany go

00:22:50 SPEAKER_002: under sea get it charts can't see clear John analysis more conservative total amount sees 500 billion tons recoverable due constraints haven't got clear Hubbert lines assuming reasonable estimate gigatons hard coal put together next chart

00:24:01 SPEAKER_002: two coals dark line off to 500 brown coal much water upperty downy amount assuming 140 coverable Next slide gets back started same beginning context hard cold [coal] green oil gas red shale no brown coal

00:24:23 SPEAKER_002: then shale coal bed methane many peak now recently estimated dates brown coal peak 2012 crude oil 2017 conventional oil plateaued 2008 down by 2017 conventional gas 2019 past hard coal about now others smallest smallified

00:25:04 SPEAKER_002: bit big read blurb fine print always So conventional coal these dates pretty damn certain reflect intrinsic limits production price spectacularly desperate produce more but not much constraints Coal different China beginning move away pleased Production

00:25:35 SPEAKER_002: cost CO2 limits factors extraordinary picture really Jean Laherrère debt putting together conservative places coal brown telling world want live fossil fuel world had century growth prosperity back all Gail Tverberg expertise wonderful century profit stability

00:26:13 SPEAKER_002: food summer winter holidays skiing produced by coal nice fires school home petrol dad's car changed world now small modular reactors nuclear fusion solar lots energy nobody yet done sums correctly look away comfortable supplies to

00:26:59 SPEAKER_002: other supplies everybody knows charts seen not transitioning bringing new fuels reducing old ones big question Andrew chat shows discuss Next slide Two further readings won't go through If only read one document whole area must

00:27:17 SPEAKER_002: read Scientific American End of Cheap Oil makes clear talking conventional oil mentions thirteen times critiques say haven't had end conventional because don't understand it's conventional

00:27:37 SPEAKER_002: And those, so there's Campbell; there's a wonderful one more, and then we're finished.

00:27:42 SPEAKER_002: So another set of next slide, another set of further reading, which if you've got time—but certainly read Scientific American.

00:27:50 SPEAKER_002: Sean, have I done that justice?

00:27:52 SPEAKER_002: Is that fair?

00:27:53 SPEAKER_002: Do you think?

00:27:54 SPEAKER_002: I think it's fair.

00:27:55 SPEAKER_002: Yes.

00:27:56 SPEAKER_002: Thank you, Missy Bocul; Monsieur.

00:28:00 SPEAKER_002: If anybody wants a chart produced, Sean—produced by Jean LaRue, your chart expert—all right—and so do we have any questions from the panel about the presentation or anything?

00:28:20 SPEAKER_001: I guess we kind of know a lot of it already.

00:28:24 SPEAKER_001: Let me check...

00:28:26 SPEAKER_001: From—I cannot go ahead.

00:28:28 SPEAKER_001: I was wondering...

00:28:30 SPEAKER_001: Okay, so we're at sort of the peak of everything right now—more or less figured out in gigatons total—or are we a little past the peak of kind of everything right now?

00:28:44 SPEAKER_001: Just curious; kind of add them all together, you know.

00:28:49 SPEAKER_001: No, well Jean's numbers will show.

00:28:51 SPEAKER_002: You've got to go to the big data sets to really look—but I don't think we're past the peak, and we're at about... it is the right thing either way: okay,

00:29:01 SPEAKER_002: we're about at the peak of everything.

00:29:03 SPEAKER_002: Yeah.

00:29:05 SPEAKER_002: Okay.

00:29:06 SPEAKER_001: Thank you.

00:29:08 SPEAKER_001: Yeah; it looked like only coal was really a question—and we're past peak both in terms of liquids and gas.

00:29:20 SPEAKER_002: Yes—yes!

00:29:21 SPEAKER_002: Certainly conventional oil, conventional gas is solid peak.

00:29:24 SPEAKER_002: The others are more interpretive, and they depend on what we do.

00:29:28 SPEAKER_002: And there's no question: if you let's take the UK—I think I mentioned this once before, Dan, on your chat shows—if you really needed oil,

00:29:38 SPEAKER_002: if oil was necessary—like to stop disease—we would go to the North Sea.

00:29:43 SPEAKER_002: We'd put in huge caissons, pump all the water out, and then go down and drill up all the oil rock; and then we'd put in acetone and dissolve out the oil.

00:29:55 SPEAKER_002: Yeah—you can get much more of our recovery factors.

00:29:57 SPEAKER_002: They're now forty percent world average.

00:30:00 SPEAKER_002: There's a lot—and Ricehead makes the point: there's a lot of potential extra recovery, but it costs more money.

00:30:07 SPEAKER_002: And we're already up at nearly eighty dollars a barrel—costs more money!

00:30:11 SPEAKER_002: Too high an oil cost destroys economies.

00:30:14 SPEAKER_002: Mr. Trump isn't happy that oil/gasoline is four dollars in America now—not three dollars a gallon.

00:30:23 SPEAKER_002: So you know—you can get more—but it costs...

00:30:26 SPEAKER_002: It destroys your economy.

00:30:28 SPEAKER_002: Roger, Roger—you know; added what you're talking about there—and how I got dragged into this years ago—twenty years ago—I had to do the converting of coal-fired power plants over to gas turbines,

00:30:38 SPEAKER_002: and the reason why was because when you're down to the point where you've mined out all the hard coal—the bitumen and the lignite—you go down in... sorry: the bitumen and anthracite; not lignite.

00:30:51 SPEAKER_002: You can't run a power plant on lignite.

00:30:53 SPEAKER_002: The cost of diesel exceeds the energy content of the fuel—and when you're talking about oil and gas, we understand two-thirds of those carbon hydrocarbons are still in the ground, right?

00:31:04 SPEAKER_005: We can only get so much out using water, using CO₂, using steam—right?

00:31:10 SPEAKER_005: And but that... like Roger said—the only way to get at it is actually mine down;

00:31:15 SPEAKER_005: tunnel down six thousand feet—and physically—you know—dig it out and somehow you know use paint thinner or something like that—or steam—to physically dig it out.

00:31:26 SPEAKER_005: But the costs of doing that are just astronomical.

00:31:28 SPEAKER_005: So that's exactly right!

00:31:30 SPEAKER_005: Yeah, yeah.

00:31:33 SPEAKER_001: So am I standing correctly then: we're talking about more like heavy/ultra-heavy crude, similar to Canadian tar sands?

00:31:43 SPEAKER_005: It'd be something similar—but you'd have to dig through six thousand feet of rock to get to it.

00:31:48 SPEAKER_005: Okay—I see.

00:31:49 SPEAKER_005: Think about the engineering of that...

00:31:50 SPEAKER_005: Yeah!

00:31:50 SPEAKER_005: So it would be a low EROI—yeah!

00:31:55 SPEAKER_005: I mean think about some of the deepest gold and diamond mines we have in the world—that's that kind of engineering—and you'd be dealing with massive quantities you'd have to dig out for hydrocarbons.

00:32:04 SPEAKER_005: Is it really worth digging them out?

00:32:08 SPEAKER_005: Not compared to diamonds or gold, which are high-value products.

00:32:13 SPEAKER_005: Compared to a product like hydrocarbons—are we willing to pay that much?

00:32:17 SPEAKER_005: I mean...

00:32:18 SPEAKER_005: That's a guess!

00:32:19 SPEAKER_005: And when it gets to a certain point—you're going to get demand destruction—which is what we're seeing right now!

00:32:24 SPEAKER_005: Yeah—one of the reasons why oil isn't higher than what it is right now: a lot of different factors—but part of those factors is demand destruction.

00:32:31 SPEAKER_005: People in Asia are just not driving their cars—yes!

00:32:34 SPEAKER_005: Good example!

00:32:36 SPEAKER_005: Now don't forget, Andrew—that's very Dan; excellent points—I just quickly won't forget your international...

00:32:43 SPEAKER_002: EIA—the American Energy Information Administration.

00:32:47 SPEAKER_002: When America oil was going down year after year before the shale/fracking oil—the EIA used to say:

00:32:57 SPEAKER_002: "Well we'll get our oil from kerogen," and America is blessed with an awful lot of kerogen—you've got a thousand billion thingies of kerogen—but again you're back to rock!

00:33:10 SPEAKER_002: You're back—Dan's point.

00:33:11 SPEAKER_002: You've got to get the... there have been some projects—and when oil was a bit more expensive—the carriage boys came forward and said: "We can produce it."

00:33:19 SPEAKER_002: You've got to get the—it's all in the rock—you've got to get the rock up, crush it, heat it, then get the oil—then change it.

00:33:26 SPEAKER_002: You've got to pyrolyse the kerogen to turn it into oil!

00:33:31 SPEAKER_002: So yes—all that can be done—but so there's a lot there.

00:33:33 SPEAKER_002: But it is expensive and difficult.

00:33:36 SPEAKER_002: Dan's quite right!

00:33:39 SPEAKER_001: I have a YouTube question: How do bottlenecks in the Gulf, Red Sea, and Black Seas affect the charts?

00:33:47 SPEAKER_002: Thank you kindly, Andrew—none at all—not one bit!

00:33:49 SPEAKER_002: They're fun; very good questions—but we're facing very interesting times—and we've been asked (in some papers) to write about them.

00:33:58 SPEAKER_002: We've been asked to put reference to the Strait of Hormuz and stuff—but I fought against it:

00:34:05 SPEAKER_002: Strait of Hormuz is a political thing right now—and it could be solved—you know—it probably won't but it could be solved tomorrow!

00:34:12 SPEAKER_002: A man and Ryan are talking; it's nothing to do with resource limits.

00:34:16 SPEAKER_002: What we're talking about here is fundamental resource limits: how much there was in the ground, how many years we've used it—and how much we can use in the future—nothing to do with politics!

00:34:27 SPEAKER_005: Roger—there's another kind of question too—that is: we live in an age where we've pretty much mapped out planet Earth geologically.

00:34:35 SPEAKER_005: The USGS and other surveys have drilled and pretty much mapped out the planet as to where certain types of resources are located—and so we're kind of blessed in that regard—but on the other side—we're kind

00:34:49 SPEAKER_005: of cursed because we actually know those numbers,

00:34:53 SPEAKER_005: and there really aren't that many blind areas out in the world that we don't!

00:34:57 SPEAKER_002: Very very good point—I I know not enough about how Jean got into all this—but that's certainly how Colin Campbell got into it: he was in South America looking at availability—he knew what they drilled;

00:35:11 SPEAKER_002: he knew what they hadn't—and then when asked to look at next areas, his company told him to look elsewhere.

00:35:20 SPEAKER_002: He slowly started realising—it wasn't immediately "oh boy we had exactly as you say"—we've drilled most places!

00:35:26 SPEAKER_002: Our geological knowledge is solid—we know what we're doing—but there are some good places to go and look—not many!

00:35:35 SPEAKER_002: And the classic story: twenty-five years ago at Reading University, long came the really big oil companies—and we said: "Look—conventional oil's going over peak soon."

00:35:51 SPEAKER_002: And a senior man from Chevron (I think) said: "No no this can't be true—we've just found a big new field offshore!"

00:35:59 SPEAKER_002: He wouldn't even say where it was—but everybody in the room knew it was Namibia!

00:36:05 SPEAKER_002: So we'd just found this huge field—how could we possibly be running out?

00:36:11 SPEAKER_002: And as you say Dan—we know where it is and how much there is.

00:36:16 SPEAKER_002: A big new field in Namibia helps—but it doesn't stop conventional oil going over peak!

00:36:22 SPEAKER_001: I know Gail also has a lot of information about how price might not go up even with scarcity—I don't know if Gail—you wanted to speak to that?

00:36:34 SPEAKER_001: Anyway thanks Andrew—much appreciated—and Andy too!

00:36:37 SPEAKER_001: Yeah well the area I look at...

00:36:41 SPEAKER_001: let's see—the area I look at has more to do with how the economy is hooked together in a very strange way—we expect prices to go up if there's

00:36:59 SPEAKER_001: shortage—that's why you said "end of cheap oil"—and in 1998 that was interpreted as:

00:37:09 SPEAKER_007: if we're running short—but it doesn't turn out that's the way it works out in practice!

00:37:15 SPEAKER_007: It's end of as many finished products as we like—and our ability to buy those is changed by young people getting poorer and wage disparities—it fits; system works differently than expected.

00:37:40 SPEAKER_007: And what happens when you hit limits-to-growth?

00:37:58 SPEAKER_007: There are wars—like collapse of central government of Soviet Union—so there are things people don't think of!

00:38:05 SPEAKER_007: My analysis looks at this from different perspective as to what happens when hitting limits—to growth basically—and so it's not the story that price will go up isn't quite right.

00:38:27 SPEAKER_001: Thank you Gail—I know Arthur Berman has joined us and you have a presentation for us too—and Gail will be presenting next time!

00:38:37 SPEAKER_001: Okay Arthur I don't know if you could mute and say something?

00:38:43 SPEAKER_001: Yeah—okay hi Andre yes I do have a presentation; do you want me to run it from here?

00:38:49 SPEAKER_001: You want me to send it to you?

00:38:50 SPEAKER_001: What would be best?

00:38:51 SPEAKER_001: Okay.

00:38:52 SPEAKER_001: Yeah.

00:38:53 SPEAKER_001: You could try running it, or if you prefer, you could email it to me, and then I can go through this live.

00:38:57 SPEAKER_001: And then I can go through the slides.

00:39:00 SPEAKER_001: Okay.

00:39:00 SPEAKER_001: Well, we can try it.

00:39:03 SPEAKER_001: Okay.

00:39:04 SPEAKER_001: So I need to share my screen.

00:39:06 SPEAKER_001: You'll have to talk me through how to do this on your end.

00:39:09 SPEAKER_001: So it's the third button at the bottom: microphone, video, and then the third one is Share Screen.

00:39:16 SPEAKER_001: Okay.

00:39:17 SPEAKER_001: So, Share Screen.

00:39:21 SPEAKER_001: And then you can select either entire screen or where you're going to have the presentation.

00:39:29 SPEAKER_001: Let's get me out.

00:39:33 SPEAKER_001: Okay.

00:39:36 SPEAKER_001: Oh gosh!

00:39:44 SPEAKER_001: Oh wow!

00:39:46 SPEAKER_001: Or you could select the window.

00:39:48 SPEAKER_001: Oh.

00:39:51 SPEAKER_001: Oh, Arthur accidentally left.

00:39:55 SPEAKER_001: Um.

00:39:56 SPEAKER_001: Okay.

00:39:56 SPEAKER_001: Well, hopefully... well, Dusty, go ahead.

00:40:02 SPEAKER_001: You have to unmute first.

00:40:04 SPEAKER_001: While he's getting his tech stuff figured out, I figured we could just chat a little bit more about what Gail was talking about.

00:40:11 SPEAKER_001: That is a really interesting way to think about how monetary things can cover over physical reality for a period of time; and thinking of it in a generational/political sense is very interesting.

00:40:26 SPEAKER_009: It's something I'm going to have to think about more because it does seem like the burden of lower EROI oil is being placed on the shoulders of younger generations, which aren't politically impactful yet.

00:40:43 SPEAKER_009: So that might be part of the play here.

00:40:46 SPEAKER_009: It's a lot to think about.

00:40:49 SPEAKER_009: I don't know if anybody has a comment on that?

00:40:53 SPEAKER_001: Yeah, no—that's a great point.

00:40:55 SPEAKER_001: I know like...

00:40:56 SPEAKER_001: I'm running for mayor of Owen Sound, and part of my platform is rural affordable housing and making housing legal again.

00:41:09 SPEAKER_001: For example, currently you're not allowed to make units that would be affordable for young people.

00:41:19 SPEAKER_001: But I did the calculations: if you have a yurt with full insulation, composting toilet, and rain catchment, it's $56,000.

00:41:30 SPEAKER_001: So young people can actually afford that, and it comes with like two-and-a-half acres of land; payments are only five or six hundred—five or seven hundred—a month.

00:41:40 SPEAKER_001: So yes, it is doable.

00:41:42 SPEAKER_001: There are ways to make this work.

00:41:48 SPEAKER_009: Do you think that could potentially be a tactic used by people in power who know using the monetary system can sort of cover the realities of peak oil and they're putting the impact on people

00:42:07 SPEAKER_009: under twenty-five that don't maybe vote as much or aren't as impactful yet?

00:42:12 SPEAKER_009: Does that seem like a plausible hypothesis?

00:42:16 SPEAKER_001: Well, I think there's always some of that.

00:42:19 SPEAKER_001: Just because younger people don't vote as much, and older people vote more, so politicians have to appeal to those who vote for them.

00:42:30 SPEAKER_001: However, right now the average Boomer is already 70 years old, and life expectancy is less than that.

00:42:38 SPEAKER_001: So a lot of Boomers are dying out, and we're having more Millennials.

00:42:45 SPEAKER_001: Hey Art—I can't hear you now.

00:42:47 SPEAKER_001: Uh...

00:42:47 SPEAKER_001: You have to unmute.

00:42:49 SPEAKER_001: There we go!

00:42:50 SPEAKER_001: I'm unmuted.

00:42:50 SPEAKER_001: All right, let's try this again.

00:42:52 SPEAKER_001: Okay.

00:42:53 SPEAKER_001: Very good.

00:42:54 SPEAKER_001: Do you want to try sharing again, or do you want to email it to me?

00:42:58 SPEAKER_001: I'm going to try.

00:43:01 SPEAKER_001: Yeah, yeah.

00:43:02 SPEAKER_001: Um.

00:43:04 SPEAKER_001: Okay.

00:43:04 SPEAKER_001: And then we'll go to PowerPoint.

00:43:08 SPEAKER_001: If it's not letting me select it...

00:43:12 SPEAKER_001: Uh.

00:43:13 SPEAKER_001: Okay.

00:43:15 SPEAKER_001: Fire screen.

00:43:15 SPEAKER_001: Okay, go to—Okay.

00:43:19 SPEAKER_001: Yes!

00:43:20 SPEAKER_001: Here we go.

00:43:20 SPEAKER_001: Okay.

00:43:21 SPEAKER_001: Yeah, seeing it now.

00:43:22 SPEAKER_001: Yep.

00:43:23 SPEAKER_001: All right.

00:43:24 SPEAKER_001: So let's: you can go into presentation mode.

00:43:28 SPEAKER_001: There we go.

00:43:28 SPEAKER_001: All right.

00:43:29 SPEAKER_001: Yep.

00:43:29 SPEAKER_001: Great.

00:43:32 SPEAKER_001: So this is just a brief summary of what I think is going on right now with oil systems...

00:43:42 SPEAKER_001: and I'm going to explain—or try to explain—a few things that perhaps Gail was alluding to minutes

00:43:52 SPEAKER_001: ago.

00:43:58 SPEAKER_010: First slide: it basically summarises how 20 million barrels/day of lost oil, refined products, natural gas liquids, and a few other things coming through the Strait of Hormuz—instead of losing 20 million barrels,

00:44:16 SPEAKER_010: in the end we only lost about 4 million barrels.

00:44:21 SPEAKER_010: Without going into all the details, the biggest factors were bypass pipelines already built that could avoid having to go through the Strait: one pipeline went west to the Red Sea;

00:44:41 SPEAKER_010: the other kind of cuts around the backside of the United Arab Emirates and comes out on the other side of the Strait.

00:44:47 SPEAKER_010: So about six million barrels is making it through that way.

00:44:53 SPEAKER_010: The other big factors were reduced Chinese imports—China somehow reduced its crude oil imports by something like three-and-three-quarter-million barrels/day.

00:45:06 SPEAKER_010: Another big one was inventory withdrawals, mostly from Strategic Petroleum Reserves (SPR) by the U.S.

00:45:15 SPEAKER_010: and other OECD countries; and finally demand destruction—we don't know exactly how much that is, but I'm just saying three million.

00:45:27 SPEAKER_010: So you add six through pipelines, 3.75 from Chinese import reductions, 3.5 from inventory withdrawals, and 3 from demand destruction—and you end up with sixteen-and-a-quarter-million barrels/day instead of twenty.

00:45:48 SPEAKER_010: The point I want to make: this is adaptation.

00:45:53 SPEAKER_010: It doesn't resolve the problem; it's hardly a long-term solution—but it is how the system adapted to what looked like an absolutely devastating loss of oil supply.

00:46:09 SPEAKER_010: Now, four million barrels/day is a massive loss—don't get me wrong—but sure isn't twenty!

00:46:19 SPEAKER_002: Just to interrupt for a second: sorry—I shouldn't have... but that's just an excellent chart I wish we'd had in newspapers and things—a really good one.

00:46:27 SPEAKER_002: Thank you kindly; thank you!

00:46:29 SPEAKER_002: Sure.

00:46:32 SPEAKER_010: Well, again—they're estimates—but given our confidence intervals (plus or minus about a million barrels/day either way)—then the current narrative in the oil business is:

00:46:50 SPEAKER_010: "We are right now dangerously close to what some people call 'tank bottoms':

00:46:57 SPEAKER_010: so much oil has been withdrawn from SPRs that we'll very soon be at the level where you get that giant sucking sound and can't get any more out of storage.

00:47:16 SPEAKER_010: When that happens, horrible things are supposed to happen."

00:47:24 SPEAKER_010: That's the current story—and with most stories, there's definitely a kernel of truth to it.

00:47:29 SPEAKER_010: But back to what Gail said: markets aren't exactly freaking out about this, so there are many ways you could interpret that.

00:47:39 SPEAKER_010: Either markets are stupid (I don't think that's the case), or they're not taking this quite as seriously as certain analysts are.

00:47:50 SPEAKER_010: I'm not going to answer the question necessarily—but the truth may be somewhere in between.

00:47:57 SPEAKER_010: What I want to talk about is a method I've been using for 20 years called comparative inventory.

00:48:06 SPEAKER_010: I don't want to get too deeply into details or bore people with technicalities—except to say this really cuts through a lot of crap and helps us understand what's going on.

00:48:27 SPEAKER_010: Comparative inventory is very simple: you take the five-year average of how much oil is in storage (I'm using U.S. data here—I'll be glad to answer questions about why I use the U.S.,

00:48:42 SPEAKER_010: but suffice it to say that over 20 years, despite objections like "the U.S.

00:48:57 SPEAKER_010: isn't the whole story," empirically it works).

00:49:05 SPEAKER_010: Bottom line: if you take current levels of storage (crude oil and select products—distillate, gasoline, jet fuel, etc.) and subtract the five-year average for the specific week/month we're in—that gives comparative inventory.

00:49:35 SPEAKER_010: It's useful because taking seasonality out lets you compare how inventory today stacks up against last year at this same time.

00:49:57 SPEAKER_010: Basically: if above the five-year average → blue = surplus; below it → yellow = deficit.

00:50:07 SPEAKER_010: There's a y-axis in the middle representing that five-year average.

00:50:18 SPEAKER_010: If on the surplus side (right), oil markets are shorting—they're not willing to spend more than necessary, and oversupply signals will drop prices and discourage drilling.

00:50:45 SPEAKER_010: If on the other side of the axis—in deficit—markets go long; price rises motivate producers to drill wells.

00:51:07 SPEAKER_010: Simple concept!

00:51:09 SPEAKER_010: And then there's this sloping blue line I've drawn: what I call the attractor yield curve.

00:51:18 SPEAKER_010: You can't see all data here—I'll show you in a minute—but it's kind of a fit through accumulated points (not regression, but trend).

00:51:41 SPEAKER_010: Markets are bets; futures contracts aren't based on today's conditions alone—they're bids for one month out, two months out...

00:52:21 SPEAKER_010: up to twelve.

00:52:28 SPEAKER_010: So markets say: "Yeah, things look bad right now, but we'll discount the present because maybe they'll be different in a few months."

00:52:40 SPEAKER_010: This is what real data looks like—I just updated this morning!

00:52:46 SPEAKER_010: I'm not showing every point—just representative ones from past years (blue) and today's red point.

00:53:02 SPEAKER_010: This February: war between U.S., Israel, Iran began; March moved up here...

00:53:08 SPEAKER_010: April, May, June, July 10th—and as of this morning, we're right here.

00:53:19 SPEAKER_010: What happened?

00:53:20 SPEAKER_010: A big price excursion!

00:53:30 SPEAKER_010: Throughout the Iran War, analysts complained: "How come oil is only $95–$100/barrel in April/May when we have a world-class crisis?"

00:53:41 SPEAKER_010: I can't answer that except to say it's like a 30% risk premium.

00:53:56 SPEAKER_010: If you take an April number (~$100), draw perpendicular down to the attractor, and read across—you get ~$70.

00:54:21 SPEAKER_010: So $100 is about 30% more than $70—that's a healthy premium!

00:55:03 SPEAKER_010: People say: "But during Iran War or Ukraine War prices were much higher—$120–$130!"

00:55:10 SPEAKER_010: Here's the data: red = Iran War; orange = Ukraine War.

00:55:17 SPEAKER_010: Remember this is five-year average.

00:55:26 SPEAKER_010: In February (Iran War start), even March/April—we were still on surplus side of comparative inventory!

00:55:34 SPEAKER_010: That's part of why markets didn't freak out—it's like having money in savings: you're not happy about a major expense, but you've got the funds.

00:55:58 SPEAKER_010: On the other hand—if you move left into deficit territory ("my savings are really low"),

00:56:08 SPEAKER_010: then unexpected expenses make you sweat—but even so... where we are today (July)—we're still at relative surplus compared to when Ukraine War ended!

00:56:23 SPEAKER_010: Time matters: this is a cross-plot.

00:56:26 SPEAKER_010: Ukraine War began over here, spiked up to $148–$150-ish, trailed off—but comparative inventory never hit same deficit depth as during Ukraine War.

00:56:45 SPEAKER_010: That cuts through some crap explaining why prices are high now—though risk premiums (percentage-wise) may actually be higher!

00:57:21 SPEAKER_010: Looking bigger: this goes back to 2014/2015 collapse (black points), recovery...

00:57:35 SPEAKER_010: fits into coherent story that oil prices aren't predictable—but there's order in what looks chaotic.

00:57:56 SPEAKER_010: Sometimes point isn't "everything reverts to mean"—this is an attractor, borrowed from complexity science!

00:58:06 SPEAKER_010: System tries to manage back toward homeostasis—not necessarily "normal," but stable equilibrium.

00:58:47 SPEAKER_010: In cases shown, everything came back to attractor... except one example where it didn't (2014–15 details: early hope that crisis was mistake; by 2016 we were in giant surplus territory!

00:59:03 SPEAKER_010: Chaos ensued—overshooting/undershooting—but markets eventually said "we've exhausted possibilities of this attractor" and chose a lower one.

00:59:26 SPEAKER_010: Slope lowered → less supply urgency → moves toward surplus/deficit have smaller price effects than before.

00:59:45 SPEAKER_010: System adjusts/adapts until it can't—but not overnight!

00:59:53 SPEAKER_010: Like marriages: we try to make work, then say "okay, done—trying something different."

01:00:05 SPEAKER_010: Similarly with COVID (data from 2018–20): Trump took office in deficit territory; walked away from Iran nuclear deal → sanctions pressure on Iran → excursion away from attractor.

01:00:44 SPEAKER_010: Then COVID hit—we undershot by quite a bit and stayed undershot for months—but eventually returned!

01:01:07 SPEAKER_010: Oil is complex adaptive system—like markets, life, evolution—attracted to tendencies until it can no longer maintain them.

01:01:19 SPEAKER_010: People ask: "If Hormuz crisis continues, won't we get serious deficit?"

01:01:33 SPEAKER_010: Answer: let's see—and beauty of comparative inventory lets us experiment!

01:01:52 SPEAKER_010: Someone says oil should be $150/barrel—I say: "Let's assume inventories continue falling at current rate since Iran War started; project forward."

01:02:17 SPEAKER_010: Using charts: here's where we are—what price does that give?

01:02:25 SPEAKER_010: Play game forward: if drawing down continues, maybe by November we hit $150.

01:02:50 SPEAKER_010: Not prediction—it's fiction showing why markets don't think it should be wrong yet—but you insist on $150... well, takes time!

01:03:01 SPEAKER_010: Need sufficient deficit so markets say "oh my gosh—I'm out of savings!"

01:03:11 SPEAKER_010: Strategic Petroleum Reserve (SPR): updated this morning—U.S.

01:03:18 SPEAKER_010: had 700 million barrels; June 2020 we were here; Ukraine War hit → Biden drew down to 349, slowly put back a bit in SPR;

01:03:43 SPEAKER_010: March 2026 Iran War hits—we're at 305!

01:03:52 SPEAKER_010: Historical low?

01:03:53 SPEAKER_010: Are we at tank bottom?

01:03:59 SPEAKER_010: Controversy—I've drawn two lines: legal limit (252 million where Congress intervenes); lower operability guess 180 million.

01:04:25 SPEAKER_010: Points: (1) not there yet; (2) could get there soon; (3) how much does it matter?

01:04:37 SPEAKER_010: Trend shows withdrawals almost 3M barrels last week—but since Iran War began, drawing less per week—trend improving!

01:05:00 SPEAKER_010: When doing comparative inventory: do you include SPR?

01:05:09 SPEAKER_010: Answer: no.

01:05:11 SPEAKER_010: Many reasons—and principle is markets don't treat SPR as supply—it stays flat historically hence excluded.

01:05:27 SPEAKER_010: But if calculated with SPR included (same method): we're ~$15 above marginal price!

01:05:49 SPEAKER_010: Markets pay attention: five-dollar premium using commercial inventories only; fifteen-dollar including strategic reserve—"Yeah, this matters to us—we're not freaking out but it does matter."

01:06:09 SPEAKER_010: That's really all I wanted to present today.

01:06:13 SPEAKER_010: Not trying to argue or defend how financial markets work—not saying they're right/wrong—just showing perspective!

01:06:25 SPEAKER_010: I'm just trying to explain the way I think the mechanics work and try to give you some sort of context in which to understand that you can't just say, "Oh my gosh,

01:06:38 SPEAKER_010: we're in a war," and so things should be like they were the last time we were in a war.

01:06:44 SPEAKER_010: I mean, you know, that's not an illogical assumption, but then you look at the data and say, "Yeah, but you know... conditions are not the same."

01:06:54 SPEAKER_010: And then well, could we get there?

01:06:57 SPEAKER_010: Could we get to the same place?

01:06:58 SPEAKER_010: And I've shown you: yeah, we absolutely could.

01:07:02 SPEAKER_010: We could get there relatively soon, but not overnight.

01:07:06 SPEAKER_010: We could get there in three months or four months.

01:07:10 SPEAKER_010: So that's what I've got to say today.

01:07:12 SPEAKER_010: That's my presentation.

01:07:14 SPEAKER_001: Thank you, Art.

01:07:16 SPEAKER_001: That was really excellent.

01:07:17 SPEAKER_001: Um, I enjoyed it.

01:07:19 SPEAKER_001: How do I get out?

01:07:21 SPEAKER_001: Oh, how do you stop sharing the screen?

01:07:22 SPEAKER_001: You click the third button again.

01:07:25 SPEAKER_001: There we go.

01:07:26 SPEAKER_001: Yeah.

01:07:27 SPEAKER_001: Okay.

01:07:27 SPEAKER_001: There we go.

01:07:28 SPEAKER_001: Okay.

01:07:29 SPEAKER_001: Awesome.

01:07:29 SPEAKER_001: Okay.

01:07:30 SPEAKER_001: Now questions from the panel for Art.

01:07:38 SPEAKER_001: Anybody?

01:07:39 SPEAKER_009: Dusty, go ahead.

01:07:39 SPEAKER_009: "Art, have you done some similar work to what you showed there for the USA, showing like China's reserves?"

01:07:52 SPEAKER_009: I didn't hear the last few words in your question.

01:07:54 SPEAKER_009: Sorry.

01:07:55 SPEAKER_009: Have you... have you done any of the similar work on China's reserves compared to the USA?"

01:08:07 SPEAKER_010: Okay, well, I knew this question would come.

01:08:09 SPEAKER_010: No, because nobody knows China's reserves.

01:08:13 SPEAKER_010: So you have to have data to be able to do this.

01:08:16 SPEAKER_010: The reason that I use U.S. reserves is because the U.S. has very accurate and timely reports with a reporting schedule every week; they provide a number now.

01:08:31 SPEAKER_010: If you look at OECD—the same countries that support the International Energy Agency—I can get data on that monthly, but it's not nearly as good.

01:08:43 SPEAKER_010: It involves a lot more uncertainty and estimates.

01:08:47 SPEAKER_010: But I do calibrate what I have.

01:08:49 SPEAKER_010: We have no idea of China's reserves—absolutely none.

01:08:52 SPEAKER_010: Well, I wouldn't say absolutely none; we can guesstimate a number, but we have no way of knowing how they change from week to week or month to month.

01:09:02 SPEAKER_010: Similarly, we have no idea of Russia's reserves.

01:09:08 SPEAKER_010: Basically, we don't know.

01:09:12 SPEAKER_010: So the answer to your question is that it's purely empirical: I've been using this method for twenty years and it always works.

01:09:26 SPEAKER_010: The reasons why it works are that the U.S. is both the largest supplier and the largest consumer of oil in the world.

01:09:35 SPEAKER_010: The U.S. accounts for forty-five or forty-six percent of OECD storage, and so the United States remains a central part—not only of the oil production and consumption equation—but also as the financial centre of the world.

01:09:42 SPEAKER_010: This has worked for twenty years because of data credibility, reporting frequency, and our role in global trade.

01:10:14 SPEAKER_010: I just led you through an explanation that is probably as credible as anyone can show regarding why prices are where they are; it still works.

01:10:25 SPEAKER_010: So you know that's not exactly proof, but I guess I take what works over theory any day of the week.

01:10:43 SPEAKER_010: Okay... then yeah, I was wondering if this is kind of like when I went into a store recently—West Marine—and they're going out of business.

01:10:53 SPEAKER_010: They're selling everything at fifty percent or something.

01:10:56 SPEAKER_013: I was wondering if this is kind of like the world's inventory reduction sale.

01:11:02 SPEAKER_013: Is that what it is?

01:11:05 SPEAKER_013: I mean, are we just speculating and getting stuff out there before the world economy crashes?

01:11:12 SPEAKER_013: Just an idea.

01:11:15 SPEAKER_013: Well... you know, I do think that the Iran war is a world-changing event.

01:11:22 SPEAKER_010: I think that we are going through an energy phase shift right now, regardless of what markets may think or not think.

01:11:32 SPEAKER_010: I don't believe that this is something we're going to look back on in two years, three years, five years and say, "Oh, it's just another bump in the road."

01:11:43 SPEAKER_010: No, I don't think that's the case.

01:11:47 SPEAKER_010: Energy is the functional metabolism of the global economy, and the fact that energy and oil markets are as adaptive as they've shown themselves to be over the last five or six months is impressive.

01:12:07 SPEAKER_010: That doesn't mean, as I said in my first and second slides, that adaptability is the same thing as resolution.

01:12:16 SPEAKER_010: So you know... in the same way that COVID is still with us in many ways—even though we don't want to admit it—or the great financial crisis is still with us in many ways—this I think

01:12:30 SPEAKER_010: is bigger than either of those personally.

01:12:32 SPEAKER_010: But that's an opinion.

01:12:38 SPEAKER_010: I can't pound the table about it, and so my sense is: you know, I don't think the world is coming to an end, but I think the world is fundamentally changing.

01:12:49 SPEAKER_010: One way it's changing is that the way the world partitions and allocates energy resources is fundamentally different than it was a couple of years ago; we're increasingly into geopolitical camps.

01:13:07 SPEAKER_010: What's happening in the Persian Gulf right now is quite significant beyond just the details of how many tankers you're getting through, et cetera.

01:13:20 SPEAKER_010: You know,

01:13:22 SPEAKER_010: the entire post-World War II global order was based upon several things including the Bretton Woods Agreement and the U.S.

01:13:35 SPEAKER_010: being the policeman of maritime free trade in exchange for the privilege of having the U.S.

01:13:45 SPEAKER_010: dollar be the world reserve currency.

01:13:48 SPEAKER_010: What this Iran war is showing is that the United States can no longer uphold that part of the grand bargain.

01:13:58 SPEAKER_010: And again, I'm not saying at all that I think the U.S.

01:14:05 SPEAKER_010: dollar will no longer be the world reserve currency—but you know, this is a blow to U.S.

01:14:14 SPEAKER_010: geopolitical power globally in the Persian Gulf.

01:14:18 SPEAKER_010: You know, it was Henry Kissinger many years ago who said, "Control oil; if you control oil, you control nations."

01:14:28 SPEAKER_010: Well, the United States no longer controls the main source—the single largest source of oil in the world—and guess who does?

01:14:42 SPEAKER_010: Iran.

01:14:43 SPEAKER_010: So again...

01:14:44 SPEAKER_010: I don't want to be taken the wrong way.

01:14:48 SPEAKER_010: I don't think Iran has suddenly catapulted to superpower status, but it clearly has a lot more leverage than it did six months ago.

01:15:01 SPEAKER_010: Yeah.

01:15:02 SPEAKER_005: Thank you, Dan.

01:15:04 SPEAKER_005: Yeah, I just wanted to add on to what Art was talking about mainly regarding Dusty's question here.

01:15:12 SPEAKER_005: And I think Art kind of alluded to when he was talking about the Petrodollar—that is what's going on there in Asia.

01:15:18 SPEAKER_005: If you look at Kazakhstan: Kazakhstan was using a Russian pipeline to deliver oil to ports in the Black Sea, but they shut that down on May 1st.

01:15:28 SPEAKER_005: Well, if you look at satellite surveys built by China between Kazakhstan and China, the capacity there has to be close to three million barrels a day.

01:15:36 SPEAKER_005: So there's another source of oil we don't know about—just looking at satellite pictures of pipelines these people physically built between those two countries.

01:15:45 SPEAKER_005: And then the other thing you have to remember is that Russians and Chinese built the Trans-Siberia oil pipeline system, and they're still talking about parts of it too.

01:15:56 SPEAKER_005: There's all this significant infrastructure: pipelines for oil and gas, railroad systems—there's a major railroad system between Tehran, Beijing, and Moscow that we don't talk about.

01:16:09 SPEAKER_005: So there's all this major infrastructure; now we're basically starting to see what the effects are.

01:16:14 SPEAKER_005: So as far as China's reserves—or truly even Russia's reserves—you're really going to have a hard time determining them because of all this infrastructure these guys have been preparing for the last twenty years.

01:16:31 SPEAKER_005: For the last twenty years, we're seeing results from military preparation by Iranians; that's causing this kerfuffle we're dealing with.

01:16:38 SPEAKER_005: We're finding out it's not an easy nut to crack—that's what we're learning now.

01:16:44 SPEAKER_010: Those are good points, and certainly Putin discovered this while we didn't learn the lesson:

01:16:56 SPEAKER_010: it appears that "shock and awe" conventional military just isn't working very well—not necessarily because it hasn't worked since World War II if you look at the record—but geez...

01:17:11 SPEAKER_010: Russia should have conquered Ukraine years ago but has not principally because Ukraine found ways of using a different kind of warfare.

01:17:24 SPEAKER_010: And the United States should have crushed Iran except for the fact that Iran's unconventional or asymmetric warfare was able to keep the U.S. from defeating them,

01:17:40 SPEAKER_005: even though they couldn't defeat us outright—that's a perfect point there, Art.

01:17:45 SPEAKER_005: Warfare has changed and the United States didn't learn its lesson.

01:17:49 SPEAKER_005: I know... in defence groups I work with we've been talking about drone warfare for years.

01:17:55 SPEAKER_005: For whatever reason—and I was part of the Letter programme for air defence systems—but the government never adopted it, and now we're paying the price.

01:18:04 SPEAKER_005: Warfare changed; the U.S. government didn't learn the lesson.

01:18:08 SPEAKER_005: That's the truth—that's the important truth.

01:18:11 SPEAKER_001: Excellent point, sir.

01:18:13 SPEAKER_001: So I think I saw Gail—did you put your hand up?

01:18:17 SPEAKER_007: Was that... yeah, I was going to say: what Art is saying and Gene are saying too is that we're going through an energy phase shift,

01:18:27 SPEAKER_007: and what markets are pricing in is current inventories—which doesn't have anything to do with the phase shift.

01:18:36 SPEAKER_007: When we look at phase shifts, strange things happen.

01:18:43 SPEAKER_007: My study shows you get collapses of central governments.

01:18:48 SPEAKER_007: Let's suppose the central government of Japan collapses or some other country running into difficulty collapses—I have one slide showing how demand for Soviet Union countries collapsed over years after their central government fell;

01:19:14 SPEAKER_007: consumption went down even in nuclear and hydroelectric as the economy collapsed.

01:19:21 SPEAKER_007: So while we think it will affect prices, what happens is that demand goes down in strange ways very quickly—that's the way the system can most easily clear itself isn't it?

01:19:43 SPEAKER_010: But I guess my comment would be: supply and demand are perhaps the two most important factors but they're not the only ones.

01:20:01 SPEAKER_010: You know... to change subject just for clarity: I deal with this all the time regarding climate change.

01:20:17 SPEAKER_010: Ninety percent of people—even climate scientists—are pounding the table about carbon dioxide, and don't get me wrong; I don't think there's any question that CO2 is the primary forcing factor in today's climate.

01:20:32 SPEAKER_010: But saying it's the only factor or necessarily the most important all the time is incorrect.

01:20:45 SPEAKER_010: You have to look at feedbacks: methane, water vapor, planetary motions of liquidity... these kinds of things.

01:20:58 SPEAKER_010: And I'm not saying CO2 isn't important or even primary here—but by itself it doesn't explain the whole story.

01:21:08 SPEAKER_010: Supply and demand are primary but they're not the whole story; you won't get a satisfactory answer if that's all you look at.

01:21:20 SPEAKER_001: Okay, I just wanted to quickly share because I actually validated Art's... what was it called?

01:21:31 SPEAKER_001: Comparative inventory—and tracking it using some graphs over here—so what I found is that it tracks USO 28%, Brent 13% and 14%.

01:21:48 SPEAKER_001: So I just wanted to show this: here is the inventory tightness.

01:21:59 SPEAKER_001: It can be a bit confusing because when inventory tightness is low, prices go high; so I got an inverted version to make it easier to see.

01:22:10 SPEAKER_001: You see it tracks USO pretty well.

01:22:13 SPEAKER_001: In terms of explaining price, what actually seems to work very well is global M2 money supply—it has fifty-three percent correlation—and with the z-score you can see here: if you do it at the same time,

01:22:33 SPEAKER_001: it basically leads by four or five months anyway so then you can see that relationship there.

01:22:43 SPEAKER_001: Okay... yeah, I just wanted to quickly share that and I don't know if anyone had any comments on it.

01:22:51 SPEAKER_010: Yeah—the only comment I would have there, Andre—is to be careful about circular causality because money is a claim on energy; so if you want to think about it

01:23:09 SPEAKER_010: Money is a derivative of energy, so the fact that money correlates with energy means it has to be true.

01:23:22 SPEAKER_010: Yeah, but then to leap from that to saying M2 is causing oil prices: I would say that's a correlation that has no causality.

01:23:34 SPEAKER_010: So, let me show this again to explain more.

01:23:45 SPEAKER_001: There is about a five-month bleed; if the money supply goes up, four to five months later the price of oil goes up, and it explains what was called 53 percent of the price change.

01:24:06 SPEAKER_001: That leaves forty-seven percent due to other factors.

01:24:11 SPEAKER_001: Okay?

01:24:11 SPEAKER_001: I hope that makes sense regarding why there is causality—it has to do with what you're saying: if there's more money supply, people use more money to buy oil or produce more; whatever it may be,

01:24:28 SPEAKER_001: the relationship is very clear over the entire time we have these indicators.

01:24:35 SPEAKER_001: The correlation is strong because you are measuring it.

01:24:40 SPEAKER_010: As I said, money is a second- or third-order derivative of energy.

01:24:46 SPEAKER_010: Energy drives the economy, and money is a variable in that economy.

01:24:52 SPEAKER_010: So the correlation should be strong, but causality?

01:24:57 SPEAKER_001: Maybe not necessarily; maybe it's just about price.

01:25:04 SPEAKER_001: Okay, so let's go to Dusty.

01:25:06 SPEAKER_001: I think Dusty was next.

01:25:13 SPEAKER_001: Dusty, you're muted—you have to unmute.

01:25:23 SPEAKER_001: Okay...

01:25:24 SPEAKER_001: Nope, still muted.

01:25:25 SPEAKER_001: Alright, I'm going over to Ivor now.

01:25:30 SPEAKER_013: Just wanted to mention something very interesting from the last couple of months:

01:25:38 SPEAKER_013: apparently someone heard there was a shortage of diesel and decided that refineries should pump up production not of diesel but of jet fuel instead.

01:25:52 SPEAKER_013: So jet fuel went way up; we produced a lot of it.

01:26:01 SPEAKER_013: Then, just recently—like a week ago or so—that became the biggest day for commercial aviation ever.

01:26:08 SPEAKER_013: I thought: this is how things work.

01:26:12 SPEAKER_013: It's almost like a buffet line where everyone hears the steak is going to run out and piles on five steaks each when they get there.

01:26:28 SPEAKER_013: So our whole culture seems focused on flying around rather than producing diesel that could be used elsewhere anyway.

01:26:35 SPEAKER_013: That was just an interesting observation.

01:26:41 SPEAKER_010: Go ahead, Art.

01:26:44 SPEAKER_010: Yeah, I'd be very careful with that kind of argument.

01:26:48 SPEAKER_010: Diesel is expensive because of logistics.

01:26:54 SPEAKER_010: For example, in places like Singapore or Manila, the cash price of diesel is $150 per barrel—not because there's a global shortage,

01:27:13 SPEAKER_010: but because supply lines to regions without indigenous oil supplies have been broken by tremendous prices.

01:27:23 SPEAKER_010: The refinery issue operates on an entirely different level of complexity.

01:27:32 SPEAKER_010: Basically, since probably 2014 (following the collapse in oil prices), and certainly since COVID, many global refineries have gone offline because they were old, inefficient, or unprofitable.

01:27:52 SPEAKER_010: We're limping along at a reduced level of global refining capacity.

01:28:01 SPEAKER_010: There's understandable hesitation to make multi-billion-dollar investments with thirty- to forty-year paybacks due to concerns about peak oil demand and the energy transition, among other things.

01:28:20 SPEAKER_010: Then you add Ukrainian oil issues—drone attacks on Russian refineries.

01:28:25 SPEAKER_010: Russia is actually the second-largest oil producer in the world yet imports gasoline from India because its own refineries aren't working.

01:28:35 SPEAKER_010: So yes, the problem you point out is real; I'm not diminishing it at all.

01:28:43 SPEAKER_010: But please be careful interpreting any kind of price gouging or attributing jet fuel issues to simple shortages.

01:28:50 SPEAKER_010: Jet fuel and diesel are geochemically very similar—there's significant overlap.

01:29:02 SPEAKER_010: A refinery can shift its slate: increase jet fuel output by 10–15 percent at the expense of diesel, or vice versa toward gasoline production, simply by adjusting flows through catalytic crackers and other processes.

01:29:21 SPEAKER_010: The bottom line on jet fuel is that demand hasn't been affected much because people value travel experiences highly.

01:29:34 SPEAKER_010: I would have thought—and many others did—that jet fuel consumption would have cratered since it's largely discretionary spending.

01:29:41 SPEAKER_010: But apparently, people are willing to pay a premium to continue travelling and having those experiences.

01:29:46 SPEAKER_010: So, you know, we don't really understand how all of that works.

01:29:56 SPEAKER_010: I guess that's what I'm trying to say.

01:30:00 SPEAKER_010: Roger.

01:30:04 SPEAKER_010: Yeah.

01:30:04 SPEAKER_010: Thank you.

01:30:05 SPEAKER_002: Thank you, Andrew.

01:30:06 SPEAKER_002: Just just to say, excellent talk.

01:30:08 SPEAKER_002: Some very good points.

01:30:10 SPEAKER_002: I'm very pleased.

01:30:11 SPEAKER_002: I've got to leave unfortunately, but I'm very pleased to have stood in for Jean and to have had this opportunity to give our slides and this talk; it was much appreciated.

01:30:23 SPEAKER_002: Really good conversations and good information.

01:30:25 SPEAKER_002: So, unfortunately, I must pull out now.

01:30:27 SPEAKER_002: But thank you very much indeed.

01:30:29 SPEAKER_001: Okay, thank you, Roger.

01:30:30 SPEAKER_001: Okay, Dan.

01:30:34 SPEAKER_005: Yeah, just—you know—everybody seems to praise the fact that China isn't importing four or five million barrels a day, but they also seem to forget well how they did it: is they stopped exporting diesel, gasoline,

01:30:47 SPEAKER_005: and jet fuel, right?

01:30:49 SPEAKER_005: And so there's a huge producer/exporter of gasoline, diesel, and jet fuel that's not in the market.

01:30:56 SPEAKER_005: They're not importing it; therefore, they're not exporting it.

01:30:59 SPEAKER_005: And the other thing going on over there in Russia with the refinery outage—between 30 and 40 percent of refineries being out right now—the Russians are buying jet fuel from Japan,

01:31:10 SPEAKER_005: which is a heck of a place considering the Japanese are paying some pretty healthy prices for crude oil in that part of the world.

01:31:16 SPEAKER_005: So even though we're not seeing high prices here in Asia, when I talk to people in Japan and Korea,

01:31:25 SPEAKER_005: they're paying $110–$120 per barrel for crude that they turn into jet fuel and sell it to the Russians for close to $200 a barrel.

01:31:32 SPEAKER_005: Right?

01:31:32 SPEAKER_005: We just aren't seeing it in our part of the world.

01:31:40 SPEAKER_005: Okay, Dusty, and then I have some YouTube questions.

01:31:47 SPEAKER_009: It seems like the United States has been very good at hiding reality and kind of insulating us from it.

01:31:55 SPEAKER_009: Like you mentioned there, Dan—like different parts of the world really dealing with reality kind of brutally.

01:32:01 SPEAKER_009: My question is maybe to Art or Dan or anybody: Is this stuff too big to fail?

01:32:09 SPEAKER_009: Right?

01:32:09 SPEAKER_009: But it seems like governments have a certain limited ability to cover that.

01:32:14 SPEAKER_009: So if demand is lower, prices are lower, and supply is all low at the same time—can they?

01:32:24 SPEAKER_009: Can governments step in and keep refineries from going bankrupt or closing down?

01:32:30 SPEAKER_009: Like, what's the process there?

01:32:38 SPEAKER_010: All right, go ahead.

01:32:41 SPEAKER_010: Well, refineries aren't going bankrupt; refineries are making money hand over fist.

01:32:49 SPEAKER_010: The so-called crack spread—which is the margin a refinery makes compared to what it pays for crude oil—is essentially equal to the price of crude oil.

01:33:00 SPEAKER_010: The three-two-one crack spreads are running $60–$70 per barrel at most.

01:33:06 SPEAKER_010: So the problem I tried to explain: Aren't you need to explain that "three, two, one" to them because they don't understand it?

01:33:11 SPEAKER_010: Okay, so if you take the three major components of a refinery—crude oil, gasoline, and diesel—and do a ratio weighting them accordingly (I won't get into details), looking at relative pricing:

01:33:36 SPEAKER_010: what it costs for crude versus what you're paid for refined products—you come up with this thing called the crack spread.

01:33:44 SPEAKER_010: For example, if I pay $50 per barrel for crude and make $100 on gasoline and diesel, my spread is $50.

01:33:59 SPEAKER_010: Okay?

01:34:01 SPEAKER_010: That's essentially what that is.

01:34:02 SPEAKER_010: So but the point: refinery refining is a hugely profitable business at the moment.

01:34:10 SPEAKER_010: The problem I was describing—and part of why it's so profitable—is because there aren't enough refineries.

01:34:19 SPEAKER_010: Right?

01:34:20 SPEAKER_010: So you know—I just want to keep going.

01:34:23 SPEAKER_010: And to your other point, Justin, about the United States hiding information from people: I mean, I think the business of all governments is to hide information from people because the truth doesn't get you reelected.

01:34:41 SPEAKER_010: And there's—uh—I mean Jimmy Carter was—you know—the perfect example of a guy who was too honest.

01:34:50 SPEAKER_010: Many people here are as old or almost as old as I am can remember when Jimmy Carter got on television in late 1979, or maybe early 1980;

01:35:04 SPEAKER_010: he was wearing a cardigan sweater and sitting in the White House saying, "Ah, you know—we've got to conserve energy.

01:35:10 SPEAKER_010: We're kind of running out of it.

01:35:11 SPEAKER_010: We're going to have to start looking at renewables and nuclear."

01:35:16 SPEAKER_010: And that was the end of Jimmy Carter's presidency.

01:35:20 SPEAKER_010: They don't want to hear that abundance isn't the story.

01:35:25 SPEAKER_010: And every U.S. president since then learned from Jimmy Carter less than they should; he taught them a lesson, but instead of learning it,

01:35:33 SPEAKER_010: they tell you every time—despite reality—that there's no problem because that gets them elected.

01:35:42 SPEAKER_010: But that's not unique to the United States.

01:35:47 SPEAKER_010: That's how governments always have been.

01:35:50 SPEAKER_010: And I will give China credit for having done better planning in many cases than the United States; but also: if you don't have a Congress or an electorate to disagree with you,

01:36:06 SPEAKER_010: there are things you can get done.

01:36:20 SPEAKER_010: For example, electric cars—they're not profitable—but China said, "Hey, we don't care.

01:36:24 SPEAKER_010: We're going to be number one producer of not only electric cars but all the components for strategic reasons."

01:36:34 SPEAKER_010: And they'll fund this whole thing from now until kingdom comes.

01:36:38 SPEAKER_010: Okay—you can't do that in the United States because you get voted out of office; but you can't get voted out of office in China because it's an autocracy.

01:36:49 SPEAKER_010: So true and fair enough: China has done a better job, or Iran with their drones—but again, you don't have to get parliament approval for billions of dollars worth of drones and ballistic missiles.

01:37:07 SPEAKER_010: You just build them, right?

01:37:11 SPEAKER_001: So I've got several YouTube questions.

01:37:14 SPEAKER_001: One from Robin Schaffler: "U.S. middle distillates rely on Canadian—and to a lesser extent Venezuelan—crude; with infrastructure destruction in the Middle East and Russia, could CI for the rest of the world diverge?"

01:37:31 SPEAKER_001: Well again—I'll take the question without putting my hand up.

01:37:36 SPEAKER_010: I've already explained that CI (Comparative Inventory) as I calculate it is based on U.S. data and calibrated to OECD.

01:37:48 SPEAKER_010: Nobody knows what global CI really is; but the simple answer: first,

01:37:57 SPEAKER_010: Canada is the leading exporter of crude oil to the United States—four million barrels a day—that's two-thirds of what the U.S. imports comes from Canada.

01:38:10 SPEAKER_010: So Canadian crude being crucial to U.S. refineries is very well known and unavoidable.

01:38:18 SPEAKER_010: Venezuela?

01:38:19 SPEAKER_010: It's coming back from a big deficit after years run by a government the United States didn't like—but no, this doesn't affect global comparative inventory because CI isn't based on that alone.

01:38:41 SPEAKER_010: Okay—thank you, thank you Dan.

01:38:44 SPEAKER_010: Did you want to talk about what we get out of Canada?

01:38:48 SPEAKER_005: If you look at the United States and draw a line from Indiana all the way down to Texas—all states in between—you'll find some of the lowest gasoline prices in the U.S.:

01:39:00 SPEAKER_005: average over $4 per gallon here nationally; but where I'm at, it's only about $3.36.

01:39:04 SPEAKER_005: That's because we're getting those four million barrels a day via pipelines hitting refineries like White Refinery in Indiana—that's why fuel is so cheap there.

01:39:13 SPEAKER_005: As far as Venezuela: that really heavy crude—we only have three U.S. refineries with coker units capable of processing it.

01:39:21 SPEAKER_005: So even if we ramp up Venezuelan production, it'll take time and lots of investment to reinvest in U.S. refineries able to process that crude—not a simple thing.

01:39:39 SPEAKER_005: Right now they're producing about 1.1 million barrels a day from Venezuela to the United States—but like I said: Chevron already has contracts with those three coker-equipped refineries.

01:39:51 SPEAKER_005: Maybe in 15 years we can get three or four million barrels out of Venezuela, but it'll take time—not simple.

01:40:02 SPEAKER_005: Canada's crude is awesome by the way—you got awesome crude—thank you!

01:40:07 SPEAKER_001: So there's another YouTube question wondering if panelists are familiar with Norwegian Lars Larsen and his "end of global net oil exports" theory—or that might be a Simon question?

01:40:26 SPEAKER_001: Okay—all right—I'll hopefully have him on next time.

01:40:31 SPEAKER_001: And then someone remarked Art had earlier said peak oil was a failed paradigm; they wondered what he thinks now.

01:40:47 SPEAKER_010: Well, I still think it is—and I haven't changed my opinion at all.

01:40:55 SPEAKER_010: I'm here because I think it's worth studying: I was even on the board of directors of the Society for Studying T40 (Transition) because I think it's worth studying.

01:41:27 SPEAKER_010: But yeah—I don't think peak oil blew its wad in terms of making noise about running out by 2006–2008;

01:41:40 SPEAKER_010: people got tired hearing that—like President Trump was always on verge of a peace deal or blowing Iran into existence—you say it enough and nobody believes it anymore.

01:41:53 SPEAKER_010: So my issue with peak oil isn't that the world doesn't eventually run out of affordable oil—I mean, Rogers is gone but his point stands:

01:42:07 SPEAKER_010: if peak oil had stuck to what Colin Campbell and John Kucera wrote in 1998—we'd have been fine because we're already out of cheap oil.

01:42:23 SPEAKER_010: Instead we got spun off trying to predict when the peak was and lost credibility.

01:42:29 SPEAKER_010: That's my answer—thank you Dusty—you've got a question?

01:42:34 SPEAKER_010: Yep—and I forgot!

01:42:44 SPEAKER_005: Okay—all right—I'll throw it on that, Andrew: What Art said goes back to what we've been talking about—the cheap stuff is gone;

01:42:58 SPEAKER_005: as long as two-thirds of higher-carbon reserves remain underground there's always going to be a quest to bring them online.

01:43:08 SPEAKER_005: Maybe technology improves—but it's more a question of cost: how much will it take?

01:43:14 SPEAKER_005: When does it become impractical to drive your car?

01:43:19 SPEAKER_005: That really is the question—what does affordability look like?

01:43:31 SPEAKER_001: That reminds me what Gail was talking about—but here Dusty, did you remember your question?

01:43:36 SPEAKER_001: Yes I did.

01:43:38 SPEAKER_009: So I was curious if anyone had seen Sabine Hossenfelder's recent video on a new Russian drill site trying to prove abiogenic oil theory—and whether anybody has thoughts on that?

01:44:02 SPEAKER_005: I have some thoughts—I've answered before: last year we talked about geothermal and showed what's inside the planet—molten rock shooting up in various places.

01:44:12 SPEAKER_005: But I'm sitting on depleted fields too: Shelbyville, Indiana—we had gas wells drilled back in 1890s still producing until they stopped them; probably plugging those by next three years (Shelbyville).

01:44:33 SPEAKER_005: The other is Evansville—basically just natural gas left from Standard Oil's early drilling.

01:44:40 SPEAKER_005: Whenever we run out of oil the last thing coming out is natural gas—and eventually that runs out too.

01:44:49 SPEAKER_005: Maybe oil regenerates—but not at measurable scale; none of these fields regenerate within human-measurable timeframes.

01:44:59 SPEAKER_005: Maybe over longer periods but no—not relevant here.

01:45:10 SPEAKER_005: And Art—you're a better expert on this area—go ahead?

01:45:13 SPEAKER_005: Yeah, abiogenic oil is nonsense.

01:45:24 SPEAKER_010: When I was grad student riding dinosaurs to school we used to have seminars debating it:

01:45:38 SPEAKER_010: yes there's some hydrocarbons generated in Earth's mantle—but by virtue of temperature only very stable methane forms survive even upper mantle/lower crust temperatures.

01:46:05 SPEAKER_010: We've drilled Zilijian Ring in Sweden—we did this—and whole abiogenic theory is based on a mass-balance problem where someone calculated we can't account for discovered oil vs shale-generated amounts—so argument rests on data problems, not facts.

01:46:42 SPEAKER_010: I'd place very low probability of success: if it works maybe—but commercial volumes?

01:46:58 SPEAKER_010: Close to zero.

01:46:59 SPEAKER_010: And I'm with Dan: anything that exists will be very dry gas/methane.

01:47:09 SPEAKER_010: A lot these technological "Deus ex machina" ideas are just bedtime stories we tell ourselves—it doesn't matter oil or renewables;

01:47:29 SPEAKER_010: pick up any newspaper and find harebrained schemes like screwing light bulbs into dirt to generate current—"good for you buddy!"

01:47:48 SPEAKER_010: But question isn't whether you can do it: first what does it cost?

01:47:55 SPEAKER_010: Second, can you scale it enough to affect energy needs of 8.2 billion people?

01:50:16 SPEAKER_010: Maybe marginally—but economics don't work yet on enhanced geothermal as I've studied them today—not just drilling but fracking—you fracture wells at 15,000 feet pump volumes down heat up bring surface turn turbines onsite because you can't

01:50:49 SPEAKER_010: transport steam economically—it's not even about geothermal vs nuclear;

01:50:56 SPEAKER_010: both are profoundly non-commercial.

01:51:01 SPEAKER_010: If money weren't issue and U.S.

01:51:07 SPEAKER_010: government underwrote every cockamamie idea—including screwing light bulbs into dirt—you could theoretically get 100% electricity covered—but then still have 80% of remaining energy needs unsolved!

01:51:36 SPEAKER_010: My point: all these pie-in-the-sky ideas about nuclear,

01:51:40 SPEAKER_010: geothermal renewables only account for 20% of total energy use—that's why transition is a big bomb because we're not decreasing fossil fuel usage—which whole reason using renewables theoretically—to reduce carbon emissions.

01:52:03 SPEAKER_010: We've had spectacular success increasing EVs solar wind—but guess what?

01:52:12 SPEAKER_010: Haven't made difference in emissions or temperature because still burning more oil gas coal etc!

01:52:22 SPEAKER_010: Eventually you have to say wait minute guys—why keep trying make party go when right answer maybe time we all go home get sleep?

01:52:45 SPEAKER_005: I agree—we need rethink mix volume usage relationship energy—and thing happening Iran going force it on us soon.

01:53:13 SPEAKER_010: Flows are down—I'd be bewildered startled pleasantly surprised if Hormuz ever gets back 50% pre-war flows;

01:53:25 SPEAKER_010: Red Sea never has—not because can't move oil but shippers unwilling take risk insurance companies won't sell policies tanker operators refuse work: wouldn't sign up again after Persian Gulf incident—these real-world questions you must ask yourself.

01:53:55 SPEAKER_001: Gail—I've seen lots comments on transition wondering if you have something?

01:54:10 SPEAKER_007: On transition I'm not sure what to comment; think headed into major recession/depression financial crashes worse than 2008 based prior observations—but can talk more next time thanks!

01:55:09 SPEAKER_009: Okay Dusty—you had question: following might not be much hope but maybe...

01:55:20 SPEAKER_009: We talk about different things my big concern getting younger people under forty talking like we do here podcast recently Art got shoutout on pretty big young-audience podcast different genre Tucker Carlson's so didn't know if

01:55:43 SPEAKER_009: you heard yet—but did.

01:55:45 SPEAKER_009: Little glimmer of hope maybe as crisis approaches younger folks affected will start talking more topic?

01:55:58 SPEAKER_009: Could clarify who called out?

01:56:02 SPEAKER_009: Art was!

01:56:03 SPEAKER_009: Did comment?

01:56:06 SPEAKER_010: Yeah never been on Tucker Carlson show not sure want same room him—personal integrity issue don't think much guy's integrity but apparently one guest friend colleague former Royal Navy commodore got asked question turned back said

01:56:51 SPEAKER_010: ought answer Art Berman—that origin yes very good episode recommend excellent up alley conversations stuff talk here wouldn't call controversial even if dislike Tucker smart instincts chasing things admit right track my issue more integrity than

01:57:35 SPEAKER_010: intelligence fair!

01:57:38 SPEAKER_010: Another YouTube: Art says not choice but lower energy use true U.S.

01:58:22 SPEAKER_010: less dependent Middle East?

01:58:36 SPEAKER_010: Yes idea U.S. only 10% dependent Middle East fair say—but deprived 10% oxygen probably feeling poorly keep context perspective government tells us grain truth aren't fully true United States never been will be energy independent half

01:58:53 SPEAKER_010: import six million barrels crude daily four from Canada how country importing that can claim independence fraud completely untrue six million exceeds Europe consumption bean counter adding net imports exports coal LNG electricity biomass accountant says

01:59:43 SPEAKER_010: U.S. slightly net exporter sometimes even net exporter fifty-nine cents worth stupid!

01:59:58 SPEAKER_010: But question fair: if talking bad off I'd rather suffer Iran war in United States than Japan no natural resources—but argument things fine U.S.?

02:00:33 SPEAKER_010: Less bad but flip side Gail speak trade world most indebted us rest worse can't buy products pay debt now tell again better off?

02:01:03 SPEAKER_010: Could argue due trade finance relationships U.S.

02:01:13 SPEAKER_010: end up worse countries little oil knock-on effects thanks Art!

02:01:28 SPEAKER_010: Ivor next question:

02:02:05 SPEAKER_010: recently said bailing Japan buying yen euros keep selling T-bills wondering if relates paying more oil yes don't have any answer yes go ahead Den currencies beating dead horse problem United States government thinks control dollar

02:02:35 SPEAKER_005: banks actually control internationally fight impression Americans think infinite energy leads bad behaviours report North American Energy Reliability Council says summer 2028 AI data centres LNG export terminals power grids collide rolling blackouts cancel contracts likely

02:02:48 SPEAKER_005: already signed building AI centres New York moratorium Texas governor also moratorium enough requests build four hundred gigawatts demand state only ninety-six generating capacity what happens between now twenty-twenty-eight Americans wake shocker not infinite energy finite

02:02:58 SPEAKER_005: becoming more difficult change perception hard must do by shock unfortunately!

02:03:03 SPEAKER_005: Round up people happy see us closing remarks?

02:03:05 SPEAKER_005: Thank you Art coming show thank having me thanks coming appreciate Gail showing legend work lot looking forward September third first Thursday same time everyone welcome open meeting if can make it leave infinite love peace

02:03:15 SPEAKER_005: infinite creator rejoicing infinite power friends later everybody ended live stream okay that was