se五月天There was an interesting article this week in the New York Times about overcrowding at National Parks. Our family visited Zion National Park this summer (where almost all of the photos are from in this article) and I can certainly agree that parks like Zion are experiencing crushing numbers of visitors. Hiking Angel’s Landing was like being stuck in bumper-to-bumper freeway traffic.
se五月天I pulled the data from the National Park Service and was surprised to see that park visits per capita actually peaked in 1986. Also very interestingly (since we hiked the Narrows with a permit) was that backcountry hiking on a per-capita basis continues to fall. The massive increase in park visits between the end of World War II and the 1970’s oil crisis was driven by an equally massive increase in global per-capita oil production. As driving became cheaper, more people drove to national parks.
Visits Per Capita Peaked in 1986. Backcountry hiking per capita continues to fall.
When you look at the year-over-year change in national park visits per capita and compare it against the year-over-year change in real oil prices, you see that in years when the oil price falls, more people visits parks and vice versa. Cheap oil = cheap vacations. Peak oil = peak vacations?
National Park visits are correlated to changes in the real oil price. Data 1980-2016.
Stuart McMillen, an Australian comic artist, recently released a new comic about Buckminster Fuller’s idea that we all have thousands of “energy slaves” working for? us in the form of finite fossil fuels. I particularly enjoyed these two slides which show how we are deluding ourselves into thinking that our unsustainable lifestyle, fueled by a one-shot expenditure of millions of years of stored sunlight is somehow “normal”:
It’s interesting that?Buckminster Fuller calculated that the average person working full time could generate the equivalent of 14 liters (3.7 gallons) of gasoline per year. As I showed in my post last week, global oil production is about 4.5 barrels per capita per year (715 liters). It’s like there are 50 energy slave for every person on earth (and that’s just oil and doesn’t include gas and coal). But then of course a small fraction of the people in the world have thousands of energy slaves while the vast number of people have far less than 1 energy slave. When you consider that we have probably reached peak net oil per capital (after accounting for declining EROEI), we’ll all have fewer energy slaves going forward, forcing us into a more sustainable lifestyle.
Check out the comic here:
Also, prior to this comic, Stuart McMillen also drew a fantastic comic on peak oil, which you should check out here:
The supermajor oil and gas companies reached peak oil in 1973. This was a “political peak” caused by oil reserve nationalizations.
They reached a second peak in 1998 and oil production has declined by about 2 million barrels per day between the companies.
The companies reached peak gas in 2010.
After reaching peak oil and peak gas the companies ramped up capital spending, ultimately hitting a peak of capital spending of over $60 billion per quarter in 2013. Capital spending has crashed since 2013, reaching levels not seen for over two decades.
Meanwhile global oil production continues to grow, approaching the psychologically significant value of 100 million barrels of oil per day.
However on a per-capita basis global oil production peaked in 1979 and has been on a plateau since the 1980’s. If you adjusted peak oil per capita for the declining net energy returned on energy invested (EROEI) we would have reached a permanent peak of per capita oil production in the 1970s.
I’ve written before about demand destruction, but with gasoline prices at historic lows right now we are seeing the?opposite: demand rebound.?Gasoline sales in the United States are approaching all-time highs last seen right before the “great recession.” People are taking advantage of “cheap” gasoline and driving more. As we slowly recover from the recession (economists tell us the recession ended 5 years ago, but it seems like many areas still are recovering) more people are working and commuting more miles.
US Gasoline Consumption
Car sales are reaching record highs.?Americans?seem to have completely forgotten $5 gasoline are are buying more gas guzzlers than ever before. Below I charted out the sales of 21 models of muscle cars, full-sized pickup trucks and large SUVs with an average fuel economy amongst them of just 17 MPG.?Since 2010, sales of these 21 models have put nearly 18 million new fuel-hungry vehicles on America’s roads. With an average fleet turnover time of 23 years (from a 4% scrappage rate), these cars will be on the road for many years to come.
Sales of Muscle Cars, SUVs and Pickup Trucks
Part of the reason for this increase in fuel-hungry vehicle sales is sub-prime lending, which John Oliver does a great job of explaining:
With global oil investment budgets being slashed by over $1 trillion dollars, it seems likely that the market will re-balance itself of the next few years and millions of Americans will be stuck with fuel-hungry vehicles as gasoline prices rise again.
As part of my “peak supermajor” project, I discuss the oil and gas production and capital expenditure of the supermajor oil and gas companies from 1900 through the 2nd quarter of 2016.
Please leave me comments below.
Between?1999 and 2014 the liquid oil production rate for the supermajor oil and gas companies?was on a?steady decline. Between?Q2-2014 to Q1-2016 this trend reversed, with liquids production increasing by over a million barrels per day. This increase in production has came on the heels of ever-increasing capital investment, which peaked out in Q4-2013. Since this peak, quarterly supermajor capital investment has dropped by nearly 60%.?With less capital invested each quarter it is likely that the total supermajor oil production will return to its long-term downward trend.
Indeed this past quarter may have shown the beginning of the reversal.?Supermajor liquids production declined by 7% quarter-over-quarter and?increased by less than 1% year-over-year from Q2-2015 to Q2-2016.
Recent Supermajor Liquids Production
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Supermajor liquids production increased significantly year-over-year and quarter-over-quarter. This is partly due to a large increase in?capital expenditures by the supermajors from 2006 to 2013.?Interestingly, this large increase in capital spending has not abated the drop in natural gas production. As supermajor CAPEX spending peaked in in the 4th?quarter of 2013 and has dropped by over 50% since, it seems likely that both liquids production and gas production will continue to decline from the historical peaks of 1973 and 2010, respectively.
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Today I would like to introduce my “Peak Supermajors” project. The goal of this project is to answer the question “when will we reach peak oil” by studying the production and financial health of the world’s largest oil companies. Because oil is a finite resource, its daily global production will eventually reach a peak. By measuring when individual oil companies reach peak oil, I hope to bring us closer to answering the question “when will we reach peak oil?”
I am beginning my project by analyzing the?largest?publicly-traded companies: the “supermajors“. These 5 companies – BP, Chevron, ExxonMobil, Royal Dutch Shell and Total – produce nearly 20% of the world’s oil and gas. They are mostly descendants?from the original “Seven Sisters,” which themselves were largely?descendants?of?John D. Rockefeller’s?Standard Oil Company. These companies are leaders in the industry, both financially and technologically. By understanding the history of these companies and their strategy for the future, we can better understand the historical arc of the broader oil industry. As I fill out the database I plan to expand it to include data from all of the largest global oil companies.
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