free html hit counter Peak Oil Debunked: 411. REALITY CHECK FOR "ACE"

Wednesday, July 15, 2009


Today's a good day to review one of the oil production forecasts made by the Oil Drum's primary forecaster, Tony Eriksen aka "ace". (Quick question: How narcissistic do you have to be to call yourself "ace"?)

On August 6, 2007, ace published the following prediction on the Oil Drum:
World C&C production continues to retain its May 2005 peak and is forecast to decline by 1%/yr until 2009. The decline rate steepens to 4%/yr until 2012. The main reason for the end of the total liquids plateau in 2009 (Fig 1) is that the C&C production decline rate changes from 1%/yr to 4%/yr in 2009.
The graph of this forecast is as follows. Notice in particular the steep increase in the decline rate to 4%/yr which ace forecasted to begin right now, in the Summer of 2009 (click the graph to enlarge):

Now, let's compare this forecast with the actual results to date (from the latest Oilwatch Monthly):

As you can see, the first part of the forecast was not very accurate. Ace stated that there would be no new peak after 2005, but in fact a new peak was set in July 2008. Furthermore, production did not decline by 1%/yr from May 2007. In fact, there was a sharp increase in production, until the steep drop due to the recession.

However, those points are all pretty minor. The funky part of ace's forecast starts about right now, in July 2009. As you can see in the graph, he is predicting that world C&C (conventional crude) production will now begin a shocking and unprecedented nosedive, and decline by 4%/yr until 2012. (Compare this with the 1.3% C&C decline forecast by Kjell Aleklett.)

Current C&C production is roughly 72 mbd (EIA, April 2009). So here's ace's forecast for the next few years:

Summer 2010: 69 mbd
Summer 2011: 66 mbd
Summer 2012: 64 mbd

Those are horrendous declines. The total crude production of Saudi Arabia gone, in just three years. So stay tuned folks. Either oil production, or ace's credibility, is going to swirl down the toilet in the next year or two. I'm betting on the latter.
by JD


At Wednesday, July 15, 2009 at 9:14:00 AM PDT, Blogger JCK said...

Haha. See Westexas's third comment on that oildrum thread from 2007:

"I think that it is important to get people to understand that oil exports are probably crashing..."

He was also predicting 10%/yr annual declines for Russia.

Oops. Make that a 0.8%/yr decline last year.


At Wednesday, July 15, 2009 at 10:21:00 AM PDT, Blogger Barba Rija said...

Oh come on JD!! When I saw the title, I said Allelluiah, JD's gonna beat the shit out of ace, but then I get disappointed like this.

JD, here's a tip. I know this is probably too much of an hard work, but probably it is worthy. All you need to do to laugh pretty hard at "Ace" is to combine all the nice pretty .gifs that he has been making for the past, I don't know, 4-5 years? in TOD, and make a nice .gif animation out of them. Or just post them on top of each other. Hilarity will ensue, believe me.

At Wednesday, July 15, 2009 at 10:41:00 AM PDT, Blogger Bloggin' Brewskie said...

Ace? An armchair oil analyst with an MBA (what's it made out of - recycled Zimbabwe trillion dollar bills?) who resorts to Wikipeida, as opposed to the EIA or IEA, for his fudged production statistics.

Here's some fine words from this Wikpedia-sourcing stooge (who, like his other peak cohorts, finally figured out months back that oil didn't peak in 2005):

"World oil production peaked in 2008 at 81.73 million barrels/day (mbd) shown in the chart below. This oil definition includes crude oil, lease condensate, oil sands and natural gas plant liquids."

The 81.73 mbpd production stat. he refers to, of course, is total liquids. This statistic is dead wrong: 2008 liquids production remained consistently above 84 mbpd last year (see page 2).

Also, here's how his past-production and forecast statistics for Saudi Arabia compares to the EIA, and IEA. Notice any bias?

Ace: 9.02 (2006), 8.73 (2007), 8.44 (2008), 8.16 (2009), 6.86 (2012), 5.96 (2015).

EIA: 9.15 (2006), 8.72 (2007), 9.33 (2008), NA for beyond.

IEA: 9.23 (2006), 9.34 (2007), 9.44 (2008), 9.55 (2009), 10.26 (2010), 11.30 (2012).

Thanks for your time, interest and your distracted attention, y'all.

At Wednesday, July 15, 2009 at 11:33:00 AM PDT, Anonymous Kevin L. said...

Hi PODers,

I've been reading a lot of the posts here over the last couple months. Originally, I just came to get the visceral satisfaction of seeing the big-name peakos (Kunstler, LATOC, etc.) thrashed, but I've since transitioned away from that and enjoy the technology articles and looking at solutions to peak oil.

That being said, I noticed JD that you hadn't done a post on Transition Towns yet. There are over 100 now throughout the world, mainly in the U.S. and England, and their goal is to increase community resilience and power while reducing their carbon footprints. I've been researching them, and they seem to be good partial solutions, even if peak oil and climate change aren't the emergencies the Transition Network (the charity spearheading the Transition Town movement) have made them out to be.

That being said, while I like the towns' emphasis on cutting out waste, growing your own food, and repairing things rather than throwing them away, they perpetuate a lot of bad myths, such as agriculture being hopelessly oil-dependent, debt-based money being bad, etc. Their educational material hearkens back to a lot of Heinberg (especially PowerDown). As a result, it's not surprising they don't give enough credence to technology or nuclear. My other concern with them, being a student of economics, is that they advocate almost Kunstler-like relocalization for food, energy, manufacturing, etc. Global markets allocate resources more efficiently than local ones, so paradoxically, the local markets of Transition Towns would waste the same resources they're designed not to.

For my two cents, I think the Transition Towns offer some constructive suggestions, but carry some serious baggage. I was wondering what your take on them is.


At Wednesday, July 15, 2009 at 2:59:00 PM PDT, Blogger Bloggin' Brewskie said...


Great quote! I'm posting that to your credit on the Peakers' Hall of Shame.

At Wednesday, July 15, 2009 at 5:35:00 PM PDT, Blogger JD said...

Allelluiah, JD's gonna beat the shit out of ace, but then I get disappointed like this.

Be patient BR. Dismantling ace's forecasts is a big job, and I'm going to take it one step at a time. Don't want to eat the whole bag of candy in one gulp. :-)

At Wednesday, July 15, 2009 at 6:03:00 PM PDT, Blogger JD said...

Welcome to POD. You've got a good grasp of the situation, and my take is basically the same as yours. Reducing oil dependence is definitely a good thing, but there's a lot of sloppy thinking and utopianism in the Transition Town movement.
I often think about your point that "paradoxically, the local markets of Transition Towns would waste the same resources they're designed not to."
There are lots of ways that can happen. For example, many people are moving to the country to reduce fuel consumption in transporting food. However, the most fuel-intensive part of the food/goods transport system is not trans-oceanic shipping; it's the drive from the supermarket/store to home, and moving to the country often means that you're going to be very distant from the stores you do shop at. Furthermore, truck transport over land is the most wasteful form of transport there is, consuming 10 times more fuel per ton mile than a large ship. So moving to the middle of, say, Saskatchewan may be very counterproductive.
Or imagine the tremendous waste if everyone made their own blue jeans, or ground their own grain with their own mills. I'm not an economist, but I'm sure there is a great post to be written about how Transition Towns and "lifeboats" can result in tremendous waste due to the diseconomies of lack of scale. If you ever feel like writing something along those lines, I'd love to post it. :-)

At Thursday, July 16, 2009 at 3:13:00 AM PDT, Anonymous JL said...

The main problem I see with "do everything yourself" attitudes like some Transition Town ideas is that they forego many, if not all, economic advantages of the division of labour.

Many of their ideas defend moving to a more "generalist" life to be able to better survive a possible catastrophe, but survival oriented economy has never produced much beyond basic dull survival and resource waste, and we have many examples today in impoverished countries where the division of labour is minimal.

At Thursday, July 16, 2009 at 3:32:00 AM PDT, Blogger Gavin said...

I've looked at transition towns, even thought I'd move to one.

But if peak oil doom happens, and they survive and thrive, then they'll need to learn warfare to protect their assets (localized food staples, etc) from all the starving PO survivors. Hardly utopia.

Which is why the best case for all of us is if our society, as a whole, adapts to peak oil by a combination of new technology and permanent behaviour change.

JD: how about a blog post about Sweden. They have a policy on oil usage reduction, aiming for 2020 consumption to be down 25-40% versus todays level. They are going after the low hanging fruit, e.g. heating of buildings with oil, but also have tougher targets such as the gradual phaseout of the ICE - I think the target is no new sales by 2025.

The point being that if they meet their minimum target of 25% by 2020, and lop off another 25% by 2030, then they beat PO hands down.

At Thursday, July 16, 2009 at 3:36:00 AM PDT, Anonymous JL said...

Another thing that I don't like of Transition movements is their focus on overpopulation and Malthus-style theories.

Recently, I read an interesting book called "The Logic of Life" by Tim Harford (I had previously read "The Undercover Economist" from him). I found both books very insightful and giving very clear explanations on how day to day life works.

To the point, in just 4 pages "The Logic of Life" explains why Malthus (an economist) was wrong: at his time (1798), population was relatively tiny and he concluded that technology would increase arithmetically while population would increase geometrically so that from time to time "die-offs" would inevitably occur, as had been the rule in the past.

Firstly, Malthus did not anticipate the pill and many other family control methods which allow us nowadays to better control the population increase.

More importantly, just after publishing his theory, data started accumulating proving him wrong. Actually, technology increases in direct relation with the population, so if the population increases geometrically, technology will also increase geometrically.

When Malthus published his theory, the population was so low that he mistook a geometrical technological advance with an arithmetical one (easy to do when you are using low numbers). Nowadays, technology is improving at an ever accelerating pace, thanks to the combined inventive power of more and more people. New technologies allow more of us to survive spending less resources per capita while at the same time enjoying much richer and interesting lives than those lived by past humans.

I love one phrase that the author cites in his book: Ted Baxter's strategy, who planned to have six children in the hope that one of them would solve the population problem.

Incidentally, JD, I liked a lot your posts about population "problems" and advantages. Please write one more of those soon.

PS: sorry for any English grammar mistakes; my mother tongue is Spanish.

At Thursday, July 16, 2009 at 10:02:00 AM PDT, Blogger Nick G said...


Malthus didn't argue that contraception wasn't possible, he argued that it was morally wrong, and therefore would make it's users unhappy!

He was really arguing that happiness was impossible, by arguing that we had to choose between unhappiness due to contraception or poverty due to overpopulation!

Modern writers universally miss this important detail.

Malthus-related thinking is wrong in so many different ways that one can spend quite a bit of time debunking it.

At Thursday, July 16, 2009 at 2:14:00 PM PDT, Anonymous non-doomer said...

Doomers are a very very stubborn group. many times I think they let their emotions get in the way of their facts. I think we are seeing that in the last few posts by JD as regards to westexas and ace.

just admit you were wrong guys and go back and do better research.

in the future keep an open mind. don't be so married to a scenario that you lose your objectivity.

At Thursday, July 16, 2009 at 3:41:00 PM PDT, Anonymous Anonymous said...

"More importantly, just after publishing his theory, data started accumulating proving him wrong. Actually, technology increases in direct relation with the population, so if the population increases geometrically, technology will also increase geometrically."

It's actually better than that.
Technology starts increasing faster than the rate of population growth because it really depends on "connectedness". This is something that only happens when you have civilization based on cities. The internet has amplified that drastically. Solutions that would have taken decades to find are iterated out of like minded individuals with a bit of the solution each. A la James Surowiecki's wisdom of crowds.
This forum is an example of it.

The doomer forums are... well.. doomed.

The reason is that they are inventing MODELS to say why things cannot be done. They don't realize that this is a waste of effort and amounts to nothing more than intellectual masturbation.

The best solution is the experiemental method. i.e. figure out a solution and try it.
Trying to model the answer first won't work unless your model is very, very good.


At Friday, July 17, 2009 at 3:33:00 AM PDT, Anonymous JL said...


What you say about connectedness makes a lot of sense. Actually, the book I talked about, "The Logic of Life", also talks about the advantages of living in cities and why people decide to live in them even if their purchasing power is reduced when compared to small towns or villages.

It seems that having a group of experts close to each other favours the advance of technology even more than having the same number of people in separate places. Even with Internet, it seems that this tendency of individuals to choose to live in big cities is not diminishing, as many of the advantages offered by Internet are directed to people living in urban areas.

If you are in a big city such as NY or similar one, you can meet all sorts of interesting people when going out. The chances are reduced when you live in smaller towns, and Internet cannot help with that (and I like and use Internet a lot to find info about my hobbies and many other stuff).

At Saturday, July 18, 2009 at 11:59:00 AM PDT, Anonymous John said...

Here's a new one for you to write about. How about oil at $118,000 per barrel!!!!!

At Sunday, July 19, 2009 at 9:41:00 AM PDT, Anonymous Freddy Hutter, TrendLines said...

Ace's forecasts are inherently handicapped 'cuz of two flaws: he does not recognize that there is any surplus capacity in the system & assuems that there will be no more MegaProjects beyond those announced.

This is an immature stance based on his (and TOD's) agenda-driven motives and completely ignores industry trends.

Geologically speaking, there is no barrier to the current new capacity additions of 3.2-mbd/yr continuing for four more decades. This is based on current reserves and resource estimates. Ace's premise that new facilities dwindle to zero by 2020 is plainly absurd.

He does not recognize the 6-mbd of spare capacity that will allow new records to be set post-recession.

2008 marked the 20th consecutive year McPeaksters declared Peak had "arrived". With all their cards bet on Tony Erikson (at TrendLines, we've nicknamed him "the joker"), this string is guaranteed to continue well into the mid century.

At Sunday, July 19, 2009 at 11:03:00 AM PDT, Blogger bc said...

I was amused to see the CliffordJWirth virus has helped spread one of aces charts on a blog at "The Times" website, under the heading Peak oil latest - yikes. "The Times" being a pretty mainstream paper, if no longer the paper of the ruling class.

I tried to make a comment but I think it got deleted. I guess "please don't believe these fools" was not considered polite enough.

At Friday, July 24, 2009 at 5:46:00 PM PDT, Blogger Gavin said...

Is this blog still alive? Are you on holiday JD? I hope so, because I a really do you enjoy your thorough but joyful deconstructions of the peak oil hype.


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