Still on vacation, but I couldn't resist this one. A couple of days ago, Dmitry Orlov posted a new presentation
on his website, well-larded with his usual asinine assertions about the imminent end of industrial civilization etc. etc.
The funny part is that much of it is based on this concept:
François Cellier has recently published an analysis in which he shows that at roughly $600/bbl the entire world's GDP would be required to pay for oil, leaving no money for putting it to any sort of interesting use. At that price level, we can't even afford to take delivery of it. In fact, at that price level, we can't even afford to pump it out of the ground, because the tool pushers, roughnecks and roustabouts that make oil rigs work don't drink the oil, and there would no longer be room in the budget for beer.
And so, the actual limiting price, beyond which no economic activity is possible, is certainly a lot lower, and last summer we seem to have experimentally established that to be around $150/bbl. which is something like 25% of global GDP.
Scary stuff, except the figures are totally bogus.
$150 oil would not constitute 25% of the world's GDP.
The world consumed 84 million barrels/day in 2008 (from the BP statistical review 2009
). At $150 per barrel, that comes to $12.6 billion a day, or $4.6 trillion per year.
The CIA Factbook 2009
gives world GDP for 2008 as $69.49 trillion.
Therefore sustained $150 oil would only account for 4.6/69.49 = 6.6% of world GDP, not 25% as Orlov fraudulently states.
Similary, if oil rose to $600 a barrel, that would cost roughly $50 billion/day, or $18.25 trillion per year.
Clearly $600 oil cannot consume the entire world's GDP because
$18.25 trillion < $69.49 trillion
It would take something a little closer to $2240 per barrel to consume the world's GDP.
You can see where Orlov screwed up if you compare his comment with the original analysis by Cellier. Here's the quote from Orlov:
François Cellier has recently published an analysis in which he shows that at roughly $600/bbl the entire world's GDP would be required to pay for oil, leaving no money for putting it to any sort of interesting use.
Here's the source quote from Cellier
This means that, if ever the price of energy should rise to a level of $0.37/kWh, we would spend our entire GDP just on the procurement of energy. This corresponds to an oil price of $590/barrel.
Notice the little switcheroo there boys and girls?
The really funny part is that he delivered this presentation at some cheesy doomer jamboree called The New Emergency Conference
and NOT ONE PERSON bothered to check his figures. Then he posted the presentation on his blog, and it was commented on by more than 40 fawning idiots, and NO ONE bothered to check his figures. No critical thought was anywhere to be seen. Nothing but wall-to-wall brown-nosing: "Fabulous, Dmitry." "What an absolutely amazing and thoughtful essay." "Marvelous" "Brilliant!"...
I submitted a comment pointing out Orlov's mistake on his blog. However, Orlov heavily moderates the blog, and buried the comment by not posting it. Apparently the facts are not welcome at ClubOrlov.
This incident really speaks volumes about sycophancy and gullibility in the peak oil community.
Orlov has now formally conceded
that yours truly gutted him like a fish, and his figures are complete bullshit (Read down in the comments. Orlov calls himself "kollapsnik". Hat tip to LoneSnark for smoking him out.):
Some people have pointed out that I misquoted François Cellier:Orlov:
"François Cellier has recently published an analysis in which he shows that at roughly $600/bbl the entire world's GDP would be required to pay for oil..."
Here's the analysis: http://europe.theoildrum.com/node/5388#more
Please substitute "energy" for "oil" and $590 for $600.
I said "oil" whereas I should have said "energy". [...] I don't care about arithmetic very much at all.2009/7/2 update:Another (more formal) apology
from Kamrade Orlov.
Reading the comments to the blog article, I was amused to see that Dmitry had a presentation
(tickets: $20-30) scheduled in NYC for July 11, 2009, but it was cancelled due to lack of interest. Apparently only 18 people in the entire 5-borough area expressed any interest. LOL