Pub analogy

Bandidoz · Post by **Bandidoz** » 09 Sep 2005, 00:47

Imagine the following scenario:

You're running a country pub, and the regulars are hooked on Guiness. They have drunk it all their lives. They expect it to be served to them whenever they want it. There are fields of wheat and barley around the pub, but although the pub could brew it to keep their regulars pissed, it just doesn't work anything like as well as good old Guiness.

Then one day, the sea level rises and Dublin gets engulfed. The Guiness factory is ruined, and no more is ever going to be made. Ever. The publican learns about this news and faces a dilemma. He realises that the supply is going to run out and knows his regulars are going to go f**king ape if he suddenly stops serving their favourite tipple to them. So he cranks up the price, hoping that they'll decide to change to the beer that they can brew in-house. Unfortunately, the idea just doesn't enter their heads - they just keep on guzzling the Guiness, and stump up the price rises. They grumble a little, but nothing is going to get in the way of their habit. They cannot imagine life without Guiness.

"ARSE!", thinks the landlord, so he rises the price a bit more. Then a bit more. After some time, Guiness gets more expensive to buy - the stocks are running out. The addicts learn that there's another pub 20 miles away that still serves cheap Guiness; alas the landlord there is completely oblivious to Guiness depletion. But 20 miles is too far to go. They could buy the lager, they could even brew their own. They just don't want to, they love their precious Guiness far too much.

Some bald-headed bloke with glasses tries to tell them that the global supply of the Black Stuff is running out, but they just don't want to hear that. "RUBBISH!" they exclaim, "there is plenty of it left. The landlord knows we're addicted and is just deliberately ripping us off". "Even if it does run out one day, market forces will come to the rescue and provide us with something to feed our addiction".

The landlord hears about the student's conversation, but keeps quiet. He remembers too well the story of a previous publican, Jimmy Carter, who told his addicts that they will have to give up their Guiness. The addicts revolted and brought in an old actor to run their pub when the lease was over.

The squabbling goes on. The addicts become increasingly militant. The intellectuals look on in disbelief. Enthusiasts try brewing their own beer. The landlord, however, continues shitting his pants. Damn! The "market forces" are not working! But he doesn't have the balls to tell it like it is, and brew his own beer that the addicts would be reluctant to drink.

isenhand · Post by **isenhand** » 09 Sep 2005, 06:19

Nice, maybe you should put that on a leaflet or send it to a paper?

PowerSwitchJames · Post by **PowerSwitchJames** » 09 Sep 2005, 10:56

I don't like the taste of Guiness.

Bandidoz · Post by **Bandidoz** » 09 Sep 2005, 10:58

Please suggest any enhancements you can think of

PowerSwitchJames · Post by **PowerSwitchJames** » 09 Sep 2005, 13:43

No enchancements necessary.

Although you could do one where you have people on a desert island and the fresh spring water starts to dry up.

Bandidoz · Post by **Bandidoz** » 28 Jun 2007, 21:51

Interesting to see Skrebowski using a pub analogy here (albeit a much better one than mine!):

http://www.energybulletin.net/5266.html

JD: Now the matter of depletion is not really that easy to understand. I mean in principle it's easy to understand, but in practice as so many things, it's not so easy. Can you explain a bit more about depletion especially as its happening now in the world. For instance the fact that Exxon and the International Energy Agency have suggested 5% depletion which would be around 4 million barrels per day reduction, and yet in your editorial for Petroleum Review (April 2005) recently you said we only need to make up for one million barrels a day. Can you explain the discrepancy?

CS: Yes, hopefully this is reasonably straight forward. All oil fields deplete, literally from the day they start. So you know, very quickly if you've got a field there will be some wells which are not producing as much as they were say last year. And you'll be drilling new ones to compensate or some of the existing ones will be able to be turned up and they will compensate. Now that's a completely normal process and no one thinks very much about it.

To give a very homely analogy, if you go do down to your local pub and you order a pint of beer, and you find that they're drawing it from a different beer engine from last time you were in, it's really of not much interest to you. You're still getting your beer. They for some reason have changed the tap around, connected the kegs differently. So that's the sort of every day depletion. Now there then comes a point when perhaps it's not any longer a depletion within a field, but some parts of a country are actually in decline, but they are still being offset by increasing production from another part of the country. Canada's quite a good example of this. The conventional production in western Canada is in decline at the moment. Over recent years of shore production in eastern Canada has gone up. Production from heavy oil and from tar sands has gone up. So, if you are a buyer of Canadian crude you wouldn't be that bothered. You're not getting it from quite where you were before but that doesn't bother you.

So, if we go back to the pub analogy, if you go down to your local pub, this would be the equivalent of being told ?well we're not serving that beer in this bar but if you go to the upstairs bar you can get it there.? So it would mildly inconvenience you and no more. Now this, if you like, has been a key part of the oil industry since its inception.

But, then there's the third type of depletion and that's the type that worries us. That's when an entire country ? because we define our measurements on the basis of countries ? starts to decline. And this becomes different because now the customers for that oil now have to go off and find a new supplier. So for example the UK North Sea is going down at about 150,000 barrels a day, 200,000 barrels a day. Now the people that were buying that oil now have to go off and find another supplier. For that other supplier, they are like new demand, new customers.

So again if we go back to the slightly forced analogy of the pub: You've gone down to the pub, you've asked for your pint of beer. They've reluctantly admitted that they haven't got it. You're now going to go off and find an other pub and see if they've got some. Now that, if you think about it is a completely different situation than if you've just got to the upstairs bar or taking it from a different beer engine.

So to put the numbers on it, the overall decline which is largely being covered for by normal oil industry activity is around 4 million barrels a day per year. The specific decline which has got to be made up from somewhere else is around one million barrels a day per year. That's the number which is recorded in the editorial.