Ideosphere Forum

fx-propose: Revision of Proposal: 'POIL30'

Author: FX
Conversation: fx-propose: Proposal: 'POIL30' ( prev | next ) reply!
Topic: fx-propose ( prev | next )
Date: Tue Sep 11, 2018 05:00 am
Michael Cowley
chrisran.bma e-mailFX
FX



The creator of claim 'POIL30' has made the following changes to its proposal.
If you have constructive suggestions, please follow-up to this message. Thank you.

Results of editing claim 'POIL30':
'long' changed to:
This is a scaled claim that will pay (10*(peak year-2020)) capped at
or between 0 and 100. The peak year is defined as year with highest
worldwide annual total of oil production according to the BP
Statistical Review of World Energy.

The claim should not be judged until one of the following four
options occurs and then it should be judged.

A. 1. There is a subsequent year with worldwide annual total of oil
production being over 5% below the peak year, and 2. This is not the
year following the peak year, and 3. This is not due to temporary
freak circumstances, and 4. There is widespread agreement amongst
experts that there will be further falls in worldwide annual total of
oil production.

or

B. 1. There are four years of declines in worldwide annual total of
oil production in a four or five consecutive year period, and 2. The
end year of that period has worldwide total of oil production over 2%
below the latest year before the period starts that is not affected
by temporary freak circumstances, and 3. None of the years in the
period are affected by temporary freak circumstances, and 4. There is
widespread agreement amongst experts that there will be further falls
in worldwide annual total of oil production.

or

C. There is a subsequent year with worldwide annual total of oil
production being over 10% below the peak year, and 2. This is not the
year following the peak year, and 3. This is not due to temporary
freak circumstances. Experts expecting rises in oil production have
no effect under this C clause.

or

D. 2030 or subsequent year has highest worldwide annual total oil
production.

The precise meaning of 'temporary freak circumstances' is at the
judges discretion but should be expected to include things like
natural disasters, terrorist action on oil production/refining or
other facilities, wars that are significantly more widespread than
previous years, pandemics, or government action like bans/rationing
possibly taxes etc provided that the circumstances are expected to
last 18 months or less and have highly significant impact on oil
production.

Anything approaching normal operation of the market like OPEC
deciding to pump less because they want to drive the prices up should
not count as temporary freak circumstances unless it is clearly in
response to some other freak event.

Temporary freak circumstances can turn out to last a little longer
than 18 months without ceasing to be temporary. A maximum of 3
consecutive calendar (or whatever annual period BP Statistical Review
of World Energy uses) years can be below 95% of the peak year due to
temporary freak circumstances and not be used to cause the claim to
be judged.

The judge has discretion on how and when to decide the temporary
freak circumstances have ceased to have impact and may shorten the
maximum 3 consecutive calendar (or whatever annual period BP
Statistical Review of World Energy uses) year period. The 3
consecutive calendar year period should not be extended to 4 or more
years unless there is a completely separate temporary freak event.

Government action like bans/rationing possibly taxes should be
expected to last more than 18 months unless there is clear evidence
that it is intended to be a short term measure. Note also that if
this government action is a short term measure while politicians work
out implications and other aspects of a different measure like a ban
then this should be considered part of long term action and not a
temporary measure.

Examples

Suppose governments ramp up taxes on oil products to deal with
climate change (long term issue) and this is followed by oil
producers funding a coup and toppling the offending governments and
reversing the tax increases. The increased taxes should initially be
considered a long term action unless there is clear evidence that it
is intended to be a short term measure. If a full calendar year not
immediately following the peak year shows oil production below 95% of
peak then, when this is published, the claim should be judged as per
the wording. If the coup(s) happen before the data leading to a true
judgement is published then, the judge might want to consider whether
circumstances of high taxes were 'temporary freak circumstances'. I
would regard the taxes as something 'approaching normal operation of
the market' and therefore unlikely to qualify as freak. The taxes
were intended to be long term and while this should be reconsidered
if it turns out to be temporary, in this case it was long term and
abnormally ended rather than the event turning out to be temporary so
unlikely to be considered temporary either.

However, there might be other circumstances where 'temporary freak
circumstances' needs further explanation. The word freak is mainly
there just to imply unusual circumstances that have significant
impact on oil production but it also excludes things 'approaching
normal operation of the market'. The temporary decision should mainly
be based on whether it is intended or expected to last 18 months or
less. If this isn't clear the judge doesn't have to make an immediate
decision. If there is new peak or no circumstances requiring
judgement if it is not temporary freak circumstances, then the
decision doesn't have to be made. Usually it will be clearer whether
it was a temporary effect later. However, if still unclear and
decision is needed the judge has discretion but might decide to look
at monthly data and see if more than an 18 consecutive month period
has monthly oil production numbers that are generally below 95% of
same month in the peak period in order to decide if it is temporary.

Unlike the increased taxes, coup(s) could well be 'temporary freak
circumstances'. e.g. the coup(s) may reverse the taxes but have other
downward effects on demand.

If taxes cause production to fall below 95% of peak starting in July
2024 but whole of 2024 (and previous years) stay above 95% of peak,
then no judgement re 2024 numbers. Coup(s) in March 2025 is
considered 'temporary freak circumstances' due to demand effects of
the coup(s). If temporary demand effect of coup(s) and counter
coup(s) cause oil production to remain below 95% of peak, then 2025,
2026 and 2027 might stay below 95% of peak without a judgement being
given but if 2028 is below 95% of peak then the coup(s) and any
counter coup(s) are no longer temporary. If there are no other
temporary freak circumstances then after 2028 data is published,
judgement should then be made.

If the coup(s) were in November 2025 and record equalling November
production numbers plus record equalling December production numbers
plus the actual production for the year to October 2025 would still
leave oil production for 2025 below 95% of peak oil production: Then
if it can be observed that: 1. 2025 actually turned out to be below
95% of peak production and 2. 2024 is not the peak year and 3. This
is not due to temporary freak circumstances of taxes because taxes
are normal not freak and nor is it due to temporary freak
circumstances of coup(s) because it is the taxes and other events
before the coup(s) not the coup(s) that did it, and 4. there is
widespread agreement amongst experts that there will be further falls
in worldwide annual total of oil production then judgement can be
made. The judge has discretion to use a different method rather than
using record month production numbers as indicated above if the judge
considers it more appropriate.

If the BP Statistical Review of World Energy ceases to be produced
then the judge should add a statement indicating a replacement source
that is preferably similarly authoritative.

'Widespread agreement amongst experts that there will be further
falls in worldwide annual oil production totals' will depend on
sources available at that time and the judge has discretion on how to
interpret this.

It is possible the claim will need to be kept open past the due date
to see if a new peak is reached per D, or to see if oil production or
expectations declines in order to satisfy A, B or C above or to see
if widespread agreement of experts is reached or if circumstances
remain temporary freak circumstances.

source



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