Posted on 05/28/2008 5:10:23 PM PDT by Kaslin
Energy: Analysts have found that investors spooked by the peak oil theory — the belief that crude production has topped out and is in decline — are partly behind the soaring oil prices. Someone should set them straight.
But the impact of those nations on crude prices in recent months is suspect. Global oil consumption grew 2% in the first quarter of this year over the first quarter of 2007, while production increased 2.5% over the same period. On a daily basis, roughly 85 million barrels of oil are consumed across the world, almost exactly matching the amount produced each day.
Production over the next two quarters is projected to continue rising (3.3% and 4.1%, according to estimates from Citigroup), while demand is expected to grow at a slower 1.6% pace over the next six months.
These data don't indicate higher prices, so something else is at work. Some analysts believe that investors who have swallowed the peak oil theory are pricing oil higher because they fear the world is running out of crude and permanent shortages are nigh. They shouldn't believe it.
(Excerpt) Read more at ibdeditorials.com ...
btt
You'll tell when the "top" has come when an unruly mob is marching on Washington with torches, pitchforks, and rifles, and an ecofascist hangs from every lamppost.
Question is:
When the heck are we going to get to the bust period???
The boom period seems to keep going and going and going... just like the damn Energizer Bunny!!!
Currently the production capacity for light sweet crude is maxed out [unless / until peace breaks out in Nigeria.] The IEA [or maybe it is the EIA — I get them mixed up] shows about 1.5 million barrels of productive capacity that is not being produced. All but 70,000 barrels per day of this excess capacity were in Saudi Arabia and all of it is heavy and sour [and the refineries that can process the stuff and make a profit given the current very low crack spreads are about maxed out.]
BTW, the 1.5 million compares with approximately 10 million barrels per day of reserve capacity during the 1990s. Do you think that the difference between 10 million and zip [given the refining limitations] might have an impact on crude oil prices?
To paraphrase JP Morgan [the man not the Company] the “price of crude oil will fluctuate” over the near term. Longer term, it isn't getting any easier to find, the national oil companies that have it belong to governments that don't like us, and the rewards of a restricted supply are clearly evident to to those national oil companies. You don't need to believe in peak oil [I do but it is not a requirement] to believe that higher prices are in our future.
BTW, the perceived risk of much lower crude oil prices [based on the belief that peak oil is a myth] is part of the reason that the alternatives aren't attracting the investment that they should. Who would make a multi billion dollar capital investment if they believed it could be rendered worthless based on a whim by a goof ball in Venezuela or Saudi Arabia?
In the last few years China has changed from primarily bicycles and beast drawn vehicles to cars.
And they only produce 1/2 the oil they need to run them
I remember a great line from the infamous charatcer, JR Ewing on Dallas.
Hell, we’ve been running out of oil after we drilled the first well.
Never watched "Dallas" but never the less "true"... but we only reached what appears to be a peak in conventional crude in 2005 or maybe if production picks up wee bit in response to a doubling of price in 2008. In any event, light sweet crude won't break a record in 2008. If this record stands [or is not exceeded by a significant amount] you will have been a witness to peak oil. Not the end of oil ... more than half remains ... peak oil is instead the rate of maximum daily production.
Don't believe in peak oil? Do you believe that individual wells peak? [Hard to find anyone involved in the industry who does not believe in individual wells peaking.]
Do you believe that individual fields peak? [Hard to find anyone involved in the industry who believes that fields do not peak.
Do you believe that countries peak? The U.S., U.K., Indonesia, Venezuela, Kuwait, Mexico [probably], Russia [also probably] and potentially Saudi Arabia appear to have already peaked and there are only so many fields in a give country.
As per "J.R." peak oil is not so much a theory as an inevitability. The question is not "if" but "when". Feel free to assume a "when" out several decades, but don't attach too much significance to that assumption. We don't really know, but I suspect [I don't know either] that the answer to "when" is soon or maybe even in the recent past.
My belief is that a "no peak oil now", will be validated when either the previous peak in conventional crude plus lease condensates is exceeded by a significant amount on an annual basis, or [at your peril] when the optimistic prognosticators start to get it right. Until then we have what I believe is a reasonable working hypothesis. When / if disproved, as I have noted elsewhere in this thread, the question is not "if" oil will peak, but "when".
Peak oil - perhaps not considering there are at least 5 trillion barrels around.
Peak “cheap oil”? - meaning the stuff that is easy to get to and costs $2-4 to get out of the ground? Maybe.
Of course, tulips are a renewable resource, and although speculation is a large part of the oil curve, there’s also the weak dollar and many other factors.
Actually US oil consumption is roughly the same today as in 1979 with our population having nearly doubled since then. We are using less oil here for the very reasons they forced more efficient use back after the last price run up/shortage.
Btw, has anyone seen gas lines today like we had back in 1979?
>> there’s also the weak dollar and many other factors
Sure. There’s no denying that increased demand is a factor too.
But I bet fully half the $130+ price is speculative bubble.
I have seen graphs quite different than this. What is the source?
The price of gas has rationed the oil this time. The 70’s oil lined were because of price controls. The graph is different than what I have seen and is not supported by the tables I have seen.
Intersting year for comparison. 1979 was when we started turning off many oil fired power plants. By 1982 our oil used for electric power generation was cut in half and our total oil consumption greatly reduced.
U.S. Crude Oil and Petroleum Products Product Supplied
http://tonto.eia.doe.gov/dnav/pet/hist/mttupus2a.htm
Consumption of Combustible Fuels for Electricity Generation: Electric Power Sector, 1949-2006
http://www.eia.doe.gov/emeu/aer/txt/ptb0805b.html
A Bloomberg article, a few days ago, said the world currently consumes 88mbpd while producing 87. Who's right? No one knows. Figures aren't that good and many people benefit from keeping it that way.
What is true is that there's no "cushion", no spare production capacity which can be ramped up immediately to prevent price spikes...and that's a situation the world has never before faced. Not so long ago the Saudis could do that but no longer. They've several times promised to increase production but nothing happened. Their output is about 10 1/2 mbpg with 8 1/2 for export (if you believe the most optimistic estimates. some claim their output has been falling for the last four or five years) and it is increasingly sour. Their best field is Ghawar, already 50 years old and for quite some time now in need of huge water injections to stimulate output.
Yes, domestic output has peaked. But it peaked at a level 13% above what Hubbert predicted. And the peak wasn't followed by a falling-off-the-table decline. Output rose after a temporary slide.
Upon reading this I thought, wow, something new that I hadn't seen. But then I read
U.S. production is trending down again, but it's not because there's no oil. It's due to shortsighted policies that prevent the industry from drilling for the almost 100 billion barrels of crude known to be under Alaska's Arctic National Wildlife Refuge and beneath the oceans just off of America's coasts.
And I realized the author was just another dishonest idiot. Huppert's predictions were meant to apply to the land mass of the 48 states, not to what we U.S. companies might find elsewhere. I quit reading after this.
Rush and other pundits stress this point daily, that we have so cut consumption given our dramatic population growth since the late 70s and the last oil shortage.
But I'm not sure this is a shortage...where are the gas lines?
then by all means ML please post one like I have to bolster your contention., meanwhile here is an article to bolster mine once again:
Here from Willaim Poole of the Fed banl in St Louie
If you have a chart that US consumption has doubled since the late 70s, please produce it. I agree with the production shortfalls btw.
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