Peak Oil Notes - Nov 13
1. Plunging Prices
On Monday oil rose to $67 a barrel after China announced a $600 million stimulus package. Twenty-four hours later oil was back down to $60 as the markets decided that the Chinese stimulus really wouldn’t do much for the global economy. By Wednesday, a flood of bad economic news and anticipation that the IEA would lower the forecast for oil demand next year sent oil down to close at $55.82. Oil is now down nearly $90 below its close on July 3rd. December gasoline on the NYMEX fell to $1.25 a gallon, the lowest close since the contract was first listed in 2005. Because of the holiday, this week’s stocks report will not be released until Thursday.
As prices fall, the odds are increasing that OPEC will hold a second emergency meeting before the one scheduled for December 17th. The Arab oil ministers’ meeting, which is already scheduled for November 29th in Cairo, could be expanded to a full OPEC meeting. Last week the average price received by OPEC was $56 a barrel. Unless there is a dramatic turnaround soon, this number will soon be in the $40’s. Even Moscow, which has been sending mixed signals recently, is now saying that Russia must act to increase oil prices.
China’s crude imports for October increased by 7.5 percent over September and by 28.2 percent over October 2007. There is speculation that Beijing may be using the low prices as a opportunity to start filling its strategic reserve.
2. IEA Report
The long-anticipated 569-page IEA report on the world energy situation was released Wednesday morning and the Internet is already filling with commentary about it. In comparison with other years, the report breaks new ground in conveying a sense of urgency, analyzing oil depletion rates, and warning of the catastrophic results from carbon emissions. Although not as optimistic as in prior years, the report still talks about the possibility that world oil production will increase for the next 22 years.
The Agency continues to deny that geologic constraints on world oil production are imminent, and continues to focus on geopolitical problems and the lack of adequate investment in new oil production as the reason shortages could develop in the next few years. The IEA’s new reference case now calls for $26 trillion worth of new investment in energy infrastructure by 2030. Among other marquee factoids in the report is the need to find 64 million b/d of new production, or four Saudi Arabia’s, in the next 22 years.
During the press conference that accompanied the release, Dr. Fatih Birol, the IEA’s chief economist, told reporters he is worried that the numerous oil project delays announced in recent weeks could have an effect on production by 2010. He pointed out that the world will need about $450 billion worth of investment each year between now and 2015 to keep production up with demand
What do you think? Leave a comment below.
Sign up for regular Resilience bulletins direct to your email.
This is a community site and the discussion is moderated. The rules in brief: no personal abuse and no climate denial. Complete Guidelines.