Peak oil notes - Nov 19
Prices and production
Oil prices moved up this week from a low of $76 on Monday until they briefly touched a high above $80 on Wednesday, settling at $79.58. As usual these days, the weaker US dollar had more to do with the price increase than the fundamentals of the oil markets. Most analysts are talking about higher prices in the future based on increasing demand from Asia. Japan reported that its GDP increased at an annual rate of 4.8 percent on Monday, contributing to the rise. US demand, however, remains weak at 18.6 million b/d which is 4 percent lower than in November 2008.
The weekly stocks report showed an unexpected drop of 1.8 million barrels in US gasoline inventories, with crude inventories falling by 900,000 barrels. Some of the decline was due to tropical storm Ida which shut down the Louisiana Offshore Oil Port and many offshore production platforms for 2-3 days last week. With US refining still running below 80 percent of capacity and gasoline imports at low levels, it still appears that refiners are attempting to force gasoline prices higher.
Cambridge Energy’s new report
This week Cambridge Energy Research Associates (CERA) released a new report claiming that world oil productive capacity will continue to grow for another 20 years and then remain steady for 20 years after that. In other words geologic shortages will not be an issue until 2050.
As usual, CERA starts with an assertion based on a study of their proprietary database: that there are no geological constraints in sight, and that any decline in oil production will be only due to their cherished “above ground factors” or their new tack – a lack of demand. CERA now has the world’s “productive capacity” (production plus sustainable reserve capacity) rising to 115 million b/d in 2030 from what they say is the current 92 million b/d.
One of the most interesting features of the new report is that Jad Mouawad of the NY Times immediately wrote a favorable story about CERA’s report. Although the Times notes there is much debate about when oil production will peak, CERA is cast as “resolutely” optimistic about the future.
The CERA report is clearly full of holes, faulty logic and circumlocutions galore. We are certain to hear more in the days ahead. In the meantime Daniel Yergin, founder of CERA, is clearly sticking to his long held positions even as some of his most formidable allies such as the IEA start to melt away.
ASPO-USA will circulate a response to the CERA report in next week’s Peak Oil Review.
What do you think? Leave a comment below.
Note on Comments
This is a community site and the discussion is moderated. The rules in brief: no personal abuse and no climate denial. Complete Guidelines.
Sign up for regular Resilience bulletins direct to your email.