Oil - Feb 13
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Dude, where's my cheap gas?
James Hamilton, Econbrowser
Those who have been told that oil production is booming may be wondering why the prices of oil and gasoline are climbing again.
Price of Brent crude oil, dollars per barrel, daily, Jan 4, 2005 to Feb 5, 2013. Data source: Quandl.
According to the EIA, world petroleum production in the first 10 months of 2012 averaged 88.8 million barrels a day. That's 2 mb/d, or 2.3%, higher than in 2010. The IMF estimates that world GDP grew by 7.1% between 2010 and 2012. If we used a global income-elasticity for petroleum demand of 0.75, we might have anticipated that a 5.3% increase in petroleum production over the last two years would have been necessary to keep the price of oil from rising. Ongoing conservation, for example, in the form of continued improvement in fuel economy, has been a key factor keeping the oil price from rising more in the face of world income growing much faster than world oil production.
China likely consumed nearly half of the global 2 mb/d increase. The EIA reports that China increased its petroleum consumption by almost 500,000 b/d in 2011, and preliminary estimates are that China added another 420,000 barrels to its daily consumption in 2012...
(11 February 2013)
How do you measure China’s oil demand? IEA goes from “error to error”
Rob Minto, FR beyond brics
China’s statistics are notoriously unreliable, and oil demand is no exception.
In its Oil Market Report for February, the International Energy Agency admits that measuring it is more of an art than a science, and has announced a new methodology...
(13 February 2013)
Twilight of an energy boom: Alberta’s new fiscal challenge
Gordon Pitts and Nathan Vanderklippe, Globe & Mail
A squared-off concrete shell sits in a frozen field, a short distance from Highway 63 north of Fort McMurray. It was to be the first building block of the $11.6-billion Voyageur oil sands upgrader, which was taking shape in 2008 as the latest megaproject to inject adrenalin into an Alberta economy that was already riding high on its good fortune.
A half decade later, the concrete shell is still there, but the ebullience is long gone. This week, Suncor Energy Inc. , the oil sands giant that has partnered with Total SA to build Voyageur, took a $1.5-billion writedown on the project – now at imminent risk of cancellation.
The grey slab has all the subtlety of a giant tombstone. “It has been a depressing derelict standing there for years now,” says Wayne Prins, provincial director for the Christian Labour Association of Canada (CLAC), representing vast numbers of oil sands workers, who once saw Voyageur as the next ticket on the endless train of long-term prosperous employment.
The forlorn shell symbolizes the hollowing out of Alberta’s hopes and dreams, as it confronts an energy market that has turned dramatically against it. It is a signal of how fast Alberta has fallen, as it tumbles back to the pack of provinces with severe fiscal challenges. The provincial government has just seen $6-billion wiped off its revenues as a result of declining resource income – equivalent to the province’s annual education budget...
(9 February 2013)
OPEC Boosts Estimated Demand for Its Own Crude Oil
Grant Smith, Bloomberg
OPEC raised forecasts for the amount of crude it will need to supply this year because of stronger fuel demand in emerging economies.
The Organization of Petroleum Exporting Countries will have to provide an average of 29.8 million barrels a day in 2013, or 100,000 a day more than it estimated a month ago. The producer group’s output in January was 500,000 barrels a day larger than this, at 30.3 million, according to OPEC’s monthly market report published today.
“Given some signs of recovery in the global economy and colder weather at the start of this year, the forecast for world oil demand growth in 2013 has also been revised up,” OPEC’s Vienna-based secretariat said. “The bulk of the growth is seen coming from China.”...
(12 February 2013)
Setback for Shell's Arctic oil ambitions as rigs require repair in Asia
Emily Gosden, The Daily Telegraph
Royal Dutch Shell’s hopes of resuming drilling for oil off Alaska this summer have suffered a further setback after it revealed both its Arctic drilling rigs would now need to be taken to Asia for repairs.
The oil giant has admitted it does not know whether it will be able to continue its controversial campaign this year after a series of setbacks in 2012, including the grounding of its Kulluk drilling rig on New Year’s Eve and problems with its second rig, the Noble Discoverer.
However its exploration plans for 2013, set out a fortnight ago, showed it still was still intending to resume the work. It has so far spent nearly $5bn on its Arctic campaign without being allowed to drill into potentially oil-bearing rocks.
(12 February 2013)
Image credit: Offshore oil rig at sunset - arbyreed/flickr