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Oil Exporters Are Unable To Keep Up With Demand
Domestic Needs, Sluggish Investment Crimp Shipments
Neil King Jr. and Spencer Swartz, Wall Street Journal
The world’s top oil producers are proving unable to put more barrels on thirsty world markets despite sky-high prices, a shift that defies traditional market logic and looks set to continue.
Fresh data from the U.S. Department of Energy show the amount of petroleum products shipped by the world’s top oil exporters fell 2.5% last year, despite a 57% increase in prices, a trend that appears to be holding true this year as well.
There are several reasons behind the net-export decline. Soaring profits from high-price crude have fueled a boom in oil demand in Saudi Arabia and across the …
(29 May 2008)
Contributor Jeffrey J. Brown writes:
Many journalists at the Wall Street Journal, especially Neil King, continue to do some very good work on energy issues, and I would not be surprised to see Neil covering the net export issue in more detail in future articles.
The EIA data for the top five net oil exporters and the annual rate of change are as follows:
2005: 23.9 mbpd
2006: 23.1 mbpd (-3.4%/year)
2007: 22.0 mbpd (-4.9%/year)
This is of course what we have been warning about–an accelerating net export decline rate.
Saudi Arabia has of course shown a recent rebound in production, but IMO there is almost no chance that they will exceed their 2005 production rate in 2008, while their consumption is showing an accelerating rate of increase. And then we have Russia..
Global Demand Squeezing Natural Gas Supply
Clifford Krauss, New York Times
… But now L.N.G. shipments to the United States are slowing to a trickle, and Cheniere and other companies have dropped plans to build more terminals.
A longstanding assumption of American energy policy has been that natural gas would be plentiful abroad, and therefore readily available for importation, as production falls off in North America, where many fields are tapped out.
But some experts are starting to question that idea, saying natural gas could be subject to the same explosion in overseas demand that has made oil so expensive.
As it is, the supertankers that were supposed to deliver cargoes of gas from Africa and the Middle East to the United States are taking them to places like Spain and Japan instead, pushing up gas prices and depleting the nation’s stockpiles as the hurricane season approaches.
(29 May 2008)
Is it “peak oil” or a speculative bubble? Neither, really
The Economist
Double, double, oil and trouble
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AFTER oil hit its recent record of $135 a barrel, consumers and politicians started to lash out in every direction. Fishermen in France have been blockading ports and pouring oil on the roads in protest. British lorry drivers have paraded coffins through London as a token of the imminent demise of the haulage industry.
… But the most popular scapegoats are “speculators” of the more traditional sort. OPEC itself routinely blames them for high prices. The government of India is so sure that speculation makes commodities dearer that it has banned the trading of futures contracts for some of them (although not oil). … The assumption underlying such ideas is that a bubble is forming, and that if it were popped, the price of oil would be much lower.
Others assume the reverse: that the price is bound to keep rising indefinitely, since supplies of oil are running short. The majority of the world’s crude, according to believers in “peak oil”, has been discovered and is already being exploited. At any rate, the size of new fields is diminishing. So production will soon reach a pinnacle, if it has not done so already, and then quickly decline, no matter what governments do.
As different as these theories are, they share a conviction that something has gone badly wrong with the market for oil. High prices are seen as proof of some sort of breakdown. Yet the evidence suggests that, to the contrary, the rising price is beginning to curb demand and increase supply, just as the textbooks say it should.
… Nonetheless, PFC Energy has examined projects that are already under way, and concluded that global oil production will grow by over 3m barrels a day (b/d) over the course of this year and next. In particular, it expects production outside OPEC to grow by about 500,000 b/d both years-a marked increase from the near stagnation of recent years.
(29 May 2008)
Long-ish article. I searched the rest of the article in vain for the reasons The Economist discounted the theory of peak oil. Tellingly, the article doesn’t mention peak oil again. All it does is quote the study from PFC Energy – hardly convincing evidence. See the related Leader from The Economist below. -BA
The Oil Price: Recoil
The Economist
Painful though it is, this oil shock will eventually spur huge change. Beware the hunt for scapegoats
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… Stuck for answers, politicians have been looking for scapegoats. Top of the list are the speculators profiting from other people’s hardship. Some $260 billion is invested in commodity funds, 20 times the level of 2003. Surely all that hot money has supercharged the demand for oil? But that is plain wrong. Such speculators do not own real oil. Every barrel they buy in the futures markets they sell back again before the contract ends. That may raise the price of “paper barrels”, but not of the black stuff refiners turn into petrol. It is true that high futures prices could lead someone to hoard oil today in the hope of a higher price tomorrow. But inventories are not especially full just now and there are few signs of hoarding.
If the speculators are not to blame, what about the oil companies, which have failed to increase output in spite of record profits? Profiteering, say some. However, that accusation doesn’t stand up to much scrutiny either. The oil price is set in a market. For Shell, Exxon et al to hoard oil underground would be to leave billions of dollars of investment languishing unused. Others fear that oil is pricey because it is running out. But there is little evidence to support the doctrine of “peak oil” in its extreme form. The Middle East still seems to contain a sea of the stuff. Even if new finds elsewhere have been rarer and less accessible than in the past, vast quantities of oil could now be profitably stripped from tar sands and shale.
The truth is more prosaic. Finding and developing new oil fields is an expensive and time-consuming business. The giant new fields in the deep water off Brazil are unlikely to produce oil for a decade or more.
(29 May 2008)
Emphasis added. Does this mean that The Economist holds to a “non-extreme form” of peak oil?
Dr. David Goodstein called for “Manhattan Project”-level research on green energy (video)
Marc Strassman, Etopia News
A “Manhattan Project” for renewable energy and “education, education, education” are recommended by Dr. David Goodstein and Dr. Peter Gevorkian, respectively, at this February 27, 2008, GIVE Green Valley Symposium on Dr. Goodstein’s “Out of Gas”
(29 May 2008)
FACTBOX: Peak oil: Fact or fallacy?
Alastair Sharp, Reuters
The price of crude oil has hit record levels above $135 a barrel, pushing industry analysts to take more seriously peak oil, or the idea that global production is near an apex after which it will decline sharply.
The following are some facts about the concept, its adherents and its detractors.
… The theory has long been considered marginal, and premature declarations and inaccurate predictions have weakened its credibility.
Optimists include major oil firms Shell, BP, and Exxon Mobil, and the members of the Organization of the Petroleum Exporting Countries (OPEC).
Among the pessimistic oil majors are ConocoPhillips and Total .
(28 May 2008)
Peak oil protest in the city
Adelaide Advertiser (Australia)
PEAK-HOUR traffic was faced with the looming reality of “peak oil” this morning.
About 15 concerned demonstrators marched at the intersection of King William St and North Tce between 8am and 9am to raise awareness that petrol will eventually run out.
Organisers Beyond Oil SA called on the State Government to invest more in public transport and review its energy policies to prepare for “a world without oil”.
The demonstrators held signs bearing such slogans as and “Carpool is Cool” and “No Oil = Stranded in the Suburbs” and said the reaction from motorists was encouraging.
(30 May 2008)
First demonstration I’ve heard of that was devoted exclusively to peak oil. -BA
