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Saudi King says keeping some oil finds for future
Reuters
Saudi Arabia’s King Abdullah said he had ordered some new oil discoveries left untapped to preserve oil wealth in the world’s top exporter for future generations, the official Saudi Press Agency (SPA) reported.
“I keep no secret from you that when there were some new finds, I told them, ‘no, leave it in the ground, with grace from god, our children need it’,” King Abdullah said in remarks made late on Saturday, SPA said.
(13 April 2008)
Saudi cuts output
Gulf Daily News (“The Voice of Bahrain”)
LONDON: Saudi Arabia, the world’s top oil exporter, has trimmed its output to about nine million barrels per day (bpd), a Saudi oil source said yesterday.
The level is slightly lower than the 9.2m bpd that Saudi Arabia had been producing until now and reflects lower customer demand, the source said.
“Saudi oil production currently is around nine million barrels per day, which reflects the demand from our customers,” the Saudi oil source said.
He reiterated the kingdom’s production capacity stands at 11.3m bpd and will rise to 12.5m bpd by next year.
At its meeting last month, Opec agreed to leave output unchanged.
(12 April 2008)
IEA cuts world oil demand growth by most in 7 years
Alex Lawler, Reuters
World oil demand will rise much less than expected in 2008 because of slower economic growth in the United States and elsewhere, the International Energy Agency (IEA) said on Friday.
The cut to demand growth is the IEA’s biggest since 2001 and follows the release of lower economic growth forecasts by the International Monetary Fund (IMF) this week, and the impact of high oil prices above $110 a barrel. “The latest GDP projections from the IMF suggest less robust oil demand growth in the coming months,” the IEA said. “This report projects April and May oil balances tipping towards a supply surplus.”
Global oil consumption will rise by 1.27 million barrels per day (bpd) in 2008, 460,000 bpd less than the previous forecast, said the IEA, adviser to 27 industrialised countries, in its monthly Oil Market Report.
(11 April 2008)
Contributor Dave Cohen writes:
The IEA’s sharp downward demand revision is based on the slowing world economy described in the IMF’s latest World Economic Outlook.
The IMF Forecasts Slow Global Growth (PDF)
International Monetary Fund
The International Monetary Fund’s (IMF) latest World Economic Outlook sees a substantial downturn in global economic output both in 2008 and 2009. Growth projections are revised downward 0.5% in 2008 and 0.6% in 2009.
From the report:
The world economy has entered new and precarious territory. The U.S. economy continues to be mired in the financial problems that first emerged in subprime mortgage lending but which have now spread much more broadly. Strains that were once thought to be limited to part of the housing market are now having considerable negative effects across the entire economy, with rising defaults, falling collateral, and tighter credit working together to create a powerful and hard-to-defeat financial decelerator…
The global expansion is losing speed in the face of a major financial crisis (Chapter 1). The slowdown has been greatest in the advanced economies, particularly in the United States, where the housing market correction continues to exacerbate financial stress. Among the other advanced economies, growth in western Europe has also decelerated, although activity in Japan has been more resilient. The emerging and developing economies have so far been less affected by financial market developments and have continued to grow at a rapid pace, led by China and India, although activity is beginning to slow in some countries.
At the same time, headline inflation has increased around the world, boosted by the continuing buoyancy of food and energy prices…
(11 April 2008)
Contributor Dave Cohen writes:
Table 1.1 in Chapter 1 of the report shows the IMF predictions. This data is easily accessible at Econbrowser’s Revisions: The Global Outlook in the WEO
Oil Price Defies Easy Calculation
Steven Mufson, Washington Post
Gasoline Sets Record at Pump Despite Struggles in U.S. and Overseas Economies
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Is there a fair price for oil?
It doesn’t seem that way. Over the past year, the price of crude oil has nearly doubled even though oil inventories are ample, there has been no disruption in supplies, and petroleum demand in the United States, the world’s biggest consumer, has leveled off in recent weeks as the economy has slowed.
… That could make oil prices a politically volatile issue this year among voters who think prices are excessive and are looking for someone to blame.
… If consumers are baffled by the rising prices, so are many oil experts. “The fundamentals are no problem,” Jeroen van der Veer, chief executive of Royal Dutch Shell, said in a recent interview. “They are the same as they were when oil was selling for $60 a barrel, which is in itself quite a unique phenomenon.” He blamed the lack of spare oil production and refining capacity, and tensions in the Middle East, for keeping prices high.
… Global factors matter, too. The Organization of the Petroleum Exporting Countries cut production in January 2007 to keep prices from falling below $60. Rapidly increasing oil consumption in developing countries such as China is also propping up prices. And it is becoming harder to find new oil.
(11 April 2008)
Why the energy reporter from a world-class newspaper doesn’t mention peak oil in an article about oil prices is hard to explain. It doesn’t matter whether he believes it or not – the theory has become a significant factor in the thinking of the industry, consumers and investors. Peak oil has been covered in many mainstream publications, but the Washington Post, LA Times and New York Times still ignore it. -BA
4 Experts on Why World Teeters on Brink of Energy Crisis –
#1: US State Dept.’s Izzo ‘Frightened’ By NOCs
Energy Tech Stocks
“This situation is more frightening than people realize,” a U.S. State Department official told an energy and environmental summit here, setting the tone for what turned out to be universal agreement among a wide range of political and scientific experts that the world teeters on the brink of an energy crisis.
Jeffrey R. Izzo, Energy Officer in the U.S. State Department’s Bureau of Economic, Energy and Business Affairs, explained in an interview on the sidelines of the Blue Planet Foundation’s 2008 Summit that he is frightened by the prospect of the U.S. falling into a recession and the price of oil continuing to go up due to rising demand elsewhere in the world. Izzo said that, even as the U.S. economy falters, the national oil companies (NOCs) that own most of the world’s remaining reserves will have no reason to operate more efficiently and, as a result, the likelihood of a devastating global shortage of oil will keep rising.
“They do the exploration and production,” Izzo said, referring to the NOCs, but “They don’t have the technological expertise.” Izzo said that the NOCs’ production “inefficiencies” are costing the world a lot of oil. While he didn’t get into specifics, other experts maintain that NOC-run oilfields in Mexico, Russia and the Middle East are all suffering from chronic over-exploitation and under-maintenance which threatens to greatly shorten the economic life of most, if not all, of the world’s biggest, most important oil-producing installations.
(14 April 2008)
Bill Paul from EnergyTechStocks writes:
We are starting a four-part series tomorrow (Monday)featuring the perspectives of four very different experts (a US State Department official, a former director of the CIA, one of the co-recipients of last year’s Nobel Peace Prize, and the head of the Hawaii state legislature’s energy and environment committee), each of whom sees the world teetering on the edge of an energy crisis.
In Part 1 State Dept. energy official Jeff Izzo warns about NOCs’ ineptitude. In Part 2, Jim Woolsey warns about Big Oil’s “stranglehood.” In Part 3, Stanford’s Stephen Schneider warns about Russia’s military and energy plans. And in Part 4, the Hawaiian legislator warns that America’s 50th state is one missed oil tanker shipment away from disaster.
