Friday Charts: The Never-Ending Greek Tragedy, Facebook, Cheap Oil and More

Comments (4)

  1. Jeffrey J. Brown says:

    Global annual (Brent) crude oil prices doubled from $55 in 2005 to $111 in 2001, in order to balance demand against a declining supply of Global Net Exports of oil (GNE).

    Oil demand in the US is down substantially, relative to our 2005 consumption level, as we have been outbid by the developing countries, led by China, for access to a declining supply of GNE.

    While slowly increasing US crude oil production will help, we are still dependent on imports for about 60% of the crude oil that we process in US refineries.

    At the Chindia regions’ rate of increase in their combined net oil imports as a percentage of GNE, in only 18 years the Chindia region alone will consume 100% of Global Net Exports.


  2. Ghung says:

    A nice group of charts today. My only bone to pick is your take on peak oil. Those who follow this idea realistically never say that “we are running out of oil”, as you suggest. Peak oil is the point at which crude oil production “peaks” globally and begins at some point to decline. Two facts bear out the validity of this reality: Production of crude has been on a relative plateau since 2005; and the US is using roughly 3.5 million barrels per day less than it did in May of 2005. Also, excepting an aberant spike/drop in 2008, average oil prices have doubled twice in ten years. You seem to suggest that $90/barrel oil is cheap. The current (minor) decline in price is attributable to reduduced demand (lagging) and reduced refining capacity, especially of the heavier, more sour crudes that are becoming more available. Fuel prices in the PacNW are spiking due to lack of refining capacity.

    You also ignore that world oil prices (ie: Brent) are still well above $100, and that exporters are using an increasing percentage of their production domestically as their production levels off and declines. It doesn’t matter how much oil KSA produces; what matters is how much they are able to export and of what quality.
    Considering that new discoveries are not offsetting decline rates (even at these high prices), and haven’t for some time, we are, indeed at peak oil. Substitution has masked the decline of world crude production, but the ability to do so going forward is dwarfed by the scale of global consumption; increasing in China, India, and much of the developing world.


  3. NSherrard says:

    I am confused. Why do you consider $90 a barrel “cheap oil”? Cheap compared to what?


  4. Robert Marston says:

    So how do you address the fact that conventional crude oil production has fallen to 66 million barrels per day and that even the additions of tar sands, tight oil, and deepwater have only been enough to keep production flat at 75 million barrels per day.

    The stuff the world is now calling oil includes biofuels, ethanol, and natural gas liquids. This stuff is not oil. But it has managed to allow world liquids production to increase to 90 million barrels per day.

    This extra oil comes at a very high price. And with marginal production reaching nearly 90 dollars per barrel in cost, you have demand destruction in key areas — especially the US. And this, my fine man, is the reason we have a glut. The addition of expensive fuels our economy doesn’t really want to swallow. So consumption keeps falling.

    And yet you say this means there’s no such thing as peak oil? Peak oil caused this. You’re just myopically focused on one outlier tree in a very large peak oil forest.

    So I wonder what would happen if natural gas liquids, biofuels, and ethanol replaced all of world oil supply and somehow, miraculously managed to increase production about 90 million barrels per day. Would you still claim that peak oil hadn’t happened even though the world produced no oil?

    No. The all liquids number is the equivalent to an accounting trick. And the real oil, the stuff that doesn’t come from tar, or far offshore, or in tight deposites requiring fracking, has been in freefall.

    I think you need to take a serious look at your data and then think again.


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