94 comments on Angola Joins OPEC
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So how long can this (taking oil from the inventory instead of importing it) go on? At this rate how long will the inventory last?
Suyoghttp://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/weekly_petroleum_status_report/curren t/txt/wpsr.txt
But, I did notice this endnote and never realized what it could mean:
This could literally mean we have tanks or fields reserved just for the US all around the world?
There is the possibility that some of this is Iraqi oil, being held as collateral for all of the uranium the US is shipping over there, just in case they decide not to pay their bill.
Anyway, given those rough numbers, the current gap can be covered for a long while (a few years) unless the gap grows larger. This is the question that WT has raised - can we continue to expect growing imports at a time when the exporting nations are cutting back production and seeing internal consumption growth of their own? A key consideration is whether this is peak or not. If not, then theoretically and at least for a few more years, production could increase although demand could still outstrip production pushing prices higher even as production rises. But if this is peak and production cannot rise while demand continues trying to rise, then the market mechanism will balance the distribution of oil production to consumption - via price. However, even if this is not the exact peak, we can still get what I believe Robert calls "peak lite" effects of production failing to keep pace with demand.
My own view is that I agree with Stuart's previous assessment that peak is about now. However, even if not, and if peak is 2010 or 2011, it doesn't matter much because we're likely to get Robert's "peak lite" anyway. We're too close to the peak to alter the impact appreciably at this time and so we get to ride whatever wave emanates outward from this, positive or negative. We gave up our chance to control that wave years ago.
- Inventories were drawn down only recently after the summer driving season and refineries going into maintenance. US refineries saw a huge drop in prices for Canadian oil and little storage space to buy more oil to store away. This led to dramatic declines in NYMEX WTI crude oil. After this event, we saw a draw down. I thought you were showing export numbers going down before the drawl down?
- Over demand is not down. The WSJ reports only small users cutting back. There are actually bigger users cutting back like Japan, Germany, etc.... These are the ones who will show up in the data. Even after accounting for these, we are still seeing increased OECD demand.
When I asked this same question else where, they said it might be a delay between oil production numbers stated by producers versus oil supplies in transit through pipelines or ships, but I have not heard anyone here mention this.Its a shame that common sense seems to have escaped the majority of posters here. If there is no place to store the oil, imports have no choice but to decline, and we have no choice but to use the oil we have in inventory.
WT is the minority even amongst peak oil 'prophets' in believing that the peak has passed.
Explain why the inventory or the richest largest oil consumer on the planet will be the first effected by peak oil. Looking at US inventory as some sort of indicator of peak oil is navel gazing at its finest.
When US inventory becomes a problem and it will one day we are well past peak oil.
US inventory and peak oil have nothing to do with each for some reason people like to use US inventory to somehow indicate we are not at peak. This is a increadibly flawed logic. I see a lot of people following peak oil making this assumption.
Now with all that said the current economic/political intrigue going on in the face of tight and declining oil supplies may cause a engineered or shortage but its root cause would be political not economic. Peak Oils role is simple the shortness of supplies allows political moves that cannot be circumvented by using alternative suppliers.
Finally depending on the depletion rate post peak vs demand the time period between peak and when the US becomes effected is not long but its certainly post peak. My guess is if we peaked in 2005-2006 then the US will start experiencing strong effects of peak oil in 2008-2009.
In any case by the time the US experience real supply problems we will be obviously past peak.
When this occurs, your imports must decline. If anything, this could be a indication that a good portion of our petrol demand is now being offset by various biofuels, or that some industries and consumers are cutting back on their consumption. Or any number of other reasons.
Why is it that it has to be because exports are falling, and that we must have reached peak oil in 2005?
Agian who cares about the US right now ? Show me it matters.
All US demand does is set the base price for oil. We have plenty of oil at 60 a barrel with a economy in recession.
And we will have plenty at 100 and 200 dollars a barrel.
If price is going up on a commodity you try and stock up on the goods. So I expect the US will have high inventory right to the point that depletion is high enough to cause real shortages.
Again.
1.) The wealthiest consumer will be the last to face shortages.
2.) If price is rising you keep maintain high reserves.
Note its more complex than this but this is a basic factor.
Peak or no peak tying US supplies to peak oil makes absolutely no sense. A lot of people make this mistake your not the only one.
Next US reserves are not large anyway outside the SPR less than 30 days supply so we don't keep huge quantities of oil on hand the storage here is strictly to ensure we have enough to cover most reasonable supply disruptions. The SPR covers extraordinary disruptions. Thus the ability of the US to use their reserves to manipulate price is very limited.
What's really going now if you paid attention is OPEC is pissed the US is willing to allow the dollar to slide its a money game and has nothing to do with oil.
East Coast PADD 1 stocks peaked in November 1981 at 276,956,000 barrels http://tonto.eia.doe.gov/dnav/pet/hist/mttstp11m.htm
Midwest PADD 2 stocks peaked in January 1981 at 339,795,000 barrels http://tonto.eia.doe.gov/dnav/pet/hist/mttstp21m.htm
Gulf Coast PADD 3 stocks peaked in July 2005 at 1,166,519,000 barrels http://tonto.eia.doe.gov/dnav/pet/hist/mttstp31m.htm
Rocky Mountain PADD 4 stocks peaked in March 1981 at 41,262,000 barrels http://tonto.eia.doe.gov/dnav/pet/hist/mttstp41m.htm
West Coast PADD 5 stocks peaked in January 1982 at 186,768,000 barrels http://tonto.eia.doe.gov/dnav/pet/hist/mttstp51m.htm
Assuming that all peak storage levels were "full tanks", implied total availability of storage in the USA is 2.011 billion barrels, almost 300 million barrels more than current stock levels.
I assume that some of the regional storage (PADDs 1 and 2) have been mothballed or decommissioned due to locational redundancy, more recent peaks in 1998 (November and August respectively) were 216.5 million and 258.8 million barrels respectively.
PADD 5 stocks were as high as 185.5 million barrels in 1995, so I would guess that storage levels remain the same as they were in the early 1980's - logically this makes sense as PADD 5 grows increasingly reliant on imports.
Using the more recent PADD 1 and 2 data, we can still extrapolate upper capacity limits in the region of 1.870 billion barrels, which is almost 160 million barrels above present levels.
"SANTA MONICA, Calif., April 6 /U.S. Newswire -- The Foundation for Taxpayer and Consumer Rights today released internal Shell documents showing the oil refiner is set to close and demolish its Bakersfield refinery despite the fact the site had the biggest refinery margins, or profits per gallon, of any Shell refinery in the nation as of yesterday."/
I have posted facts and links - you have posted unsubtantiated theories and opinions.
You do yourself no favours on this site with cantankerous rebuttals and a demonstrable inability to structure a carefully considered argument. You might consider once in a while doing some research before stating an opinion. You might consider once in a while conceding that you are wrong when so proven. You might consider the virtues of grace and humility.
You might, but you won't.
And I am the one that can not structure a carefully considered argument?
You already acknowledged that storage capacity was reduced by a significant value from the 80s until 1995, yet when I ask why you believe nothing has happened since 1995, I'm some crank? The irony is not lost :P
The tanks were very nearly full. This was the primary reason that prices dropped so quickly in the late summer and early fall. When things are near the top, they generally have no other choice but to fall. Is that in dispute?
I did NOT acknowledge that storage capacity "was reduced by a significant value from the 80s until 1995" - I speculated that this might be the case, though I do not know this as a fact. The intention was to demonstrate that even if there have been substantial reductions in capacity, that we are still some way from "virtually full". Specifically 8.5% away from that level, or 7% if I accept your unsubstantiated postulation that PADD 5 capacity is 30 million barrels lower than my number...
My view on unchanged capacity since 1995 in PADD5 was explained in the previous post - it would make no sense to reduce storage capacity in an area increasingly reliant on imports - did you miss that part or just choose to ignore it? I would add that reducing capacity makes even less sense from the perspective that PADD 5 has no substantial liquids pipeline links with the rest of the nation and as such is pretty much an "island".
Tanks were very full in late summer (about 90% full by end September in my opinion), both in north America and across other OECD countries. I believe the actual reason prices came off was the lack of hurricane activity. Stocks had been built in anticipation of hurricane-related supply disruptions, none occurred. In this respect, you are right that high stocks were one of the major causes of the sell-off, another (possibly more important) being the liquidation of approximately 150 million barrels worth of speculative "stocks" held in the futures markets by hedge funds et al.
I did not call you a "crank", but note that you are essentially calling me one by stating that "the irony is not lost". I would agree, however, that your behaviour is cranky.
This will be my last reply to you on this or any other thread. Your hostility and overbearing arrogance is insufferable - I have better things to do. I hope others have benefitted some from the discussion about storage levels, which was my sole original intention.
It is clear Hothgor simply misrepresents shamelessly what you are saying - I don't know if he's just being deliberately provocative, irritating or what - but it is clear there is nothing you can say that would actually engage him in a productive debate. I encourage you not to respond to him unless it is for the benefit of the rest of us, who will read what you have to say thoughtfully. I think you stuck it out far longer than most would have.
Ask Westexas that please. I too want to know why this is the case :)
First I've posted before that I can't see the US have true peak caused supply problems until well after the peak and I've mentioned that in posts following West Texas. As I said a lot of people are making this mistake I'm not sure in the hundreds of great posts that WT has made if he as made it or not. He can speak for himself.
I do however think two things will happen the price we pay will go up as significantly as we bid against other first world nations WT is 100% right on this side.
Next the vast majority of the work done on this site is on supply side not demand and certainly not speculation on the distribution of oil except with as I've noted what I feel is a incorrect assumption that US supplies and peak oil are correlated. The only correlation is the price we pay which by any standard is high.
Now with that said you can imagine that under these conditions that the chances for supply disruptions are very high and it almost certain that the first effects in the US will be temporary shortages that become more frequent and longer.
I'd love to see this site explore issues on the demand side of peak oil more. I've suggested several times that asphalt prices and real shortages here indicate are one effect of peak oil. Others exist if we collectively start looking at issues such as real demand destruction examples price/supply problems etc on the consumption side I think we can collect real and useful examples of the effects of a constrained expensive oil supply today.
It won't initially be in the US gasoline supply.
The big problem is not that some people that believe a peak is near are incorrectly following the US oil supply.
I've probably made the same mistake myself in some of my posts. Since we have the data to look at its hard to not get drawn into making false interpretations. The price we pay is important and it pays to watch our supply since disruptions that are related to peak oil will happen but I'm as guilty as anyone of reading too much into US supply numbers.
Thats what happens when a data junkies get free data :)
The problem is people disputing Peak Oil are incorrectly assuming that since the US has plenty of oil we are not at the peak. If we are going to convince people of peak oil we need to look beyond the US gasoline supply and find real examples of peak oil effects.
Agian I implore people to look...
Look at Propane supply in the third world.
Look at Asphalt.
Look at bunker fuel and fuel oil.
I have no idea what products are made from oil but I'm pretty sure that we are probably starving markets right now of other oil products in order to keep diesel and gasoline supplies up.
If we look we can find this information.
I've tried.
http://www.bunkerworld.com/
But the data is behind a pay wall maybe someone with connections can get them to release historical data for free.
Asphalt seems to be a local product from what I can tell I've found no compilation of data for it.
Next of course the places we are most interested in are in the third world and I've no clue on how you would find stats on for example asphalt usage in Africa.
But this is what we may need to look at and even more important we need to discuss what oil products might be the canary in the coal mine for peak oil.
Asphalt also exists in huge quantities close to or at the surface. The ancient Summerians of Iraq used it as mortar in their cities and to waterproof adobe brick. The egyptians used it as boat caulking, and it could theroreticially be mined and used that way today. In Texas we have extensive deposits in Uvalde and Real Counties, the La Brea Tar pits in Los Angeles are asphalt, the Orinoco tar sands and the Alberta Tar sands are all asphalt mines.
What I'm saying is I don't think asphalt is a good indicator of the peak. Your bunker fuel idea though has a lot of merit, and probably watching the total import figures of countries without much foreign exchange, like Haiti, Guatemala , Mali or Chad. Since kerosine is a big import for poor people's cooking fuel, perhaps we should try to find those figures? Kerosine is virtually the same thing as jet fuel, so the kerosine markets will suffer before airlines and national govt. airforces give theirs up.
As I have repeatedly stated, IMO, the forced conservation has first shown up in poorer regions like Africa, where there are numerous documented examples of forced price based conservation.
I think that the US import data are sending price signals, to-wit, that if we wish to continue consuming petroleum products at our current rate, we are going to have to bid price up. Only, this time we are going to be bidding against regions like China and Europe.
Are we really the "richest largest oil consumer?"
Consider the simple fact that the majority of Americans live off the discretionary income of other Americans, or the fact that we use twice as much energy per capita as the EU. We have the illusion of a prosperous economy, where vast amounts of energy are in effect wasted on businesses that amount to little more than transfer payments. For example., instead of going to Las Vegas, you could just mail the various companies checks and it would have the same economic impact.
As I outlined up the thread, if you think that we can continue to increase our total petroleum imports by close to 5% per year, while world export capacity--as I predicted--is falling, I have a perpetual motion car to sell you.
The depth of denial--on a Peak Oil website of all places--is simply amazing to me. What part of the impossibility of an exponential growth rate in a finite world do you people not understand? The problem is not in 2010, 2015 or some other multiple of five. The US is expecting a perpetual increase in petroleum imports, while world exports are declining.
And the fact that a majority of Americans have a lot of discretionary income is precisely what makes us a prosperous economy, isn't it? If you can afford it there is nothing wrong with going to Las Vegas and enjoying yourself. And the fact that we use twice as much energy per capita as EU is what gives us room to conserve without jeopardizing our survival. In N. America, peak oil will be an economic event; in many other parts of the world physical survival will be at risk.
Of course, the fact that we have had a net negative national savings rate for over a year, combined with the highest debt to GDP ratio in US history, doesn't exactly put us in good shape to bid against Europe and China, does it?
Also consider the nature of the "GDP," when the majority of Americans live off the discretionary income of other Americans. As Americans have to spend more money on energy and food (and other items), what is left of their "discretionary" income is going to shrink rapidly.
WestText I agree with you 100%.
As far as being the richest as long as the petrodollar reigns supreme we are. The could end at any moment. It should have ended years ago if Japan had clean up their act and with the new Euro. America has taken advantage of the fact the world did not move to a basket currency for world trade.
I think we are the richest country in the world right now but a lot of this wealth is from selling debts we will never repay to suckers around the world.
I also have serious doubts on how long we can maintain this financial scheme. As I learn more about how wealthy America has in many ways leveraged its middle class to allow it to control the majority of the worlds international corporations I've become convinced that chances for a real response to peak oil from the US is basically zero.
Once you realize that many American companies make more money outside the US than inside you realize the full extent of the problems we face.
Basically they no longer care about the American consumer and are happy to pump them for their last dime. And of course the American consumer is quite happy to be pumped.
This situation is quite relevant to peak oil since we are suggesting a major investment on the part of the American government which would of course mean additional taxes and investment on the part our our corporations. They have no interest in the long term survival of the American consumer.
No grand conspiracy is needed for this to happen its a side effect of globalization. In a global economy worker pay is driven down too the global mean.
This added with WT export land model implies that at some point the US will become a second world nation
with demographics similar to Brazil.
We probably will see our oil consumption drop at that point but its not a pleasant way to achieve the goal. Any chance of a rational response to peak oil from the American goverment assumes that they care I see no indication that this is the case.
There are several ways to look at this.
One way is to look at it from currency point of view:
Prior to 2006, the situation was a lot different than post 2006, so let's go back to 2005. If the world's economy is frozen and all assets are liquidated to payoff all debts, US will have a positive cash balance. Post 2006, US foreign earnings will no longer compensate our account deficit. So from a currency point of view, we are living on past capital accumulations/savings starting from 2006.
A second way to look at it is ability of US citizens to payoff debt, US citizens own more assets than all US debt combined. US income is also quite high, so no danger of defaulting. This is only a valid way to look at it due to US debt is denominated in USD, so currency depreciations do not alter US ability to repay debt. Other states do not have this luxury. As the more money they paydown US denominated debt, the less their own currency are worth and the more money they need. Of course, they get around this by dealing with hardcurrency.
There are more ways to look at it. The point being it is not too late for US to get their act together. Not like they will, but they are not at the point of insolvency or close to it.
Where did you get $50Trillion?
I would hope with an annual $13+Trillion revenue economy that assets are at least value 4 times revenue.
I don't know what you think our assets are. I also have no idea why you think we are not bankrupt. All the methods that I mentioned points to US being in a bad position going forward.