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182 comments on DrumBeat: December 9, 2006

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joule on December 9, 2006 - 12:53pm Permalink | Subthread | Parent | Comments top
I see that many of these global oil production numbers are reported to five significant figures. This makes me wonder how real a roughly 0.0025% difference (85, 205,00 vs 85,184,00) actually is.

One reason I (again) bring this up is that one of the lead articles in today's thread claims that roughly 1 million bbl/day of Russian oil is sold illegally.  It has also been reported elsewhere that a smaller yet still sizeable amount of Iraqi oil gets diverted to the black market. As such, I find it doubtful that this 'hot' oil gets accurately recorded in the respective country's production statistics, if it gets recorded at all.

I've asked this as an open question about three or four times in as many ways, but no one out there seems to be able to offer a numerical answer (i.e. something other than 'pretty good') as to the confidence level, error band, or whatever those more statistically literate than I wish to call it.

The accuracy of these production numbers is also potentially muddied by an apples & oranges problem as to whether all the components that make of the global total consist of just crude + condensate, c + c plus NGL plus other liquids, or what.

As such, I have a very hard time seeing these global production numbers as being anymore accurate than three significant figures (at best).

I know this is a bit beside your point that production (as however measured) has not moved much, but I think there is a tendency here at TOD to read too much into some of these very small differences between very large numbers.

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joule on December 9, 2006 - 12:57pm Permalink | Subthread | Parent | Comments top
errata:

In my haste I dropped the last zero. Should read: (85,205,000 vs 85,184,000).

Sorry

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Darwinian on December 9, 2006 - 1:34pm Permalink | Subthread | Parent | Comments top
Joule, a couple of points. The Russian oil is oil that is being produced above the agreed upon quota, or so Russian officials say. It is not produced illegally other than it violates their agreed upon contract. It is counted just as OPEC oil produced over the agreed upon quota is counted.

And yes there is some oil sold on the black market that is not counted. But in the grand scheme of things, this small amount of oil can be ignored. It has always been there and will likely be there for a very long while.

The second point is the exact month matters little. What matters is that we are currently on a plateau, and we have been there for about two years. This plateau, in my opinion, is the peak of world production. The month simply does not matter, nor does it matter that some oil is not reported, and neither does it matter that the figures are not exact. Even if the numbers are fudged by the reporting agencies, they can only fudge the numbers so much for so long. This will not hide the peak when it comes. (Which in my opinion is right now.)

Ron Patterson

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Dragonfly41 on December 9, 2006 - 2:30pm Permalink | Subthread | Parent | Comments top
Yep...I was just about to say the same thing...in the large-time scale look at production, the last year has been "struggling" at best to get up to 85,000,000 a day.  I think 2007-8 time period is going to be the kicker here.  If we don't see some "amazing" increases during this time, someone here wins the office pool.
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geewiz on December 10, 2006 - 2:05am Permalink | Subthread | Parent | Comments top
sadly, i think your right!
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joule on December 9, 2006 - 3:54pm Permalink | Subthread | Parent | Comments top
I would have to agree with you that in the larger scheme of things, particularly as it relates to the world being more or less stuck on a plateau ('undulating' or otherwise), the month-to-month figures are not of much signficance. Year-to-year is much more meaningful, but even there, one has to be careful in not presuming more accuracy than is really there. I know there are people who would read much significance into 85.2 million vs 85.1 million.

Regarding the small amount of 'funny' oil, you are probably right in that it has always been there and therefore tends to be a constant source of error that more or less washes out.

Based on my work in the environmental field, I am particularly skeptical about a lot of these gross 'aggregated' economic statistics, particularly those generated by governmental agencies. Not because someone is being deliberately misleading, but rather due to the inherent limitations and just plain slop in many of methodologies used in generating the numbers.

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smekhovo on December 10, 2006 - 12:08am Permalink | Subthread | Parent | Comments top
Most of Trutnev's remarks were about violations of environmental laws and regulation. He spoke about the whole sector without singling out foreign-run or joint venture projects.
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182 comments on DrumBeat: December 9, 2006

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