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51 comments on The Union of Concerned Scientists Report on XOM: How Does It All Fit In?
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51 comments on The Union of Concerned Scientists Report on XOM: How Does It All Fit In?
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Ace, your first contribution was excellent but your subsequent presenations have quickly deteriorated. Twice i have alerted u to the fact that your subsequent assertions that supply will shortfall demand is faulty.
Your original work was C+C. Today, after my two complaints, i see u have amended your premise to say:
"World total liquids supply declines at -0.8%/year"
Oh really? When did u come to that conclusion? U said your study was limited to C+C. Now u are taking that same 0.8% and applying it All Liquids? Nonsense. All five Presentations of bottom up state that the globe will be at 90mbd by 2010.
Your deception is on par with Bakhtiari's scammy stuff. Please make full disclosure. Your Supply graph line above is fantasy to support your agenda...
Actually I don't understand the concept of "growing gap" between demand and supply. A gap growing linearly and reaching -10Mbd in 2010 would correspond to an integrated deficit of 5 Gb or so. Probably more than the entire world crude stocks. It seems obvious that if the supply does not fulfill the demand, there will be some demand destruction due to high prices, until demand adapts itself to available supply (think of the current sensitivity of the market to stock changes announcements). Actually there is ALREADY a gap between the extrapolated demand from 2004 and the current supply, but the result is clearly visible : demand has been lowered and the two curves have always closely overlapped - as they will in the future.
For the same reason, it is not that obvious for me that crude oil prices will reach 100$ or more and stay here for a long time. Past data show that the crude oil barrel reached only temporarily the 80-90 $ threshold (mainly caused by sudden and unpredictible events) and but that provoked rapidly a demand destruction or even a recession, and prices fell again. It may well be that PO will never produce high 3-digits numbers - but just experience some spikes that will plunge the economy in a recession , insuring the balance between demand and dwindling supply.
Excellent reasoning, Gilles. Since the 21-day iraq2 war, we have seen contracted oil prices jump from $23 to $69. We saw a fear comonent in pricing slowly replaced by a global demand component. Interspersed was a fear of shortages component inflamed by the MSM amid rumours of Peak Oil. All the while, oil exec's were openly stating that their ROI is satisfied at the $40 level. Everything above that is demand or fear inspired.
The non-OPEC capacity increases are driving the present downward movement. It is outweighing the cuts in OPEC quota and momentum has not yet ceased as we see in today's market action.
Global GDP has likely slowed to 3% from 4.5% as well as demand destruction working itself thru the system (takes two years generally). Both the fear component and excess demand conponents are evaporating. Ideally, should there be sufficient surplus capacity, there will be equlibrium at $40. From there, it depends on geo-political events and the resiliency of regional economies as to where the Price is headed. But be assured, the suppliers are now quite aware of the recessionarly effects of plus $60 (contract) pricing. They will not venture there for quite a while.
The industry does not enjoy spiked cyclic environments. Having tested the waters, we should see some rational efforts. This will likely include adoption of the proposal for fixed prices of OPEC products and dissolution of the price band guidelines. It will add stability to their economies.