 | DrumBeat: June 21, 2007 | The Oil Drum | Science and Technology Energy and Environment Subcommittee Action Today |  |
| Lies, damned lies and BP statistics | The Oil Drum: Europe | Carbon emissions: China no longer has any excuse to wait | |
139 comments on Will OPEC increase supply in the 2nd half of 2007? Or has Ghawar peaked?
Comments can no longer be added to this story.
| Show without comments | PDF version
139 comments on Will OPEC increase supply in the 2nd half of 2007? Or has Ghawar peaked?
Comments can no longer be added to this story.
| Show without comments | PDF version
User login
Personnel
Editors
Contributors
Peak Oil Primers
Archives
- November 2009
- October 2009
- September 2009
- August 2009
- July 2009
- June 2009
- May 2009
- April 2009
- March 2009
- February 2009
- January 2009
- December 2008
- November 2008
- October 2008
- September 2008
- August 2008
- July 2008
- June 2008
- May 2008
- April 2008
- March 2008
- February 2008
- January 2008
- December 2007
- November 2007
- October 2007
- September 2007
- August 2007
- July 2007
- June 2007
- May 2007
- April 2007
- March 2007
- February 2007
- January 2007
- December 2006
- November 2006
- October 2006
- September 2006
- August 2006
- July 2006
- June 2006
- May 2006
- April 2006
- March 2006
Vital Trivia
License
This work is licensed under a Creative Commons Attribution-Share Alike 3.0 United States License.
GAIA Host Collective
Except gasoline demand is up.
Yes, but not up enough to create a problem. Why do OECD build more stocks?
1. Because they belive Crude is cheep now?
2. Because they believed demand would be even greater than it became?
3. Unknown factor?
4. Unknown unknowns? (Thanks Donald)
For me it is abvious that OECD can handle §70/Barrel, but the price increase must have led to demand destruction somewere. That demand destruction might mean that the increase in crude sales is less than it had been at say $30/barrel. It does not have to be a decrease in use for us to have demand destruction.
Do the poorest people on earth really buy as much oil know as they would have at $30/barrel?
For me it is obvious that OECD can handle $150 oil. Or $250 oil. But not the rest of the world. That is, as long as you can *get* the oil you want at those prices.
Cheers, Dom
Munich
Exactly!
And that is why OECD inventories have very little to do with how well the world market is fed with oil from OPEC.
OPEC is putting up a smokescreen here, or do any TODers have any good arguments to counter that?
There is no way to know with ironclad 100% metaphysical certainty what OPEC is up to. We should instead look at various scenarios as more or less likely. For example, anybody who claims to have full knowledge of Saudi Arabia's reserves and production capacity has no credibility IMHO. We have to live with the fact that there are many things we would like very much to know--but which cannot be part of our knowledge but rather only opinion, more or less supported by facts.
Facts NEVER speak for themselves. Facts must be interpreted in terms of theory or models, such as Hubbert's Peak. Where we differ on TOD is not so much as to "facts" but rather as to the interpretation of these facts (e.g. Westexas's vs. Robert Rapier's interpretation).
Agree, but I still do not get why OPEC says:
"We do not need to increase the supply, since the OECD stocks are in good shape". I do not understand the logics here. I can not see the link.
It does not have to be a smokescreen of cource, it could be just good ol' stupidity, or can any of you explain this argument from OPEC for me, i.e. it might be my own stupidity that comes in to play here...
My hunch is that OPEC wants to keep crude in the sixty to eighty dollar range; in other words, they do not want to increase output. Whether they could increase output if they wanted to does not matter in the short run if the case is such that they do not want to drive prices down by allowing output to increase.
Agree again, BUT DO YOU UNDERSTAND THE OPEC ARGUMENT regarding OECD stocks? I do not! Does anybody?
No it makes no sense. As long as the oil markets are in Contango the natural move is to buy and store. Effectively hoarding oil. You have to look at the price. OPEC is not happy with the what they now consider a bargain price for oil and they want it higher. I've posted a few times that the last thing we will see before TSHTF is low oil inventories in OECD countries and it will be at far higher prices than today.
What I think is happening is OPEC is testing to see of non OPEC sources can deliver or if OECD stocks will go down. The reason is very sinister they want to repeat the 1970's embargo and get rid of Israel once and for all. At the moment they are a bit peeved because its not clear that a embargo would be devastating.
I'd suggest you give it a year or so and the political goals of OPEC will become clear in any case I fully expect another Arab embargo in the next few years.
I think they're well aware of PO and they're keeping us supplied until TSHTF. The battle between Islam and everyone else is a chess game...a marathon, not a single move game or a term-by-term race. While Iran openly admits they'll play their oil weapon when they see fit, OPEC has kept their overall strategy under the radar.
____________________
MySpace.com/ziontherapy
I think they're well aware of PO and they're keeping us supplied until TSHTF. The battle between Islam and everyone else is a chess game...a marathon, not a single move game or a term-by-term race. While Iran openly admits they'll play their oil weapon when they see fit, OPEC has kept their overall strategy under the radar.
____________________
MySpace.com/ziontherapy
What battle between Islam and everyone else? There is certainly an attack on Islam by everyone else, especially Western zealots and fundamentalists. Don't confuse the mugger with the victim. Islam is the victim not the aggressor.
Let's get things the right way round. During the European crusades against Islam in the middle ages, Islam was also portrayed as the aggressor, whereas in reality it was the victim of the barbarous crusades.
I think you will find the real enemy and therefore the "real battle" is much closer to home.
Triumvirate of collapse - Economy, Ecosystem, Energy
I try to stay out of political debates but this crap is so far out in left field I must comment. The three thousand people who died on September 11, 2001 were not muggers. How dare you suggest such a thing!
What happened one thousand years ago is not pertinent to this discussion. You may as well agree with those who say we owe money to the ancestors of slaves because our ancestors held slaves. At any rate the crusades were driven by religious fanatics, just as all Islamic terrorism today is driven by religious fanatics.
I agree that the Jews should have stayed out of Palestine, but that is now water over the dam. Neither you nor I had any say in that decision and we should not have to suffer the consequences. Bombing inniocent people becase of past errors is no way to settle differences.
Islam is a religion that believes that the infidel, (anyone not a Moslem), should be killed. The Koran divides the world up into two worlds. The world of Islam and the world of war. All the world is to be converted to Islam or be killed.
Now I know moderate Moslems do not agree with that position. But deep in their hearts most of them do. It is holy writ if you are a Moslem.
Follow the news out of Britain today. They are marching in the streets. They wish to make the law of the Koran the law of Britain. And they don't care who they have to kill to accomplish that goal.
Ron Patterson
"Nobody can just write what he thinks without proof. But we have real proof that that the story of Adam as the first man is true"
"What Proof?"
He looked at me with disbelief: "It is written in the Koran."
Science and Islam, Discover Magazine
The whole "does Islam preach killing of infidels" thing has been done to death all other the internet. Here's one link:
http://qa.sunnipath.com/issue_view.asp?HD=7&ID=9801&CATE=3000
It's not particularly difficult to "prove" that Judaism preaches the same thing by pulling particular passages out of the OT. Christians tend to let themselves off the hook by claiming that the NT showed a "new way" of love and tolerance etc. etc.
All mono-theistic religions are essentially "supremist" and destructive. In this current day and age, it may be that Islam has more than its fair share of followers that take this to an extreme, but that hasn't been true in the past, and there's no real proof that Islam is inherently worse than Judaism or Christianity in this regard.
I'm sorry, but I'm afraid the West are the muggers, and there is nothing historical in this statement. We are the ones who have been putting Islam on the spot by continually pushing our ideals, our economics and our values upon them (not to mention dictators, regimes, etc.).
Nothing political or religious, just an observation. I see no occupation of the West by Islam, no military bases or armies on our land, no fleets off our shoreline. In terms of scale the agression is practically all one way. The West is the aggressor, whether by military force, economic force or simply by pushing its culture upon a people who do not want it. Just look at which way the military convoys are going.
And don't put 911 on me as though it has some special meaning, it was just another atrocity amongst many, committed by people whose motives are mostly unknown.
I have no connection with Islam, but cannot abide the propagandist nonsense that there is a clash of civilisations or other such rubbish.
Triumvirate of collapse - Economy, Ecosystem, Energy
No particular disagreement here, I was merely looking at the issue from a comparative-religion standpoint.
Much as I have no time for religion, it's pretty hard to demonstrate that the U.S.'s military incursion into the M.E. has much to do with any sort of Christian superiority complex (though I'm sure it exists).
I am, on the other hand, prepared to defend the military imposition of democracy in extreme cases, providing it's done with that intent and done properly (as was quite obviously not the case in Iraq).
There are some 1 billion Muslims.
Undoubtedly any generalizations about beliefs about such a large group embedded across such a wide range of cultures and soceities is likely to be fraught with error.
Are Muslim countries more likely to support genocide? In the most recent incidents of geneocide the perpetrators were Christian (Rwanda and Bosnia), Marxist from a predominately Buddhist culture (Cambodia), and Darfur - where Muslim Arabs are persecuting Afrcian Arabs.
The largest scale genocides of the 20th century were carried out by Christian nations (Germany), Marxist nations with predominately Christian backgrounds (USSR) and Marxist nations with Confucian/Taoist cultures (China).
I think it is much simpler than all this stuff about religious zealotry. First they fought to force the Russians out of the Afghanistan (with our help) and now they are trying to do the same thing to us. It’s a good old fashion anti-colonial struggle. We should take their word for why they oppose us.
We have a very heavy footprint in their part of the world because we need their oil and gas. (You should know. You were part of it.) That effect is not surprising. But it is also not surprising that many people do not like us being there. We have brought about wrenching dislocation of their society and culture. Just imagine how people in the US would react if people from the Islamic world moved into the US in comparable force to our presence there and brought about similar changes here to our society and culture. Why do you think we have a second amendment? We would try to throw them out too, as we have in the past to much more familiar people.
Except people are moving into the US all the time and changing its society and culture, and have been for thousands of years.
Yeah, because they are relatively few compared to what is happening in the Middle East and most of them share much of our cultural heritage, they are not totally changing the nature of our society and violating our culture. They are successfully assimilating. It would be better for Saudi if that were happening there, too. But it's not. Its not a question of what should be happening to them. It is what is happening to them.
Thousands of years? What was 1776?
Accepted, technically before 1776 it wasn't the "U.S." - let's say the Americas.
Of course I realise there's a significant difference between the general pattern of "intrusion" into the Americas and the recent pattern of Americans into the M.E. Some Native American tribes might beg to differ, of course.
Note also that most M.E. countries have social structures and laws that make it virtually impossible for outsiders to 'assimilate'. We have a U.S. presence (civil and military) in Australia - it also exists in the U.K., Japan, and various other nations, all of whom (for the most part) are happy to have it there.
Especially in 1492.
I think they were testing the world production by 2005/2006, and are acting now. That could explain KSA dropping production.
I also think that it is about money, not Israel. Altough, Israel is about the US controll, so it may be involved.
Anyway, above ground factors (caused by the proximity of the geological peak) are a very nice explanation for what we have now. That would explain OPEC working into increase its market-share (with more countries), if it was a geological peak, OPEC would have no reason to grow. But above or below ground doesn't really matter, it's peak both ways.
Israel is the political whipping boy used to keep a restive populace inline attacking Israel is the easiest way to ensure that you have a lot of popular support. Thus when two conditions get closer one the world is obviously dependent on OPEC for any growth in oil supplies and the populations are restive you will see another Arab Oil Embargo ostensibly to force the destruction of Israel. In reality it will cause prices to increase dramatically and also rally the population.
Kill one dove with two stones :)
So yes its about money but its also popular politics and it probably will be a partial embargo you still need to make that money.
In general your right most of the Arab world probably does not really care about Israel outside of their usefulness as the best whipping boy on the block.
Historically, OPEC has used stocks levels in order to assess the equilibrium between supply and demand.
Check this article:
Low Inventories Or Stable Prices? You Can’t Have Both
BTW, there is also an interesting interview of William R. Edwards:
http://www.opec.org/home/Multimedia/videos/2006/142%20Meeting/Mr%20Willi...
But US oil inventories are a measure of nothing except expectation that prices might be lower in the future if they are low. We import gasoline and other finished products so we don't meet internal demand with our oil imports. So the US is going to have zero finished product imports long before its will have low inventory as long as the market is in contango.
I can't see US oil imports as an effective measure of anything except a contango market. The fact we continue to not fill the SPR is telling.
So this statement effectively means OPEC has no plans to ever increase production such that it will offset world decline.
They may increase production sometime in the future who knows but it won't be enough to make of for non OPEC declines. So ready or not it seems the decision has been made that peak oil is here now all OPEC might be able to do is effect the decline rate.
I think it makes good sense if the following are true:
1) They really don't care that much about small 3rd world countries and their people (at least not enough to sacrifice their own benefit - like the rest of us).
2) Only OECD countries have the power to put economic, military and political pressures on OPEC leaders, and they want to keep them happy.
3) To keep prices high, they can't cater to the "little guy" who by definition can't afford the high prices. They have to stick with the wealthier, big customers.
So in the end they are only really invested in keeping OECD happy, not everyone else, and their statements reiforce this.
Don, full knowledge and preponderance of evidence are two entirely difference things. Absolutely no one here claims to have full knowledge of anything. We do however claim to have examined the evidence and come to a conclusion as to what the preponderance of evidence supports.
The folks at the Oil Drum have gone over Saudi production, especially Ghawar, from top to bottom over the past six months or so. And I do believe they have a tremendous amount of credibility.
You have been gone for some time and apparently have not followed this debate or read any of the threads that dealt with Saudi production. You should review some of the data posted here before making such brash comments.
Ron Patterson
I did read the debates on Saudi oil that you refer to: They were excellent, outstanding pieces of research and reasoning.
However, I think Saudi oil is a puzzle inside a mystery inside an enigma. In other words, my reading of the data is that it is not sufficient to come to more than highly tentative conclusions.
For all we know, CERA is right. (Not likely, but possible.)
Don, you are making Saudi oil far more mysterious than it actually is. I spent five years in Saudi working for Aramco, (1980 to early 1985). Peak oil wasn't even on the radar screen back then and neither was Saudi reserves. But I did learn a lot about how the Arabs work and think.
There is not a snowballs chance in hell that Saudi has 264 billion barrels of reserves. The SPE papers reveal far more than than a tenative conclusion as to the condition of Saudi's ageing giant fields.
Of course one could come to the conclusion that all those engineers who wrote all those papers were just lying, in an attempt to deepen the mystery. You can believe that is a serious possibility if you wish but I must disregard that possibility.
For God's sake man, the data is right there before your eyes. Simmons saw it, the SPE authors saw it, and most important of all, the data and Saudi actions support the concept that future Saudi oil production is in deep doo-doo.
Wake up and smell the coffee.
Ron Patterson
In your opinion, CERA has no credibility. I make no claim to knowledge, though I am very suspicious of Yergin and Co.
Speaking as one outside the oil industry but as one who is sophisticated at analyzing quantitative data, my inclination is to believe that your interpretations of the data are correct. But this belief of mine is highly tentative and subject to revision.
If you want a subjective probability, I'll say that I think there is more than an eighty percent probability that your position is essentially correct. But I'll have to give CERA that ten percent probability--because those folks are neither idiots nor ignoramuses.
Ron:
I agree with you (and have heard the same thing from people I know that worked for Aramco. There are far too many miracles that have to take place to believe that Saudi Arabia has the capacity to be the swing player in all this for much longer, if it all.
Sometime back on TOD, I observed that the Hubbert Linearization curve for the KSA and Ghawar had the "dog-leg right" look to it, and from the standpoint of every other major oil basin that has gone through it's peak, that's a really bad sign because many of them show this same characteristic for 3-8 (annual) cycles before going over the falls.
In fact, the EIA (and I suspect the IEA projections) are all about creating and sustaining this "dog-leg" condition for the next 30 or so years. I think it's a fair question to ask if past performance does not support the assumptions, what "change" occurs and where to change the performance curve?
Starship, the Saudi dog-leg up was for the years 2003, 2004 and 2005. Saudi, and OPEC did reduce production in 2001 and 2002 but began to ramp up to full production in 2003.
A new Saudi linearization which includs 2006 data will show the dog-leg turning sharply downward. And when the 2007 data is eventually added the dog-leg downward will be even more pronounced.
There is no way that the EIA or IEA can fudge the data enough to keep the dog-leg from turning sharply downward.
Ron Patterson
"There is no way that the EIA or IEA can fudge the data enough to keep the dog-leg from turning sharply downward."
I know that and you know that. And yes, my linearization shows the same downturn (over the falls) as production was declining well before OPEC reducing export production quotas (as has been well documented here) in 2006. Might there be a little life left in that leg? Maybe, but history tells us it won't be for very long.
But besides a number of us whom follow such things (we are the persistent whine of the wind in the wires that is getting louder and bit more noticed) it will take sucha shock to get people to notice, and then only in disbelief . We've raised the hurricane warning flags and taken the first steps into the "new" future. But that future is pretty empty right now as the various parties hide stuff in plain sight. As the CNN series states "We were warned."
"Above ground factors" affect production, but to what degree will the big producers use production to affect "above ground factors".
It wouldn't be a stretch for KSA to use production to make their voice heard if for example they want the US to take some specific actions in Iraq.
Never mind Russia when it comes to possible action in Iran.