<DrumBeat: January 17, 2008 The Oil Drum Goodbye Helium, Goodbye Brainscans>

125 comments on President Bush Questions Saudi Ability to Raise Oil Supply

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rainsong on January 16, 2008 - 8:09pm Permalink | Subthread | Comments top

Saudi Arabia planned to reach peak capacity in 2009. How long they might hold that plateau, is an unknown variable. The UAE was forecast to reach peak production by 2012. Iraq has much potential to grow production if they can form a stable government. Iran boasted of great reserves. Before Bakhtiari (retired Iranian National Oil Company manager) died he indicated Iran had proven reserves of about 40 billion barrels. If Iran will get santions lifted they might prove more oil. Kuwait is unlikely to produce more than four million barrels a day as they decided they should not push production in Burgan to higher levels. Algeria and Libya have seen declining reserves in large older generation fields. They have discovered more oil on previously unexplored blocks. Nigeria and Angola have potential to increase production for some time to come. Indonesia is seeing more E&P interest with higher oil prices and might be able to continue to produce for years to come, although they may yet need to import oil. Some OPEC members' internal oil consumption has been growing more rapidly than OECD consumption according to reports I have read. OPEC production neared 32 million barrels. If they grow consumption by as little as 3% annually, then they will need almost a million barrels a year of oil production increases for themselves alone. ASPO indicated that many of the newer fields being brought into production will deplete out in ten years. There is a constant need to replace production. A common error some made was assuming that any new oil project would increase oil supply while ignoring the depletion within exisiting projects. Many of the new projects scheduled for completion will be needed to replace the depletion of exisiting fields. Because natural gas liquids production is not regulated by OPEC, some OPEC countries were increasing their liquids production. The tendancy for some groups to be switching from gasoline to compressed natural gas cars decreased some of the demand for oil. A switch to smaller cars in America will be inevitable if costs are to be contained.

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rainsong on January 16, 2008 - 8:55pm Permalink | Subthread | Parent | Comments top

My calculation of 3% growth of OPEC oil consumption neglected the fact that much of OPEC's oil was exported. This was an error. U.S. net oil/product imports increased this week compared to this week last year (1.3% -- EIA) in spite of record high oil prices and a rumored economic slowdown.

Saudi Arabia's ability to increase production? In late 2006 oil prices dropped to about 60 dollars a barrel and they found themselves unable to increase production, but willing to decrease it. Some of the supply issue was political, some was project engineering and geology.

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SailDog on January 17, 2008 - 1:48am Permalink | Subthread | Parent | Comments top

A switch to smaller cars in America will be inevitable if costs are to be contained.

In his February 2005 report Hirsch reported that the median age for the US fleet was 16 years. It is hard to see in a recession how the fleet is going to be replaced any quicker. Much of it may be scrapped, but that is a different issue. Car pooling, minibus point to point services (like in Africa and the Caribbean), reduced and shorter trips; and more use of public transport will most likely take up some of the slack. The recession and or increasing cost of oil products will also result in fewer journeys.

Anyway gasoline is more of a discretionary fuel.

The big issue is going to be diesel and Aeroplane A-1 (Jet fuel). These are very similar blends. Diesel is a vital fuel while jetting around is more discretionary. When shortages become apparent my guess is that the military, agriculture and haulage will get first crack at the available supplies while air travel will get very expensive.

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expat on January 17, 2008 - 7:56am Permalink | Subthread | Parent | Comments top

Though currently, it is outlying areas in the U.S. that seem to be suffering sporadic diesel problems.

Interestingly, gasoline appears ever less 'discretionary' in the eyes of those using it. At least if you see how declining expenditures in other discretionary areas continue, while money continues to be poured into the gas tank.

Even more interestingly, Europe has apparently turned its back on 'regular' gasoline (talking about details concerning octane, the ways to measure it, etc. is not important here) - in part, according to the radio news a couple of days ago, because the price for it at Rotterdam has been steadily increasing. As have European exports to America.

If you will, Europe is offsetting some of the increase in fuel prices through a strengthening euro combined with a bit of trading of 'unwanted' gasoline at a nice mark-up - however, since Europe is very much a diesel market compared to the U.S., I don't have any idea how much of for how long Americans can afford to pay euro prices for diesel when competition grows fiercer. I do know that the dollar doesn't go as far as it used to, though.

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125 comments on President Bush Questions Saudi Ability to Raise Oil Supply

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