<DrumBeat: February 27, 2008 The Oil Drum North American Natural Gas Production and EROI Decline>

35 comments on This Week in Petroleum 2-27-08

Comments can no longer be added to this story.

| Show without comments | PDF version

m.e. on February 27, 2008 - 12:01pm Permalink | Subthread | Parent | Comments top

Since we are on inventory talk, the SPR is building, too. Feds want to reach 1.5b bbls by 2029.

Anyone have some thoughts on that?

Comments can no longer be added to this story.
memmel on February 27, 2008 - 12:41pm Permalink | Subthread | Parent | Comments top

Thats easy next question :)

I'd say that although I can't see how it will help I think that they realize that the world is becoming increasingly unstable and that we are not going to escape hurricanes in the Gulf forever.

I'd not read to much into it except that it looks like they are not anticipating a steep drop in prices anytime soon. We expanded the facilities a while back and I'm sure they needed to be expanded to ensure supply during disruptions.

If I had to guess top valid concerns.

1.) Incident in ME between US and Iran. Is tense one wrong move and problems.
2.) Trouble in Mexico damaging oil infrastructure.
3.) Venezuela attempting a embargo.
4.) Hurricanes.
5.) It has new empty capacity that needs to be filled.

Knowing the government five is probably tops.

Comments can no longer be added to this story.
Robert Marston on February 27, 2008 - 3:07pm Permalink | Subthread | Parent | Comments top

I think they'll keep building the reserve until there's no oil available for a build. For my part, I think it's good we have a solid reserve. It will buy us time when/if a real supply crisis occurs.

Just an interesting thing to point out -- OPEC is now positioning against reserves/stocks builds. I think they'd like to sell the oil later and at a higher price. And has anyone noticed that OPEC has had a really tight finger on the tap lately? They seem to be trying to match output with worldwide demand almost exactly. It's a concern. Is it possible spare capacity figures are a bit exaggerated? Or, as some say, is OPEC simply colluding to support higher prices -- all economies be damned?

Comments can no longer be added to this story.
memmel on February 27, 2008 - 3:56pm Permalink | Subthread | Parent | Comments top

I think that OPEC is working under a new set of rules. Since we have not had a real crisis yet its hard to determine what the new paradigm is. So we are in a sort of in between state that probably won't resolve till later this summer. My best guess is OPEC wants to see the price level that causes worldwide demand to start dropping. Too many OPEC producers are in decline or maxed out and if anything they know the situation better than we do. Shooting for a price point that leads to slowly dropping demand overtime makes a lot of sense. This implies that they are also betting that None OPEC production is in overall decline or cannot grow significantly.

So given that we could easily not see the true capabilities of OPEC for a few more years.
I don't think they are worried about the world turning away from oil anytime soon they can do the math on that one as well as we can.

Comments can no longer be added to this story.
alan on February 27, 2008 - 9:54pm Permalink | Subthread | Parent | Comments top

This implies that they are also betting that Non OPEC production is in overall decline or cannot grow significantly.

Or that those that are able to expand production would be interested in joining OPEC. For example Angola joined recently. After the latest discovery the possibility of Brazil joining was mentioned.

Comments can no longer be added to this story.
yartrebo on March 1, 2008 - 10:23pm Permalink | Subthread | Parent | Comments top

" 1.) Incident in ME between US and Iran. Is tense one wrong move and problems."
This one is totally our doing. Iran has no desire for an incident, but we sure seem to.

" 3.) Venezuela attempting a embargo."
Again, if they embargo us, it'll undoubtedly be because we asked for it again and again.

" 5.) It has new empty capacity that needs to be filled.
Knowing the government five is probably tops."
The SPR is a small drain on supplies and, in my opinion, it's well worth filling even with $100 oil. It's there to guard against supply disruptions, not to turn a profit.

Comments can no longer be added to this story.
Engineer-Poet on March 2, 2008 - 5:08pm Permalink | Subthread | Parent | Comments top

This one is totally our doing. Iran has no desire for an incident, but we sure seem to.

That must be why Iran was getting confrontational with 3 US warships (cough).

Again, if they embargo us, it'll undoubtedly be because we asked for it again and again.

Yeah, asking Venezuela to either stick to the terms of contracts signed by Chavez or pay market value for assets they're taking is the behavior of capitalist running dogs.

Comments can no longer be added to this story.

35 comments on This Week in Petroleum 2-27-08

Comments can no longer be added to this story.

| Show without comments | PDF version