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151 comments on DrumBeat: September 10, 2008

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Darwinian on September 10, 2008 - 9:23am Permalink | Subthread | Comments top

The IEA released the latest Highlights of the latest Oil Market Report this morning.

August global oil supply fell by 1.0 mb/d to 86.8 mb/d on North Sea maintenance, the BTC pipeline outage and lower OPEC supply. Non-OPEC output is revised by -180 kb/d for 2008 and by -85 kb/d for 2009, with hurricane outages impeding 2H08 supply. Non-OPEC growth including OPEC NGL is now 580 kb/d in 2008 and 1.56 mb/d in 2009.

If you remember last month the IEA had global supply up by 890 kb/d to 87.8 mb/d in July. The EIA numbers do not necessarily follow the IEA numbers exactly but usually the direction is the same. So look for the EIA numbers to jump for July but fall back even a little further in August.

The EIA numbers have non-OPEC supply, C+C, January thru June, down 430 kb/d verses the same six month period last year. There is no way will non-OPEC supply even be up this year let alone be up by 580 kb/d as the IEA says. Of course they are counting all liquids, not just C+C and they are counting OPEC NGL as part of non-OPEC supply. I don’t understand that fuzzy math but I suppose they have their reasons.

The last year that non-OPEC oil production was lower than this year was 2003. We have been an almost five year plateau since October 2003 when non-OPEC first passed 40.5 mb/d. That month, October of 2003, non-OPEC producers produced 40.715 mb/d. In june of 2008 non-OPEC production was 40.507 mb/d. It looks like non-OPEC oil production may fall off that 5 year plateau this year as the trend is downward.

Ron Patterson

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Pitt the Elder on September 10, 2008 - 10:00am Permalink | Subthread | Parent | Comments top

they are counting OPEC NGL as part of non-OPEC supply....I suppose they have their reasons.

I believe the reason is that OPEC NGLs are not subject to production quotas.

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xeroid on September 10, 2008 - 2:28pm Permalink | Subthread | Parent | Comments top

Peak oil is a crude oil phenomenon and primarily a future serious transport problem.

NGLs have almost nothing to do with transport and IMO are included to deliberately cloud the already fuzzy statistical picture.

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x on September 10, 2008 - 3:11pm Permalink | Subthread | Parent | Comments top

It's the same old problem that plagues discussion of oil/energy issues that I have railed against umpteen times. Things that are different can not be compared, added, subtracted, multiplied or divided. If they are the result is silly nonsense.

Those who repeatedly do this stuff can not be that stupid IMO. They have an agenda which benefits from it. There is financial gain in it somewhere for someone.

Watch the money. It is often oil money that is behind it as in the totally fallacious EROEI "studies" of ethanol by Pemintal et al. If ethanol can be slowed or stopped it decreases competition at the gas pump enabling price rises and increased refining margins.

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embryonic on September 11, 2008 - 2:52am Permalink | Subthread | Parent | Comments top

Things that are different can not be compared, added, subtracted, multiplied or divided.

You keep repeating this mantra, oblivious to the fact that people multiply and divide different quantities all the time: what's a kWh? Well, it's what you get when you multiply a kilowatt (a measurement of instantaneous power) by an hour (a duration). Oh no! Two completely different things are being multiplied together. Forget the LHC, this act of wanton senslessness will destroy the universe. (I won't digress into the more mathematical areas where "adding" different kinds of things occur.)

The key point is that you've got to actually engage your brain and think about what these quantities mean (in particular a kWh is neither a kW nor an hour but something different), but that's not saying it's silly nonsense. Combine that with your obdurate lack of specificity about what you don't like about a specific calculation and I start to get suspicious.

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Ricky on September 11, 2008 - 5:43am Permalink | Subthread | Parent | Comments top

"Things that are different can not be compared, added, subtracted, multiplied or divided. If they are the result is silly nonsense."

MPG.

Miles Per Gallon.

Silly nonsense?

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xeroid on September 11, 2008 - 7:34am Permalink | Subthread | Parent | Comments top

MPG, a ratio, isn't silly nonsense.

But directly comparing miles and gallons is silly nonsense - just like comparing NGLs and crude, they aren't the same thing and aren't used as alternates - a ratio of NGL to crude might make some sense and give insight though.

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radlafari on September 10, 2008 - 10:09am Permalink | Subthread | Parent | Comments top

August global oil supply fell by 1.0 mb/d to 86.8 mb/d

I'm a bit confused reading just that same figure for demand:

The Paris-based energy watchdog said in its monthly report that global oil demand this year will average 86.8 million barrels per day, and 87.6 million barrels a day in 2009. Those forecasts were respectively 100,000 barrels and 140,000 barrels per day lower than the IEA's previous forecasts.

Coincidence?

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Darwinian on September 10, 2008 - 12:10pm Permalink | Subthread | Parent | Comments top

No, supply and demand always equal out. There is always a demand, at some price, for every barrel of supply. The price fluctuates to insure that supply equals demand and vise versa. What the IEA is really saying, or guessing at, is the total world all liquids production for 2008 and 2009.

But of course using the term "demand" instead of "production" makes a huge difference. If the IEA said they were lowering their projection for oil production, this would cause prices to rise. But if they changed that word to demand, this would likely cause prices to fall. But no one can deny that at years end, what oil was produced was also demanded. That is, they used it all.

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Pitt the Elder on September 11, 2008 - 6:15pm Permalink | Subthread | Parent | Comments top

supply and demand always equal out.

That wasn't the question, though. The question was whether it's a coincidence that the production figure for August was the same as the projected demand figure for 2008.

The answer, of course, is "almost certainly": demand for 2008 was going to be in the 86-88Mb/d range, and production for August was going to be in that range, so the odds that they'd both be the same number up to a tenth of a point aren't that bad. Even if they were both totally random numbers between 86 and 88, that chance would be 5%; as they're related rather than random, the chance is higher.

using the term "demand" instead of "production" makes a huge difference.

Of course it does - they're different things.

Demand and supply may always be equal, but one has to change to match the other, and which one is changing affects which way prices go. If current-price demand falls, then price has to fall to make end-price demand and supply match. If current-price supply falls, the opposite happens.

If the IEA said they were lowering their projection for oil production

They did say that:

"Non-OPEC output is revised by -180 kb/d for 2008 and by -85 kb/d for 2009"

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151 comments on DrumBeat: September 10, 2008

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