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Peak Oil/Peak Exports


davo22

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A great piece of emotive writing by the hyperventilating hyphen (Ambrose Evans-Pritchard of the London Tele) imo, built around the closure of that wonderful website, The Oildrum.

 

http://www.telegraph.co.uk/finance/comment...pite-shale.html

 

The article raises some questions that I continue to be puzzled by: such as why is the oil price remaining so high, what is stopping it from falling back to a range closer to the historical mean, how is such high prices not adversely impacting on the major economies given the fragile state that they are in, why is everyone so bullish about US shale (gas in particular) given the terrible depletion rates that shale wells apparently suffer and given the probability that the sweet spots have already been tapped, and given such a high oil price why are so many oil and gas stocks performing so miserably?

 

I've got no answers I'm afraid, things simply don't make much sense to me. If I take the big picture approach then I'd say that on balance the oil price will not fall back any time soon and that oil and gas stocks that are actually producing the stuff are a good place to be. But the big picture always seems to take place just over the horizon, and it is not providing me with too many wins lately.

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Whatever happened to PEAK OIL ?

 

Nothing, it has just become longer ... now Peak Oil DEMAND

 

The precipitous decline in the price of oil is perhaps one of the most bearish macro developments this year. We believe we are entering a ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“new oil normal,ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ where oil prices stay lower for longer. While we highlighted the risk of a near-term decline in the oil price in our July newsletter, we failed to adjust our portfolio sufficiently to reflect such a scenario. This month we identify the major implications of our revised energy thesis.

 

The reason oil prices started sliding in June can be explained by record growth in US production, sputtering demand from Europe and China, and an unwind of the Middle East geopolitical risk premium. The world oil market, which consumes 92 million barrels a day, currently has one million barrels more than it needs. US pumped 8.97 million barrels a day by the end of October (the highest since 1985) thanks partly to increases in shale-oil output which accounts for 5 million barrels per day. LibyaÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s production has recovered from 200,000 barrels a day in April to 900,000 barrels a day, while war hasnÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢t stopped production in Iraq and output there has risen to an all-time high level of 3.3 million barrels per day. The IMF, meanwhile, has cut its projection for global growth in 2014 for the third time this year to 3.3%. Next year, it still expects growth to pick up again, but only slightly. Everyone believes that the oil-price decline is temporary. It is assumed that once oil prices plummet, the process is much more likely to be self-stabilizing than destabilizing. As the theory goes, once demand drops, price follows, and leveraged high-cost producers shut production. Eventually, supply falls to match demand and price stabilizes. When demand recovers, so does price, and marginal production returns to meet rising demand. Prices then stabilize at a higher level as supply and demand become more balanced. It has been well-said that: ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“In theory, there is no difference between theory and practice. But, in practice, there is.ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ For the classic model to hold true in oilÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s case, the market must correctly anticipate the equilibrating role of price in the presence of supply/demand imbalances.

 

By 2020, we see oil demand realistically rising to no more than 96 million barrels a day. North American oil consumption has been in a structural decline, whereas the European economy is expected to remain lacklustre. Risks to the Chinese economy are tilted to the downside and we find no reason to anticipate a positive growth surprise. This limits the potential for growth in oil demand and leads us to believe global oil prices will struggle to rebound to their previous levels. The International Energy Agency says we could soon hit ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“peak oil demandÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ÂÂ, due to cheaper fuel alternatives, environmental concerns, and improving oil efficiency.

 

The oil market will remain well supplied, even at lower prices. We believe incremental oil demand through 2020 can be met with rising output in Libya, Iraq and Iran. We expect production in Libya to return to the level prior to the civil war, adding at least 600,000 barrels a day to world supply. Big investments in IraqÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s oil industry should pay-off too with production rising an extra 1.5-2 million barrels a day over the next five years. We also believe the American-Iranian dÃÆâ€â„¢ÃƒÆ’ƒâ€Â ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒ¢Ã¢â‚¬Å¾Ã‚¢ÃƒÆ’ƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚©tente is serious, and that sooner or later both parties will agree to terms and reach a definitive agreement. This will eventually lead to more oil supply coming to the market from Iran, further depressing prices in the ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“new oil normalÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ÂÂ. Iranian oil production has fallen from 4 million barrels a day in 2008 to 2.8 million today, which we would expect to fully recover once international relations normalize. In sum, we see the potential for supply to increase by nearly 4 m illion barrels a day at the lowest marginal cost, which should be enough to offset output cuts from marginal players in a sluggish world economy.

 

Our analysis leads us to conclude that the price of oil is unlikely to average $100 again for the remaining decade.

Jawad Mian
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Quite simply it has changed from unable to produce any more because it ain't there to can't produce any more at this price because it is getting more and more costly to extract.

 

Don't worry, there is a peak alright. It has just changed its definition. It has also changed its timing, but not by much. I'd suggest there is money to be made from this readjustment of supply factors. I reckon that if J. Paul Getty was still alive he'd be buying now or buying soon.

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Sounds good

I look fwd to paying less across the board for most goods and services, given the lower energy inputs.

 

Then again, maybe the gov can now jackup the fuel excise to help plug the deficit.

 

It is interesting, this bearishness on POO, at the start of Northern Hemisphere winter, normally a supportive season for oil prices.

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  • 1 year later...

Peak Oil: gone and forgotten?

 

Google Inc. searches for the idea that once helped propel oil prices to nearly $150 per barrel have dwindled to almost nothing, according to a Sanford C. Bernstein analysis.

 

The theory that oil prices would have to rise as supply inevitably declined gained hold on popular imaginations in the mid- to late 2000s, but has since languished in internet obscurity, as new discoveries and technology, including the shale revolution that helped push U.S. oil production to a 40-year high, have ensured plentiful amounts of crude in recent years.

 

Underscoring the trend is the fact that Google searches for "too much oil" recently outstripped searches for "Peak Oil." Prices per barrel are currently languishing around $45.

http://www.bloomberg.com/news/articles/201...eak-oil-is-dead

 

(This time it's different)

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Please remind me - when was a major oil field discovered and put into production?

Ain't going to see another Ghawar.

 

Peak oil is peak oil. What they have done is change the definition. Confused the issue.

 

Bit like when I started working in employment statistics - full time employment was defined as 40 hours per week now a person can be counted as employed working only 1 hour per week.

 

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full time employment was defined as 40 hours per week now a person can be counted as employed working only 1 hour per week.

============

 

:lol: now you talking man!! not just Govt, most of people doing it, try twist the statistics to back them self's claim .

i saw many of those analysts twist the data eg. to back their call for the big shorts or big longs

these days ,we got confused some times. :B):

 

 

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  • 3 months later...

Here's a post mortem of the peak oil movement. Reads impressive but I don't buy it, I think the writer sounds like a sophist.

 

http://thearchdruidreport.blogspot.com.au/...ent-failed.html

 

What I have garnered is that the single thing that stopped the peak oil movement in its tracks was the development of fracking and horizontal drilling technologies in the US which created the shale oil and gas sectors. If not for shale oil then the Russians and Saudis would happily be selling oil for three digits a barrel, oil exploration and production in high cost areas would still be going gangbusters, consuming economies would still be under strain from energy costs, and the push for energy alternatives would be even more vigorous than it is now.

 

People agonise about whether Vlad Putin is mucking with our democratic processes. Well of course he is - what exactly would you expect an active particpant in the cold war to do - but in some ways just as importantly he has been messing with our energy industry as well. The biggest threat to Mr Putin's administration is depressed oil prices and he and his agents and money have been successful in closing down fracking in various parts of Europe and various states in Australia (all those nasho cow cockies in northern NSW should hang their heads in shame in doing Uncle Vlad's bidding). But whackily it seems that Donald Trump will be causing the Russians harm if he does what he said he'd do by expanding the shale oil industry in the US.

 

Counter to that, Mr Trump may assist Mr Putin were he to back away from climate change measures and from the sanctions currently in place to penalise Russia for Crimea.

 

https://www.bloomberg.com/view/articles/201...-climate-change

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