Due in part to increasing tensions with Iran, crude oil prices have been rising. For some perspective on the globe’s crude oil supply, today’s chart focuses on the big five oil producers. Of the big five, Russia and Saudi Arabia have significantly increased production as of late. However, it is worth noting the continuing decrease in US oil production as well as ongoing geopolitical tensions (i.e. Iran, Iraq, Nigeria, etc.), does leave open the possibility of supply disruptions in an already tight oil market. Stay tuned…
Source: Chart of the Day
What is primarily responsible for the drop in US oil production? I’ve seen a chart of all the oil platforms in the Gulf of Mexico, and it’s unbelievable… I’m wondering if it’s regulation or just a lack of resources.
I tend to believe it’s regulation. I have a few friends in the western part of Kansas who had oil derricks that are unprofitable to run at anything < $50/b. This makes me wonder if it was more an effect of price, and if the issue might begine to resolve itself.
Glad to see you giving more attention to oil (interesting previous post on the futures being at all time highs).
For anyone interested in this subject, Simmon’s book _Twilight in the Desert_ is a must read – and generally oil is too important to be taken for granted by anyone concerned with the ‘big picture.’
Simmons argues that the Saudi oil well, while large, are starting to deplete, perhaps dangerously. They’ve been pumping for 50 – 60 years, and he thinks they have been damaged by periods of overproduction that reduce the oil ultimately recoverable from the well. (It’s much more complicated than sucking a milkshake through a straw.)
After a well has produced more than 50%, getting the remainder out is increasingly difficult. So, the takeaway is thatthe Saudi’s have little ability to ramp up production to meet increasing world demand, and that the problem will accelerate rapidly as production starts to decline.
See the interview with financial sense (generally sympathetic to peak oil concerns)
http://www.financialsense.com/transcriptions/Simmons.html
and speeches from Simmon’s site
http://www.simmonsco-intl.com/research.aspx?Type=msspeeches
(Yes, he’s a Wall St type, Harvard MBA & on the ouncil of Foreign Relations)
This is part of the general concern about peak oil – not that we’re ‘running out’ but that discoveries haven’t made up for depletion. We’re hitting the halfway point where it becomes harder to get at the same time as global demand increases. (Very bullish!) Thus, we go into deeper water offshore, more risky countries politically, and take on projects with less expected return in barrels of oil.
Please take 5 minutes to read the Peak Oil Primer
http://www.energybulletin.net/primer.php
(Click over to the main page there for more news items.)
Chad, from the Peak Oil Primer I referenced in the last post
“In the 1950s a U.S. geologist working for Shell, M. King Hubbert, noticed that oil discoveries graphed over time, tended to follow a bell shape curve. He posited that the rate of oil production would follow a similar curve, now known as the Hubbert Curve (see figure). In 1956 Hubbert predicted that production from the US lower 48 states would peak in 1970. Shell tried to pressure Hubbert into not making his projections public, but the notoriously stubborn Hubbert went ahead and released them. In anycase, most people inside and outside the industry quickly dismissed Hubbert’s predictions. In 1970 US oil producers had never produced as much, and Hubbert’s predictions were a fading memory. But Hubbert was right, US continental oil production did peak in 1970/71, although it was not widely recognized for several years, and only with the benefit of hindsight.
“Although it passed by largely unnoticed, the U.S. oil peak was arguably the most significant geopolitical event of the mid to late 20th Century, creating the conditions for the energy crises of the 1970s, leading to far greater U.S. strategic emphasis on controling foreign sources of oil, and spelling the begining of the end of the status of the U.S as the world’s major creditor nation. The U.S. of course was able to import oil from elsewhere, and life continued there with only minimal interuption. When global oil production peaks however, the implications will be far greater.”
The next section asks about the global peak….
http://www.energybulletin.net/primer.php
Considering Canada is your primary foreign source of oil I find it amazing that we didn’t get mentioned in that chart.
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