”Missing Barrels” Reveal Bad Data, Says Matthew Simmons

From 2004 through 2005, the world produced almost 650 million barrels more oil than demand consumed, according to the accepted International Energy Agency model. But where are these barrels of oil?

“Little of this glut has shown up in observed petroleum stocks,” writes Mr. Simmons, author of Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy, in the January issue of World Energy Monthly Review. “In fact, as demand for oil continues to grow, daily usage rates indicate many key stock points are at historic lows.”
Faulty measurement models, “despite a great deal of rhetoric about better transparency,” are to blame for inaccurate estimates of global supply, he asserts, leading to the perceived supply gluts. “Supply forecasts are still speculative; they are either guessing or ignoring the steadily increasing declines from almost all significant production regions around the world.”

Not only is the supply side lacking helpful data, Mr. Simmons writes, but “the world has no system to record the physical use of almost all oil products and also lacks accurate reports of crude-oil refinery runs.”

Business Wire