Peak Oil is You
Donate Bitcoins ;-) or Paypal :-)
Page added on February 21, 2014
US to be world’s biggest oil supplier by 2016
According to the International Energy Agency, the economy will grow by 2.8 percent in 2014, higher than the 2.6 percent it previously forecasted. The International Monetary Fund predicts the global economy will grow in the same direction by 3.7 percent.
Eventually the U.S. will pull ahead of Saudi Arabia and Russia in oil production, becoming the largest oil supplier in the world by 2016, according to a report by the energy group. An estimated 9.6 million barrels of oil will flow per day in the country, reversing the upward oil import trend that has been ongoing for four decades.
But a projected increase in supply doesn’t necessarily mean crude oil prices are going down, experts say.
Crude oil prices at West Texas Intermediate, the benchmark for U.S. crude oil, are expected to be $93 per barrel on average in 2014, according to the U.S. Energy Information Administration. WTI crude oil futures for March delivery traded at $102.91 per barrel on the New York Mercantile Exchange Thursday, up $8.45 from $94.46 a year ago. Prices peaked at $103.31 Wednesday, their highest level since Oct. 8, and are expected to remain high in the coming weeks.
“Certainly, a more secure domestic supply is something prominent; it’s an admirable goal,” said Paul Donovan of Liquidity Energy LLC. “However, there’s a lot more that affects the oil market coming from the demand side.”
Donovan cited three main elements that might offset any downward pressure: potential for inflation, increased demand in fast-growing economies like China and India, and decreased worldwide supply.
However, senior E&P analyst Curtis R. Trimble of Global Hunter Securities LLC says demand growth in the U.S. is fairly minimal.
“The largest drivers of demand increases in the last several years, like India and China, will continue to be the largest drivers of demand growth worldwide,” Trimble said. “Crude oil is a cyclical commodity whose price is largely dependent on worldwide economic growth.”
There is also the global phenomenon of “peak oil.” Geoscientist M. King Hubbert theorized there is a point of maximum oil production that will eventually lead to complete exhaustion of oil.
In 2013, OPEC crude oil production was 30 million barrels per day on average, 0.9 million barrels per day less than the previous year, according to the U.S. Energy Information Agency. The agency estimates that OPEC crude oil production will continue to decline, allowing non-OPEC companies like the U.S. to become a larger exporter.
Experts say the U.S. is in a better position as Libya, which has the largest oil reserve in Africa, is still trying to recover its weakened supply.
OPEC expects global oil demand to rise by 1.1 million barrels per day, which is higher than usual growth. In fact, it’s increasing faster than the supply expansion, making some analysts believe that there will be an upward trend in crude oil prices.
“In the late fourth quarter, the demand really started taking off,” said Brian Milne, energy editor at Schneider Electric.
Crude oil demand in the West will expand “for the first time since 2010” by 92.5 million barrels per day in 2014, according to the International Energy Agency.
Still, there is a significant barrier the U.S. must overcome to become a major oil supplier.
After the 1975 oil crisis, the U.S. banned unprocessed oil exports to areas outside of North America. Because of that law, crude oil inventories will continue to rise, but not necessarily exports.
“I would expect a lengthy policy debate on the potential for exporting crude oil,” Trimble said.
There were 1.06 billion barrels of crude oil in U.S. inventories in the week ended Feb. 7, according to the U.S. Energy Information Administration petroleum report released earlier this month. That is a 1.0 percent decrease from 1.07 billion barrels a year ago.
Even if things go smoothly on the domestic front, there are international factors to consider, some experts say.
“Any major Middle Eastern crisis would see a major spike in prices,” said Oliver Sloup, director of managed futures at iitrader.com. “But, generally speaking, obviously, increased supply should keep a cap on prices.”
13 Comments on "US to be world’s biggest oil supplier by 2016"
Hugh Culliton on Fri, 21st Feb 2014 11:21 am
Horseshit.
Arthur on Fri, 21st Feb 2014 11:24 am
Why not?
The real question is: how long is this going to last?
rockman on Fri, 21st Feb 2014 12:07 pm
“As the US economy continues to grow, experts say it will rely less on the world’s major oil exporters in Africa and the Middle East, regions largely sustained by U.S. imports.” And that first sentence killed what little interest I had in reading this piece. If they are unable to do a 60 second net search to learn where the great majority of US imports come from then why expect any useful info.
Davy, Hermann, MO on Fri, 21st Feb 2014 12:39 pm
Sounds like a 2nd year college paper. The individual has many ideas and variable they can’t quite get together. This happens so much with think tanks, universities, and MSM. If you are not like a geologist/petro-engineer or like many of us here that have wrapped our arms around this topic, you fail to see the intricacies. College paper are good at digging into facts but they fail in the all-important act of digestion of facts. Without a digestion then facts are used wrong or not properly expressed in relation to other fact.
My own opinion from a finance background is the above ground factor of finance is the prominent player at the moment. We are near a 2008 moment. Will this be a correction of 10% – 20% or a contraction of more with corresponding contagions? If, you study all the other fundamental, if you dig through the raw manipulated economic stats, if you analyze the business cycle timing, and if you realize interest rates are at a point with nowhere to go but up, then, you understand we are close to a break to the downside. IMHO it is all about finance now. The retirement party on the oil supply is a few years down the road in my opinion. We have seen the various facts here. The primary driver will be the adequacy of capex. The people, machines, and product is out there. The above ground factor of political instability will prevent in my opinion growth on the conventional side with Iran, Iraq, and Venezuela in turmoil. Then there is the several lessor states that are rocked with instability. We know the US production has its limits to growth. Let’s face it unconventional sources will be limited by price and capex. Price is there but capex may not be. Since currently finance is in the realm of human nature of confidence and control with central banks, we have to accept the difficulty in predicting a bull or bear market. If you could you naturally would be very rich and likely not on this discussion board. My research shows unstainable trends in every important segment in finance. The control from the top and the rewards to the TBTF banks, brokerages, 1%-ers, and investor’s globally can keep this racket going. The racket is the age old Ponzi scheme. Ponzi scheme manifest themselves in bubbles and bubbles burst. Just like the growth of a complex system being stable the contraction introduces chaos. Chaos in its clinical definition is dysfunction, irrationality, and volatility. We are set for this kind of inflection financially. If the global economy was healthy and the dramatic market manipulations in all areas of the financial market were not present then an inflection would not be significant. Corrections are normal but we are in the new normal. This finance system is being forced much like our climate is being forced. When you force a complex system you have unintended consequences. That is where we are at this moment. This with a long list of other contagions to the global economy like food, water, revolts, wars, wealth transfer, inflation of basics, and climate instability. In my mind the glue in the market right now is the control at the top rewarding the market participants with remaining in the racket. These folk are smart. The may not get it all but they realize things are not right. The party and punch bowl are too irresistible currently
Mark Ziegler on Fri, 21st Feb 2014 2:35 pm
There are 2 things being overlooked. First the growth in the economy is more related to the 85 billion a month being donated to the bond market. Second there will not be enough water out west to do any shale drilling to amount to anything.
Northwest Resident on Fri, 21st Feb 2014 3:33 pm
“As the US economy continues to grow…”
That is a false premise. As Mark points out, the “growth” in our economy is almost entirely from our financial sector — just a lot of trades that are swishing all that QE funny money non-stop. How can the economy possibly be growing when retail giants are closing stores, retail spending is far below previous levels, oil/energy expenses are astronomical, vast numbers of working-age people and college graduates can’t find jobs, and the trillion$ in debt is continuously being added to at an exponential rate. Economic growth? Give me a break.
FuManChu on Fri, 21st Feb 2014 4:08 pm
That is funny.
The IMF forecasts alone are priceless.
http://www.zerohedge.com/news/2014-01-21/comedy-imf-forecasting-errors-global-trade-tumbles-more-50-imfs-2012-prediction
tahoe1780 on Fri, 21st Feb 2014 5:37 pm
So many issues. Who cares who’s producing the most? (and of what, Hubbert’s definition of crude oil or the new and improved definition including ethanol, natural gas liquids, and used fry oil?) The question should be “Who has the most net available for export?” Where would The U.S. then fall? Growth? How is that measured, GDP? What’s that calculation again?http://www.moneynews.com/Advani/GDP-CPI-growth-investment/2013/08/07/id/519128 Does it appear to anyone else that global production is being “sequestered” via engineered conflict in places like Libya, Iran, Iraq?
DC on Fri, 21st Feb 2014 7:58 pm
LoL! Maybe they meant, the biggest supplier of guns and prescription anti-depressants? Oh wait….
GregT on Fri, 21st Feb 2014 8:04 pm
“The International Monetary Fund predicts the global economy will grow in the same direction by 3.7 percent.”
If a 3.7 % increase in economic output could be sustained, it would take 18 years for our economies to double from where they are at today. So while it may be possible to maintain the illusion for a while, our economies are on their way out. Infinite exponential growth is not only unsustainable, it is impossible.
DC on Fri, 21st Feb 2014 10:19 pm
Yes, but even if we did manage to ‘double’ the shop-drive-consume economy size, its fixed costs would also-more than double. IoW, all that ‘growth’ would be a net loss. Ie, we’d just be losing money, just twice as fast as we are now. I no longer believe economic ‘growth’ is capable of growing faster than the societies fixed costs. Of course, austerity and accounting fraud can make it appear growth is still profitable at the margins-but its fraud at the end of the day.
mo on Sat, 22nd Feb 2014 2:58 am
The opening statement makes it seem like all we need is 9.6 million barrels a day. Wheres the other 9 million coming from?
Texas Engineer on Sat, 22nd Feb 2014 4:51 pm
Actually we must need much more than another 9 million because we are planning on being a major exporter of oil to the world demand.
This is beyond ridiculous.