Peak oil, if it even exists, is very much a moving target. But so, it turns out, is measuring how much oil is already above ground, sitting in the holds of ships and in storage facilities around the world.
It’s not that humanity is fundamentally incapable of measuring how much oil we are extracting—it’s that many countries don’t report their inventories.
Take China, for example, which has been buying up far more oil than it appears to be using. As the Wall Street Journal reports, analysts think that 160 million barrels of surplus, enough to supply the country for two weeks, has gone to one of two places: either commercial storage, or to build up the nation’s strategic oil reserves. If it’s the latter, China’s demand for crude could suddenly slow down once those reserves are at capacity, which would affect market prices.
Ships anchored off of Singapore, meanwhile, appear to be sitting on as much as 43 million barrels of oil. But the ships’ holds could also be filled with seawater, as their cargo is just an estimate based on how low they’re sitting in the water.
While many industrialized nations do regularly report their oil inventories, a large fraction of the world’s economy remains opaque. In oil-rich countries like Angola, Brazil, and Nigeria, production often defies industry watchers’ best estimates.
That means global oil prices are based on a massive amount of guesswork. For those of us who like the cost of heating oil, diesel fuel, and gasoline to stay predictable, that could be cause for concern. The countries keeping mum about their reserves, however, might see their secrecy as giving them an edge in an unpredictable world.
(Read more: Wall Street Journal, “The Amount of Oil We Can Recover Keeps Growing,” “U.S. Oil Companies Ignore Climate Change While the Rest of the Industry Evolves”)
makati1 on Sat, 20th Aug 2016 7:07 pm
There is more than you will ever hear about. If any country is “prepping” for the future, it would be foolish to tell the world what it has in it’s closet, now wouldn’t it, Preppers?
shortonoil on Sat, 20th Aug 2016 7:31 pm
Part of the end game!
onlooker on Sat, 20th Aug 2016 7:59 pm
We also know about the Export land model. How exporting countries will horde to weaken other countries and prop up themselves as trade begins to diminish in general and specifically related to trade for Oil.
rockman on Sat, 20th Aug 2016 8:13 pm
“That means global oil prices are based on a massive amount of guesswork. For those of us who like the cost of heating oil, diesel fuel, and gasoline to stay predictable, that could be cause for concern.” Yes: global oil prices are based upon guesses. But not by the oil producers since they don’t set the price of oil. The refiners set the price they are willing to pay based upon THEIR GUESSES of what consumers are going to be willing to pay in the future for refinery products. No refiner is going to pay too high a price for oil that will generate a loss. If a producer demands such a price obviously a refiner wouldn’t pay it and lose money.
And since all refiners have similar expectations of their future market the producers have a simple choice: A) sell less oil and receive less revenue or B) reduce prices and sell more oil. But if they reduce the price how can they still generate enough revenue? Perhaps by lowering prices even more and producing a lot more oil. Like the record volumes we’ve seen !aterly.
It really ain’t all that difficult to understand. LOL.
Boat on Sat, 20th Aug 2016 8:44 pm
rock,
” No refiner is going to pay too high a price for oil that will generate a loss”
Of course they did. World history is littered with refineries that went bankrupt.
And producers can and do affect price by offering below market pricing to gain market share. The Saudi held back millions of barrels per day in the past to shore up prices.
Truth Has A Liberal Bias on Sat, 20th Aug 2016 8:54 pm
Here’s an interesting article. Very thoughtful and analytical. A warning to the doom porn circle jerk crowd though, the linked article contains charts, graphs, thoughtful analysis and intelligent statements. I know that’s above the head of most of you fucking retards.
http://crudeoilpeak.info/oil-reserves-and-resources-as-function-of-oil-price
antaris on Sat, 20th Aug 2016 10:05 pm
Thalb, why don’t you and boat go blo each other !
sparky on Sat, 20th Aug 2016 11:25 pm
.China strategic storage is quite small , It was tiny
since the country massive increase in consumption the situation was really bad , finally the penny dropped
and the government decided to go for the IEA two months storage recommendation .
They are building and filling now ,quite happy to do it when the price is so low
On the subject of data , I’m still trying to get some up to date info on how much crude is exported
last number is a bit shy of 40 Mbd
that’s the critical number and all I get is two , three years old figures .
if anyone has a good source , please , pretty please post it
yoshua on Sun, 21st Aug 2016 3:33 am
Futilitist made a graph that shows the Etp model curve, which represents the average production cost of a barrel of crude.
Then he made two curves below the Etp model curve, I wonder if the second one represents the average production cost of a barrel of crude in Saudi Arabia ?
yoshua on Sun, 21st Aug 2016 3:34 am
… and the graph…
http://i1064.photobucket.com/albums/u363/Futilitist/Etp%20PROOF_zpsehrjcdwz.jpg
bahamased on Sun, 21st Aug 2016 8:20 am
Yoshua, I should stop typing now,
The chart you posted
“which represents the average production cost of a barrel of crude.”
NO, it shows the 50 week avg price that the model predicts that the consumers of Oils end products can afford to pay for a barrel of crude oil.
Or to put it in Rockman terms:
the model predicts that Refiners will not pay more then the “ETP Maximun Oil Price Curve” for crude oil if they want to make money.
Please note the “if they want to make money”, the price can and more then likely will go higher.
yoshua on Sun, 21st Aug 2016 8:50 am
I’m not talking about the moving snake and I surely hope that rockmans snake hasn’t been printed into the graph either !
yoshua on Sun, 21st Aug 2016 9:39 am
We are now two years into the destruction of the oil industry. The sun is shining, birds are singing and everything seems normal… for now. Unless of course one lives in Venezuela, Russia, Syria, Yemen, Libya, Sudan, Nigeria, Angola…
dissident on Sun, 21st Aug 2016 1:10 pm
If refiners set the oil price then the global pricing system is total nonsense. Some irrelevant US gasoline stock level says exactly zero about the remaining available supply of oil in the ground. I wish I could buy my car based on the garage capacity in the country. Not enough garages so a lower price! How in Hell is such BS logic applied to the precious resource known as oil!?
bahamased on Sun, 21st Aug 2016 7:10 pm
Dissident, who but refiners buy/use crude oil?
I know some middlemen buy oil only to later sell it to a refiner, but I can’t think of any other uses for the stuff.
dissident on Sun, 21st Aug 2016 7:24 pm
US gasoline stocks cannot possibly form the basis of pricing of oil. It is a global “commodity”. It would seem that US refineries can manipulate the price of oil by claiming to have excess gasoline reserves. Obviously more objective criteria are needed to price crude oil, such as the amount actually produced in a given month and how much tanker “storage” due to inadequate demand there is.
bahamased on Sun, 21st Aug 2016 7:57 pm
OK, so your just changing the question,
I’m done