Oil may have further to fall due to oversupply

37 Comments on "Oil may have further to fall due to oversupply"

Plantagenet on Fri, 10th Jul 2015 2:51 pm 



Amazing to see oil production continuing to grow and the oil glut getting worse, even after the price of oil has collapsed.

CHEERS!

Davy on Fri, 10th Jul 2015 3:52 pm 



You should be watching this Chinese market meltdown for a directions oil will likely follow. Even if the Chinese stabilize their markets the damage is already done to an economy that was already decelerating. Throw in Greece and a certain China contagion for the rest of the global markets and you get demand destruction leading to eventual oil supply destruction. Before you know it the global economy will not have the necessary energy to reflate even if other conditions would allow it. This is likely the beginning of the bumpy descent. I have no idea how long this will take but a stab at it is within 10 years.

Plantagenet on Fri, 10th Jul 2015 4:09 pm 



Daver—-You are 100% right about China. Greece is really small potatoes—China is the big problem right now, and a collapse in China will cause global economic turmoil and demand destruction, which in the short term will make the oil glut even worse.

shallow sand on Fri, 10th Jul 2015 5:21 pm 



Plant, I am really starting to wonder how this is going to play out. I thought by now North American production would be falling, but not so sure that is going to happen.

We could be looking at a long term bear market for oil, much like 1986-1999.

Hopefully, if that is the case, at least gasoline prices should head back down toward $2 in the fall.

shortonoil on Fri, 10th Jul 2015 7:26 pm 



Its not an oversupply, it is an undersupply.

http://www.thehillsgroup.org/depletion2_022.htm

It is an under supply of oil that can supply enough energy to drive the economy to produce sufficient demand. A quit look at the historical growth rate of petroleum production to the consequential growth in demand demonstrates that without question.

penury on Fri, 10th Jul 2015 9:12 pm 



IMHO Short is correct. The other correlation is that the glut showed up just when industrial production, shipping, retail sales and long distance trucking a;; retracted at a great rate.

BobInget on Fri, 10th Jul 2015 9:26 pm 



Ya know, when it comes to sex and oil there’s just no tellin. It’s always been kinda understood,
people lie about sex and get a pass. Lately,
or maybe not so lately, going overboard on truth telling over oil has become the norm.

Europe, where the economy is supposed to be failing, there is no so called oversupply.
In point of fact there’s a move in Congress to open Europe up for exporting crude oil.

Never mind the US, last week imported 7.4 Million Barrels … not seven million barrels for the week but every day. Now, it’s been pointed out we refine at least 2 M B p/d mostly Mexican crude for Mexico.

Just because Europe is scared to be at Putin’s mercy is no reason for America to become, like Mexico, a net oil importer.

If your a guy try your damnedest not to get caught looking at another ‘attractive’ women.
(attractive, key word)

Everyone knows Europe is looking at our ‘new found’ oil wealth. Will Europe admit they are looking? Hell no.

If we admit we are fighting oil wars (over oil)
this automatically makes crude that much more ‘attractive’. Take it from this old fart, another word for attractive is ‘expensive’.

It serves, it seems, everyone’s interest to just
pretend not to notice five million oil war refugees.
Pretend Saudi Arabia has so much oil they need to ship it to the US just to get rid of it.

Pretend Islamic States are only postalizing, just spreading the good word. Their methods may be a bit shocking at first, but we are getting accustomed.IS only need enough oil to light up the darkness.After all we dearly love Israel and Saudi Arabia. Everyone has a few faults, come-on, you know, we really NEED that oil.

Jersey Patriot on Fri, 10th Jul 2015 11:16 pm 



It is an under supply of oil that can supply enough energy to drive the economy to produce sufficient demand. A quit look at the historical growth rate of petroleum production to the consequential growth in demand demonstrates that without question.

Nonsense. Gross World Product grew by 3.4% in 2012, 2013, and 2014, and is slated to grow another 3.4-3.5% this year.

Makati1 on Fri, 10th Jul 2015 11:53 pm 



There is a ‘glut’ of oil too expensive for the consumer’s new contracting incomes. There would be no ‘glut’ at $20/bbl, but then there would be a lot less oil on the market to power any growth and a lot of bankrupt oil firms which could take down the financial system.

We are in a printing press balancing act called the economy. Something will eventually fail and when it does, the whole civilization we have grown up in will vanish in a puff of smoke, never to return. It is already disintegrating bit by bit.

As for GDP, those numbers are fantasy also. No one knows if there has been any real growth any year since, well, maybe the 70s. Every country is manipulating their numbers to pretend all is ok. It is a race to the bottom and the US is ahead as the biggest debtor in all areas.

Jersey Patriot on Sat, 11th Jul 2015 12:22 am 



All the numbers are fake except the ones that agree with me, and God put the fossils in the ground to test our faith in Genesis.

dave thompson on Sat, 11th Jul 2015 12:28 am 



In rough numbers 20% of Americas crude comes from stripper wells all of this oil is subsidized and has really crappy EROI. Lets say another 20% comes from tar sands out of Canada more energy subsidized, low EROI crappy oil. The fracked stuff every body touts as being the savior of our energy future is more crappy low EROI expensive crude,(if it can even be called crude)lets say another 20%,in rough numbers. That adds up to 60% of Americas “crude”. What does this tell us about a so called oil supply “glut”?

Boat on Sat, 11th Jul 2015 12:30 am 



Penury, Yea the world oil consumption rate is projected to slow from 1.2 mbpd to 1.4. This is growth were talking about, not a reduction. PS, the glut showed up when kick butt fracking developed.

Bob, where you been, that 2?

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MTTIMUSMX2&f=A

mbpd from Mexico is part of those imports. So why is it we export around 4 mbpd of finished petroleum products. The US refineries because of CHIP tech and nat gas give them a cost advantage.

http://www.eia.gov/dnav/pet/pet_move_wkly_dc_NUS-Z00_mbblpd_w.htm

Boat on Sat, 11th Jul 2015 12:53 am 



Dave, Tells me as long as oil stays in the $60-$70 per barrel range the frackers will ramp up. Below that seems like about 50% of the drillers have good enough tech or areas or both to compete. We have become the back up plan for oil shortages. Time will tell.

Davy on Sat, 11th Jul 2015 2:45 am 



Mak said “It is a race to the bottom and the US is ahead as the biggest debtor in all areas.” Read this again Mak:

“Why China’s Market Isn’t Fixed And The Global Bubble Will Keep Imploding”
http://davidstockmanscontracorner.com/why-chinas-market-isnt-fixed-and-the-global-bubble-will-keep-imploding/
China is a powder keg of debt. In fact, some $28 trillion of it. And, according to the bean counters at McKinsey, upwards of $21 trillion of that was created in just the last 90 months—–during which time China’s GDP rose by only $5 trillion……….In fact, margin debt soared by 5X in less than one year. Nothing like this has occurred anywhere in the world since, well, 1928-1929 on Wall Street.
China is the greatest eruption of unsustainable debt, wasteful construction and rampant speculation in human history. It has precisely nothing to do with capitalism or any possible form of sustainable economic growth and wealth creation……………In the process of taking its debt from $2 trillion in the year 2000 to $28 trillion at present, in fact, China has erected an endless string of uneconomic public facilities and industrial white elephants that boggle the mind. For instance, it has 1.1 billion tons of steel capacity——400-500 million tons more than its domestic economy will ever be able to use on a sustained, sell-through basis. In fact, its “excess” steel capacity is greater than the total steel industries of the US, Europe and Japan combined!……….Likewise, it ramped up a cement industry of 2 billion tons that is double or triple what will be needed when its construction of empty apartment buildings, unused airports, carless highways and bridges and pointless high speed rail lines finally comes to an end. Indeed, during the three years ending in 2014, China produced more cement than did the US during the entire 20th century.

shortonoil on Sat, 11th Jul 2015 8:12 am 



“Nonsense. Gross World Product grew by 3.4% in 2012, 2013, and 2014, and is slated to grow another 3.4-3.5% this year.”>/i>

Between 1960 and 2012 world oil production grew at an average rate of 2.51% per year, and supply and demand stayed in balance. Over the last 3 years production has grown by about 1% per year, and there is now the largest inventory in history. When the Chinese, US, Japanese, and European Central Banks are printing the equivalent of 6% of the total monetary base per year, GDP goes up in dollar terms. That has absolutely no impact on the amount of real goods and services produced; unless one wants to consider bits, and bytes in a computer memory goods and services.

Barrels of oil are real artifacts, in a real world like the energy they provide to drive the economy. Using dollars created out of thin air as a metric for prosperity is like using Pixy Dust to power your car. You have to be part of the Matrix to enjoy the ride!

http://www.thehillsgroup.org/

joe on Sat, 11th Jul 2015 8:17 am 



The EU also includes formally black market activities in its statistics on GDP as well, like prostitution and gambling. Global GDP so called figures are as made up as the Peter Pan story.

shortonoil on Sat, 11th Jul 2015 9:09 am 



“We are in a printing press balancing act called the economy.”

The shale industry has amassed more than a $trillion in debt to produce $360 billion per year in finished product. That $trillion came from the FED’s printing press, and was handed out at almost zero percent interest. These are companies that can not produce their product for what it cost to produce; they are companies that are producing a product for which there is insufficient market to buy. They are energy companies that after extracting, processing, and distributing their product have no energy remaining to sell. That is truly a “printing press balancing act economy”.

Penury, Yea the world oil consumption rate is projected to slow from 1.2 mbpd to 1.4.”

As oil becomes more expensive, and energy intensive to produce, it consumes a larger and larger portion of its own production. At 93 mb/d that is now growing by 2.3 mb/d per year. Consumption by the rest of the economy is now going down by 1.1 mb/d per year. With the general economy unable to absorb all the oil produced, and consumption by the industry increasing the industry must assume greater and greater debt to keep pumping. Inventories will continue to build, and price will continue to fall. The entire process now depends on one “female hobbit” running the printing presses at the FED.

How comforting is that?

http://www.thehillsgroup.org/

quintard on Sat, 11th Jul 2015 10:05 am 



Short,

oil consumption :

auto consumption petroleum industry : + 2.3 mb/d per year ?
-1.1mb/d per year ?

Source please

Thanks

JuanP on Sat, 11th Jul 2015 10:16 am 



I skipped this shit. I no longer read IEA or EIA forecasts, or articles about them. All IEA and EIA forecasts are political documents completely lacking any scientific credibility or value as they are systematically inaccurate. I’d rather look at the ceiling and scratch my itches than waste a second of my life on this crap.

BobInget on Sat, 11th Jul 2015 10:25 am 



Joe, don’t you think we in North America should include our grey and black ‘business’ in GDP?

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/04/23/americas-2-trillion-shadow-economy-is-the-recessions-big-winner/

Two trillion bucks gone unreported in growth numbers?

Growing up in Miami I watched as coke and weed money built that economy. Obviously, some tax money eventually ‘trickled down’ to construction workers etc. Crooks however
operated out in the open laundering hot money
in hundreds of tax avoidance scams.

In Oregon where I now live pot growers worst fears have come to pass. Legalization has already cut profits exactly in half. Obviously,
many growers will market product out of state.
That state, unlike Oregon will collect no direct taxes from those illegal transactions.

Nature has its way with this sort of corruption.

We know with absolute certainty, all those high-rise condos in Miami will in the space of a single human lifetime, change in character from luxury living to islands of filth and crime. Doubtless, US economic bean counters will write off South Florida as a lawless wasteland. South Florida has been practically lawless all along.

My point, economic activity never stops. No matter if banks in Iceland, Ireland or Greece close, folks find ways to conduct trade.

Also.

Stop fretting about hyper inflation in a digital society. What’s another keystroke or two or three?

Plantagenet on Sat, 11th Jul 2015 10:42 am 



Building condos in Miami is a losing proposition.

Rising sea level will infiltrate all coastal aquifers, leaving those condos with beautiful views but no fresh water.

Makati1 on Sat, 11th Jul 2015 10:54 am 



“But according to the U.S. Geological Survey, the essential Biscayne Aquifer, which provides water to the Miami–Dade County area, is falling victim to saltwater intrusion from the Atlantic Ocean. Despite the heavy rains replenishing the aquifer year-round, if enough saltwater enters, all of it will become unusable.”

http://ecowatch.com/2015/07/02/cities-running-out-of-water/

Boat on Sat, 11th Jul 2015 10:59 am 



Desalination Plant. Not sure about the view though. A bunch of water is rather featureless. Sand is where it’s at. Bikinis are the feature.

Makati1 on Sat, 11th Jul 2015 11:03 am 



You really are smoking some good stuff Boat…lol. Are you a relation to Plant?

Boat on Sat, 11th Jul 2015 11:22 am 



The math. 1 billion dollars for water for 336,000 people. Average bill goes up $7 a month. If you need it bad enough, you’ll do it or move.

joe on Sat, 11th Jul 2015 11:46 am 



The tobacco industry is about to disappear as it’s uninsurable, right now stupid people can’t see down the road. Making canabis legal is merely a substitute for the tobacco industry, the government’s of US and Europe need the tax intake but can’t be seen to be acting irresponsibly, it’s likely that canabis smoke is as cancerous as tobacco, though the legal situation is different because the widely accepted science is different. So that gives them about 50 years of tax income before they begin to get sued for the decisions of today. So yes since canabis is being substituted for tobacco with the blessing of government then yes. Prostitution is different. If you believe that humans are the same commodity as a cow or a sheep and that we have freedom to make contracts and see sexual services as merely that, then yes, but obviously that’s not true, as people get jealous and wives get upset and men feel better to get sex for free rather than pay for it, then my position is that sex is not like any other service but it is something which makes us bond better and increases the fulfillment of ourselves when in the appropriate time and place. Paid for sex is merely two people exploiting each other for different reasons, but it’s not going to go away. In Germany legal brothels are positioned on its borders to attract people from everywhere, they tax it because they want to recognise that it’s better to do it an open and honest way rather than in the seedy and dangerous way, the former being safer in all ways than the latter. Consumption of alcohol is the same. In the end though these are examples of products and services which used to be considered immoral now becoming accepted largely because the older substitutes are becoming outdated. For example for the first time in a century Islamisation has caused the consumption of alcohol in London to decrease. The media doesn’t shout about it much because of what it implies about demographic trends. Family units are falling apart exactly as communism predicted, causing the massive increase in the demand for prostitution. Most family units in Europe are formed either from unmarried people or divorced people, same is true in the US. That’s not an accident, it’s caused by changes in the law which permit people to join and split as they wish. Laws are created with a desired impact in mind. Eventually nothing will be outside the remit of government to control. Courts can pull the plug on people and nothing is sacred. I know that they consider me and you nothing more than feedstock for the tax machine and they don’t care if they use up every last drop of oil.

BobInget on Sat, 11th Jul 2015 12:23 pm 



Links to interactive fire maps, Canada, Alaska

http://activefiremaps.fs.fed.us/?extent=canada

http://afsmaps.blm.gov/imf_fire/imf.jsp?site=fire

Nothing like this in historical records.

When oil production, pipelines go down, people in lower 48 will pay attention.

Northwest Resident on Sat, 11th Jul 2015 12:38 pm 



“Making canabis legal is merely a substitute for the tobacco industry…”

Sure. They’ll drop their two pack per day habit and switch right over to puffing a hundred joints a day. Makes perfect sense. Picture in your mind the smoking areas outside of major office buildings — what fun it will be. Coffee and a few joints in the morning to get the day started, a few additional donuts to make it perfect and cure the munchies.

Substituting cannabis for tobacco — yeah, that’s the hot ticket!

Northwest Resident on Sat, 11th Jul 2015 12:41 pm 



Actually, two packs of cigarette equivalent would be just forty joints per day — big fat doobies. If the cannabis is halfway decent, how much do you want to bet they never make it past four or five per day — and what a day it would be!

shortonoil on Sat, 11th Jul 2015 1:54 pm 



“Short,
oil consumption :
auto consumption petroleum industry : + 2.3 mb/d per year ?
-1.1mb/d per year ?
Source please
Thanks

I think you meant:
petroleum consumption petroleum industry : + 2.3 mb/d per year
non energy producing sector of the economy: -1.1 per year.

The energy to produce petroleum is increasing, just as the Second Law says that it must. The Etp Model informs us as to how much of an increase is occurring.
—————————————————–
The shale industry is trying to make a go of it in the energy industry. When you have a product that doesn’t supply any energy after the energy cost to produce it is factored in, you go broke.

http://www.bloomberg.com/news/articles/2015-06-18/next-threat-to-u-s-shale-rising-interest-payments?cmpid=BBD061915

http://www.thehillsgroup.org/

Quintard on Sat, 11th Jul 2015 2:25 pm 



Short,

For a 2nd Law i Know

Source of your numbers please
(petroleum consumption petroleum industry : + 2.3 mb/d per year
non energy producing sector of the economy: -1.1 per year.)?

Quintard on Sat, 11th Jul 2015 2:34 pm 



Calculations, sources for your numbers please, Short ?

Davy on Sat, 11th Jul 2015 3:02 pm 



Quintard, Short is ignoring you because many of us including short believe you are a sock puppet for none other than the “NOo” or “Marmi”. Climb back into your hole and leave us normal people in peace.

Quintard on Sat, 11th Jul 2015 3:30 pm 



Davy

I don’t know nony and marmi
I just want to clarify that Short wrote if you become paranoid that’s not my fault

Davy on Sat, 11th Jul 2015 4:30 pm 



Quintard if you don’t know who the NOo is why did you call him by his real name “Nony”?

Northwest Resident on Sat, 11th Jul 2015 6:22 pm 



“..why did you call him by his real name “Nony”?”

Somewhere, probably in California, the net surfer who sometimes goes by Nony, sometimes by PapaSmurf, sometimes by Marmico, sometimes by Perk Earl, and almost assuredly at other times by different names, is doing a full frontal face palm right now, asking himself how he could be so stooooopid as to give away his new “secret” identity.

Nony, step out of the shadows and into the light. Be who you are. Stop hiding behind all the sock puppets.

shortonoil on Sat, 11th Jul 2015 6:47 pm 



“Calculations, sources for your numbers please, Short ?”

If you go to the site the full development of the Etp Model is explained in 22 pages. You can also download the first ten pages of the full 67 page paper at the Order Report page. When you have finished that you will have a pretty good idea for the source of the post above.

http://www.thehillsgroup.org/