Peak Oil is You
Donate Bitcoins ;-) or Paypal :-)
Page added on March 6, 2015
The World Has Extracted More Crude Oil Than It Knows What to Do With
The world is so flush with crude oil, it is running out of places to store it all.
Crude oil producers are currently pumping nearly 1.5 million barrels a day more of the stuff than the world actually needs, according to The Wall Street Journal. American crude-oil supplies are at an 80-year peak, which leaves U.S. storage facilities brimming at roughly 70 percent full, the paper reports.
If the trend continues, the storage problem could reach its tipping point: U.S. tanks may be completely full by mid-April, causing the price of fuel to plummet even further than its recent slide, according to the Associated Press.
Citigroup, meanwhile, estimates that crude oil storage across Europe is over 90 percent full, while in South Korea, South Africa and Japan, crude oil storage may be more than 80 percent full.
“The inventory levels are actually getting scary,” Harish Sundaresh, a portfolio manager and senior commodity strategist for Loomis, Sayles & Co., told the Journal. “When I look at storage, it doesn’t seem to me that we have enough.”
There may be slight relief in sight: American facilities are in the process of expansion and tanker ships are being leased for crude oil storage, the Journal reports. But regardless, analysts predict the squeeze for storage will send oil prices nose-diving even lower than the already low rates, which have plunged by half since June. While that’s bad news for producers, consumers ultimately win, as prices for gasoline and other fuels derived from crude oil will drop too.
Meanwhile, an oil train derailed in Illinois Thursday and burst into flames, making it the third such oil train derailment inferno in North America in three weeks.
16 Comments on "The World Has Extracted More Crude Oil Than It Knows What to Do With"
Plantagenet on Fri, 6th Mar 2015 5:45 pm
The oil glut is going to last a bit longer. When the storage facilities are filled, more oil will have to be dumped on the market.
dave thompson on Fri, 6th Mar 2015 5:47 pm
That BNSF line runs right smack dab to the Chicago metropolitan region. I know that line about 7 miles form where I live. Damn lots of people live along that line.
shortonoil on Fri, 6th Mar 2015 6:14 pm
As producers go off line because of low prices this situation will only worsen. The reason is that more than half of the petroleum now produced now goes to producing petroleum:
http://www.thehillsgroup.org/depletion2_023.htm
The largest consumer of petroleum in the world is now the oil industry. It is an industry that is like a snake eating its own tail, the more it shuts in production the more the prices will descend! Depletion is a reality that the world will soon come to understand more than it ever believed was possible!
http://www.thehillsgroup.org/
Makati1 on Fri, 6th Mar 2015 6:49 pm
Prices not going to go up for a long long time, it seems. I can hear the sounds of bankruptcy in the distance, getting louder. Or is it the first rumblings of the collapse avalanche? We shall see.
Craig Ruchman on Fri, 6th Mar 2015 8:51 pm
Short, am I understanding this right? A negative feedback loop has begun. Lower prices will reduce production, but since oil production is a consumer of its own product, demand will then fall more so it will be adding to its own oversupply which in turn will reduce demand further. Good paying oil jobs will vanish along with those in the supporting service sector, taking away from the economy and reducing demand still further and forcing prices lower. New more costly oil will then be forever out of reach making this the onset of Peak Oil.
Dredd on Sat, 7th Mar 2015 4:38 am
Peak glut.
Too much poison.
So, don’t worry –we have enough to totally destroy the plants, animals, oceans, atmosphere, and climate system.
Rejoice bean counters!
Who needs a planet anyway?
Dredd on Sat, 7th Mar 2015 4:42 am
Poison banks.
Isn’t that special, and quaint.
The troof is out, Barbie is to blame.
Hugh Culliton on Sat, 7th Mar 2015 7:23 am
Someone please correct me if I’m wrong, but what we’re witnessing is the “bumpy plateau” at the top of Hubbard’s Peak. Therefore the folks who are running about shouting “Peak Oil is dead!” are rather like that Senator Arsehole McIdiot who claimed that the snowball in his hand meant climate change wasn’t happening. Is that about right?
shortonoil on Sat, 7th Mar 2015 7:48 am
Short, am I understanding this right? A negative feedback loop has begun. Lower prices will reduce production, but since oil production is a consumer of its own product, demand will then fall more so it will be adding to its own oversupply which in turn will reduce demand further.
We have to date removed 83% of the theoretically extractable reserve. That is, oil that can supply enough energy to support its own production, and provide enough to the end consumer to justify them buying it. As the energy to produce oil, and its products continues to increase (which is taking a larger, and larger portion of the pie) the energy to the end consumer goes down. The value to the consumer goes down, consumer demand goes down, and the price falls:
http://www.thehillsgroup.org/depletion2_022.htm
When the price falls the highest cost producers will be shut in first. Shale, bitumen, arctic, ultra deep water, and high sulfur extra heavy fall into this category. The demand that they created from their own production disappears along with the end consumer demand which is also falling. Depletion has now set up a negative feed back loop from which there is no escape, and the oil age is approaching its final demise. The rate of that approach is orders of magnitude higher than conventional theory predicts. The world is now borrowing energy from the future which can never be repaid. The value of the world’s debt is now rapidly approaching zero!
http://www.thehillsgroup.org/
Davy on Sat, 7th Mar 2015 8:27 am
Folks, short’s profound ETP of our systematically foundational commodity oil is a primary Peak Oil dynamic. There are a handful of other POD phenomenon that are alone bad enough an indicator of production depletion. BAU cannot have an oil production slow down for more than a short period and not suffer entropic decay. If you add in ETP of oil, which is a scientific thermodynamic equation of depletion of oil then you how can you not be a doomer? This is especially true when you realize the percentage of true economic reserves left and the time frame the depletion of those reserves are trending to.
Short has had a profound impact on me along with system dynamics theory. Combining system dynamics and POD with a population and consumption overshoot you realize we are at a paradigm shift of human existence never before seen. Add to this the following population thesis I linked and the truth becomes hard to bare:
http://www.paulchefurka.ca/Population.html
Yet, these truths we must face. It is a truth we must adjust to and mitigate where possible. Now is the time to begin prepping. If we have an optimistic 10 years of a BAU in bumpy descent remaining you still have time to prepare at some level and any level. I may be being optimistic and in hopium with 10 years but it is possible. BAU can limp on conceivably and with luck.
If we are lucky as a species we will soon have a crisis that is survivable that forces BAU towards mitigation and adjustment to less with less and the elephant in the room of 200MIL year excess deaths. This 200MIL excess death is an average of what is needed over a generation to return us to a proper carrying capacity ex fossil fuels. This population is probably optimistically around 1BIl but in truth lower because of AGW and ecosystem destruction.
We can adjust and we can mitigate but we cannot deny the pain and suffering ahead. Reality could give a shit about human exceptionalism and progress. Reality is screaming a bottleneck. It is screaming overshoot of carrying capacity. The longer we remain in denial the worse will be the transition in overconsumption and further population overshoot. Now is the time to enter a crisis. Now is the time to change destructive attitudes and lifestyles. Crisis will change everything and wipe away the false gods and denial.
Since this may not happen for some years yet. Folks friggen enjoy life to a maximum if you can. Prep if you can but do one or the other. Ideally do both please. The end days are ahead do something!
Northwest Resident on Sat, 7th Mar 2015 10:07 am
“…oil that can supply enough energy to support its own production…”
If shale and other unconventional oil is worth anything at all, then it ought to be able to provide enough energy to power its own production and still leave enough remaining energy to keep the wheels of BAU turning.
It doesn’t do that, not even close. If it did, then why is the USA still importing the same amount of oil from ME countries and other conventional sources, while piling up a glut of fracked oil in storage? Why not just use the fracked oil instead of conventional imports? Because that fracked oil doesn’t contain enough energy to power its own production AND economic enterprise.
We’re burning what little remaining “good” oil we have to produce a bunch of fracked and unconventional oil that may be good for a few things, but not for powering the global or even national economies. So WHY are we wasting the good oil and creating vast amounts of unpayable debt to produce gluts of unconventional oil?
Because, at this late stage of the age of oil, it is the ONLY game left in town. Energy production is the engine that drives the global economies. They have to keep those wheels turning — the buying and selling, the shipping, the financing, the refining and all the hundreds and thousands of side businesses that are all dependent on oil getting produced and delivered to the end users. Without unconventional oil production (and the unpayable debt that enables it, because it doesn’t pay for itself), the wheels of BAU would have fallen off long ago.
We’ve been keeping BAU limping along with debt and with the economic and ecological destruction of unconventional oil production. It never was anything other than a short term strategy, totally unsustainable, destructive in every way conceivable. And now, here we are, teetering on the precipice between our last desperate attempt to stretch out BAU and the deep chasm of economic collapse that we have tried so hard to delay.
We bought some time, and we’ve used that time up. The consequences of finally having to face the reality of peak oil are upon us now, but we haven’t seen anything yet.
Perk Earl on Sat, 7th Mar 2015 11:12 am
There was a time when the boom cycle for oil would have initiated some very large growth numbers for developed countries. The tale of the tape was oil at a historically much higher price did not translate into high growth, due to too little net energy.
In the ensuing over supply, something else happened and that was every producer needed to continue to produce ‘all out’ to try and cover higher production costs and or placate their massive populations with expanding social nets to try and avoid unrest.
Now we face the next phase event; what happens when already close to full storage taps the brim? Oil price should take a nose dive, further threatening future supply by greatly reducing incentive for exploration.
The question then is; will greatly reduced price translate into much greater growth? With both governments and the public having been saddled with dramatically higher debt, it is unlikely it will be enough to charge up growth enough to support a high oil price to support development of new supply.
It would seem Short’s graph showing fast oil price decline in lockstep with depletion is so far accurate as we approach the end of the oil age. Quickly too, as that projected price in 2020 is so low there will be zero incentive to expend funds for new supply other than to simply pump what is already being extracted from existing infrastructure.
Apneaman on Sat, 7th Mar 2015 2:43 pm
The World Has Extracted More Crude Oil Than It Knows What to Do With
The world knows exactly what to do with it, it just can’t afford to buy it.
marko on Sat, 7th Mar 2015 3:26 pm
Fill it up, maybe those tank will be full for the last time
Makati1 on Sat, 7th Mar 2015 6:47 pm
As I have been asking. Where is a chart showing NET oil energy produced over the last 100 years? Or even the last decade? I know it has to be on the downward slope but how far from the bottom? And how soon?
Perk Earl on Sun, 8th Mar 2015 1:59 am
“And now, here we are, teetering on the precipice between our last desperate attempt to stretch out BAU and the deep chasm of economic collapse that we have tried so hard to delay.”
That’s good stuff, NR. Should be good fun continuing to watch that conundrum play out to it’s eventual conclusion.
We watched ‘Deep Impact’ tonight. A movie about a comet headed for Earth. All the usual cornball stuff and even though part of it hits Earth causing a tsunami, the bigger part is destroyed by a spaceship with nukes on board. What’s interesting about it is this coming end of oil age event will end up being much worse. Sort of ironic for the majority of the viewing public unaware or unaccepting of peak oil, that they probably watched it thinking humankind can beat any kind of problem, even a comet headed for Earth. Think again suckers.