Would 2mbd make a difference

by **EnemyCombatant** » Mon 21 Mar 2005, 23:34:42

I have been studying this topic only recently. From my understanding the US consumes 20mbd and the world consumes 80mbd. If Iraq produced another 2mbd, it wouldn't have much impact. That's 1/4 of a percent increase. Would that affect prices. Please correct me if I am wrong.

$this->bbcode_second_pass_quote('', ' ')"If it weren't for the insurgency, Iraq would produce at least another million barrels day -- and maybe two," said Gal Luft, co-director of the Institute for the Analysis of Global Security in Washington. "Iraq is very much missing from the market, and it's one of the reasons why prices have risen so much."

by **Dvanharn** » Tue 22 Mar 2005, 02:25:38

2/80 = .025
.025 x 100 = 2.5%

Significant, but in the range of the annual current increase in demand. Therefore, it might balance out supply for a year vs. demand growing at current rate.

Dave

by **cube** » Tue 22 Mar 2005, 03:32:37

I disagree 2 mbpd would make a difference. If you dumped an extra 2 mbpd onto the open market the supply would exceed the demand and the price of crude would drop. I'm not sure by how much but it would definitely be less then what it is today.

As for Iraq missing out I also disagree. The oil industry is not the hotel industry. Every nite that a room in a hotel does not get rented can never be recouped. If you have a 100 room hotel and only 50 rooms got filled last nite you cannot carry that 50 rooms over to tomorrow and rent out 150 rooms. However, every barrel of oil that does not get pumped out of the ground today can be pumped out later in the future....probably for a higher price in this market.

With that said I don't think Iraq is missing out on much everytime an insurgent blows up a pipeline....yeah feel free to disagree but that's my 2 cents.

by **0mar** » Tue 22 Mar 2005, 09:48:45

Already factored into ASPO's model. ASPO's model takes into account all present, and future oil finds and production.

by **Kingcoal** » Tue 22 Mar 2005, 09:59:03

Actually, there is a lot of emotion in current prices. That's why the price can drop $10 when a news story hits. Speculators have driven the price to where it is today. The typical behavior is for the President to release oil from the Strategic Oil Reserve to spoil the speculation, but that doesn't appear to be Bush's style.

Over the long term, however, supply/demand dictates price. I agree, a 1/4% increase in production is a tiny drop in the bucket.

by **stu** » Tue 22 Mar 2005, 10:58:08

Does anyone have information on oil coming from the Caspian Sea?

I've heard that oil wells there will come on line soon.

Is this going to make any difference?

by **0mar** » Tue 22 Mar 2005, 12:23:23

$this->bbcode_second_pass_quote('stu', 'D')oes anyone have information on oil coming from the Caspian Sea?

I've heard that oil wells there will come on line soon.

Is this going to make any difference?

by **nth** » Tue 22 Mar 2005, 16:47:13

$this->bbcode_second_pass_quote('stu', 'D')oes anyone have information on oil coming from the Caspian Sea?

I've heard that oil wells there will come on line soon.

Is this going to make any difference?

by **Cash** » Tue 22 Mar 2005, 17:07:55

An extra 2mbpd would make a difference currrently because demand and supply are closely balanced and commodities are priced at the margin -- in other words, the last barrel bought sets the price for all the others. But as already noted, rising demand, combined with depletion in existing fields (currently running 1.5mbpd per year) would quickly eat up your hypopthetical 2 million barrels.

Cash

Would 2mbd make a difference

Would 2mbd make a difference

2.5%, not 0.25% - you're off by a factor of 10.

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