Peak Oil is You
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Page added on June 15, 2013
Oil Supply Continues Flat
Above is the latest data on global oil supply (all liquids from various sources above, and the green curve being only crude and condensate below). We continue to be in a pattern in which supply has been very flat since the beginning of 2012. A close up just of the last few years shows this better:
Despite the flat supply, prices have fallen over the last year:
Presumably the fairly high prices sustained since the mid 2000s have set in motion enough conservation efforts in the OECD that demand is falling there enough to accomodate the rising developing country demand, without prices increasing further. I would not expect Brent prices to fall below $100 though, at least not for long, as Saudi Arabia will cut back production to support them.
For those who would like more background on these issues, I made some attempt to explain here.
12 Comments on "Oil Supply Continues Flat"
rollin on Sat, 15th Jun 2013 12:09 pm
Those short plateaus have existed in the past, according to the graph. The general production trend is still upward, just as the general price trend is still upward.
Beery on Sat, 15th Jun 2013 1:44 pm
The general trends is always upward even long after a peak. The general trend of US oil production is still upward right now, 40 years after the US hit the peak of oil production.
The trend means nothing after the peak.
John_A on Sat, 15th Jun 2013 2:15 pm
Boy when the plateau finally disappeared and became the next plateau, it isn’t anything to sneeze at.
Is there a theory of ever higher plateaus to replace the old plateau oil theory?
indigoboy on Sat, 15th Jun 2013 3:09 pm
“I would not expect Brent prices to fall below $100 though, at least not for long, as Saudi Arabia will cut back production to support them.”
This is a crucial point. For every barrel of new, bio-fuel, or shale oil the world produces, the Saudis will turn the spigot down, to control the price. They [Saudis], ‘need’ $100/barrel (at this point in time), to keep their economy on an even keel. But remember, if they sell less into the market, (say), a reduction of 3% to try to control prices, then they will need to lift the price per barrel by the same 3% to maintain the same level of revenue stream.
e.g. (using simplified figures), ~ 1,000 barrels @ $100 = $100,000. And a price fall to $80, would be catastrophic to Saudi revenue. A revenue fall to $80,000 (20% loss). They [Saudis], would not (could not!), let that happen.
They would have to crank down the spigot and sell less barrels, (say), 970 barrels @ $103.10 to keep their revenue stream at $100,000
So paradoxically, extra shale oil, condensates and ethanol onto the market, could (due to OPEC’s downward spigot manipulation), actually increase the price of oil.
But whatever happens the price of oil, is only going to trend upwards, whilst staying in a kind of ‘goldilocks range’, crushing economic recovery with high prices, and falling in price again as it finds itself in a depressed economy of its own creation.
I suppose that ‘price fluctuation’ will be a bit like the governor of a diesel engine, as it keeps the economy ‘idling’, between over-run and stall? At least until the global tank or fuel lines finally begin to empty?
BillT on Sat, 15th Jun 2013 3:23 pm
If you actually believe these graphs, maybe you need to rethink your base. NET oil has been dropping for years.
This whole idea will crash at the next black swan event and they are getting tired circling around up there. A Middle East explosion this summer or a war in Syria between the US and Russia could be another. It’s getting more and more interesting…
GregT on Sat, 15th Jun 2013 4:23 pm
If oil prices were allowed to return to pre 2007 prices, the North American ‘oil revolution’ would collapse overnight. The cartels will not let this happen.
Saudi Arabia is only along for the ride, and is laughing all the way to the bank as the price that they are getting for their same crude oil has increased 400% in the last 8 years.
GregT on Sat, 15th Jun 2013 4:25 pm
Sorry, 300%.
Solarity on Sat, 15th Jun 2013 4:31 pm
The conventional crude supply has been somewhat flat since 2005, as shown in the first chart by the obvious break before and after that year. A long range analysis shows that the illustrated pre-2005 trend went back many years. Between 1980 and 2005, world crude production increased by an average of 500 Mbpd. Whereas after 2005 it has grown by only about 100 Mbpd (excepting 2010). If not here already, a plateau appears imminent.
Juan Pueblo on Sat, 15th Jun 2013 5:41 pm
It seems that all liquid fuels production and refinery gains are peaking, just like crude and condensates did in 2005. This will put the break to the global financial speculation growth that has been keeping the system afloat for the past years since the real economy stopped growing.
If only population growth would stop, too, we would be fine. It’s all downhill from here on.
Others on Sat, 15th Jun 2013 9:56 pm
As per bp stats oil supply increased 2.2 %.
Plantagenet on Sat, 15th Jun 2013 10:29 pm
Conventional oil production plateaued in 2005, just as the “peak oil” theory predicted.
Since then, biofuels and fracking and other forms of unconventional oil have taken us a bit higher.
BillT on Sun, 16th Jun 2013 6:25 am
Right on Plant!