22
Aug
08

Oil Geopolitics – Metrics

EIA recently released their short term outlook on global oil. I know, I know, this means that the current administration does have the capacity to understand the geopolitical climate, the ability to generate meaningful information that could be very useful in, say, governing the country…. Anyways, given my rant on the worth of quantified data, I thought it appropriate to share some stats:

Consumption: First Half 2008 – these are Barrel Per Day (BPD) as compared to year-earlier levels

  • Global: Up 500,000 BPD
  • Non OECD: Up 1.3 million BPD
  • USA: Down 800,000 BPD – largest drop in 28 years…

Prediction: Up 1 Million BPD in second half of 08 and up almost 1 Million BPD in 09

Interestingly, despite the relatively drastic decline in US demand, increased demand elsewhere overshadows.

Supply: BPD compared to year-earlier

Non-OPEC:

  • First half of 08: Down 330,000 BPD
  • second half 08: Up 510,000 BPD
  • 09: Up 850,000 BPD

This growth mainly from  Azerbaijan, Brazil, USA

OPEC: set to peak in Quarter 3 of 2008

  • Q3 08: 32.9 million BPD
  • Q4 08: 32.4 million BPD
  • 09: 31.6 million BPD

Now for some interesting USA stuff: note: lower 48 production increase is to more than offset Alaskan declines…

Production / Supply:

  • 07: 5.10 million BPD Average
  • 08: 5.15 million BPD Average
  • 09 Prediction: 5.36 million BPD Average

Ethanol:

  • 07: 430,000 BPD
  • 08: 590,000 BPD
  • 09 Projection: 650,000 BPD

Crude Oil Imports 2008: Down by 240,000 BPD

Petroleum Product Imports 2008: Down by 400,000

Crude Oil Prices:

  • 07 Avg: $72
  • 08 Projected Avg: $119
  • 09 Projected Avg: $124

Gasoline Prices: 1 gallon of regular unleaded

  • 07 Avg: $2.81
  • 08 Projected Avg: $3.65
  • 09 Projected Avg: $3.82

——————————————————————————–

So those are the numbers, and the predictions / projections take into consideration a number of potentially impacting factors.. CAUTION: OPINIONS EMBEDDED BELOW, END QUANTIFIED DATA ZONE…

There is plenty of debate right now on what would cause gas/oil prices to shift, as I posted before. Here is a more specific overview:

The price of oil would likely be less than aforementioned projected levels if:

  • The economic downturn is more dismal than expected (demand would decrease)
  • Higher commodity prices (including gas) (demand would decrease further)

The price would likely increase over projected levels  if:

  • Negative events in volatile, oil rich regions: ex. Iraq, Iran, Venezuela, Nigeria, etc. (decreased supply)
  • OPEC intentionally keeps supplies tight
  • consumption exceeds current speculation
  • oil expansion does not meet projected levels of productivity
  • hurricanes

The short answer is: Yes, speculators are investing based on the assumption that oil prices will increase in coming years. Yes, global demand is growing quickly. Yes, net global supply is diminishing.

This information speaks to numerous debates, but the offshore drilling is the one that really gets me. Regardless of the fact that those extra barrels wouldn’t hit the market for years, what would the impact be? We produce so little of the worlds oil, and consume so much – the miniscule contribution of some offshore drills would be a drop in the bucket…

US: Crude Oil Production:

  • 07: 5.10 million BPD
  • 08: 5.15 million BPD (Projection)
  • 09: 5.36 million BPD (Projection)

US Petroleum Consumption

  • 07: 20.68 million BPD
  • 08: 20.20 million BPD (Projection)
  • 09: 20.8 million BPD (Projection)

Offshore drilling, by government estimates, is predicted to realize around 1 million BPD’s. That is, 1 million barrels of oil per day of the world’s 73 Billion BPD’s…  Those in favor of offshore drilling, as you know, suggest that it would provide short term, real relief to Americans at the pump. This despite government predictions that such a project would amount to a savings of about 2 or 3 cents – eventually. Unfortunately, McCain is gaining traction with this argument, and democrats are following that lead as Americans have overwhelmingly responded in favor of offshore drilling.

Supporters in the industry claim that estimates seem very conservative, arguing that actual amounts could be far and away greater than expected. I can’t argue with this as I have no idea.

Another argument is that any bit counts, even 1 million BPD’s – they follow with the whole new jobs, less foreign oil bit. Now they could easily create new jobs in renewables and reduce dependence on foreign blah blah.

I’ll agree with this – in 5 years, or ten years, or twenty years or whenever WE ARE GOING TO STILL BE DEPENDENT ON OIL… So I can almost agree with the stance taken by many, that is – let’s do everything including offshore drilling, alternatives, etc. But if we can do more of one thing because it will create greater measurable difference, than why would we do both?

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