Energy / Crude Oil

• What is Oil Really Worth?

  The reason that oil company profits are so volatile is that sometimes the price of oil becomes pretty disconnected from the cost to produce it and convert it into finished products. This is because oil is a globally traded commodity, and like other commodities such as corn, iron, and pork bellies, the price is set by how much people are willing to pay for it. This is an important point that is often lost on people who seem to believe that commodities are priced the way Ford prices trucks: Determine the cost of production and a return on the investment,…

• World Oil Forecasts and Hubbert’s Peak

  Recently when I was reading some of the papers M. King Hubbert wrote, one thing struck me was the context in which he made his forecast regarding how world oil supply would peak and decline. He made this forecast in the context of having plenty of other fuel supply from other sources already developed, to offset this decline. The three graphs shown in this paper are from Hubbert’s 1956 paper, Nuclear Energy and the Fossil Fuels. Based on Figure 30, it is clear that he expected nuclear energy to raise total energy production to a very high level, even before…

• It's Time for Obama to Spook the Oil Markets

  The fate of the Obama presidency hangs not on a birth certificate or the red ink on the federal budget but by the hose nozzle of your local gas station. Electoral discontent is measured by the price of a gallon of gasoline. Heading past $4 toward $5, that is a lethal trajectory for President Barack Obama. Enter the demagogues, especially the clown-in-a-business-suit, Donald Trump. Unfettered by the gravity that goes with facts, Trump says that he would fix the oil price – now around $110 a barrel – by facing down the producers, particularly the Organization of the Petroleum Exporting…

• Peak Oil Update - April 2011

  The US Energy Information Administration’s January oil production figures are out, and they show record oil production. Where are we headed from here? While production for January is up a bit (219,000 barrels compared to December), the monthly numbers bounce around a fair amount because of planned maintenance. They are also subject to revision. Figure 2 seems to indicate that the production amounts are trending upward a bit, probably in response to the recent higher prices. Figure 2. Monthly average Brent Oil price and total "liquids" produced, both from US Energy Information Administration. The amounts in Figures 1 and 2…

• Saudi Arabia Has Not Made up for the Drop in Libyan Oil Production

  The OPEC Monthly Oil Market Report and IEA Oil Market Report both came out on Tuesday last week and allowed us to see how events in the Middle East are starting to play out in global oil production statistics. NB: This is a lightly edited crosspost from Early WarningIn particular, here's the last three years of global total liquid fuels (not zero scaled): Note that the rise that's been going in since last fall has now been abruptly interrupted by the Libyan situation, and total oil production has fallen by about 0.5mbd. This is about 0.6% of global production, but…

• Israel May Hold the World’s Third Largest Reserve of Shale Oil

  Last summer huge deposits of natural gas were found along Israel's northern coastline. As with almost everything having to do with that controversial country, both Israelis and others found this "revelation" a mixed blessing, to say the least. On the one hand, it certainly eases concerns about Israel's energy viability, with enough not just for its own needs, but sufficient quantities to become a major exporter as well. At the same time, many Israelis feared the effect such "easy money" would have on the country's already significant elite corruption problem, and its proximity to Lebanese territorial waters raised once again…

• Saudi Arabia Oil Exports to Decrease Due to Increased Domastic Demand

  Oil importing nations have long treated Saudi Arabia as an infinitely deep well of crude oil supplies. In 2005, Matt Simmon’s book Twilight in the Desert did much to call attention to the possibility of diminishing production from the desert kingdom’s aging wells. More recently, cables released by Wikileaks highlight the possible overstatement of Saudi oil reserves. What much of this discussion ignores, however, is that oil exports from Saudi Arabia depend on more than just production — they are a function of both production and internal consumption. This post will focus on the existing trends of energy consumption within…

• Oil Production Figures in Areas of Unrest (Middle East & North Africa)

  The popular protests among the countries of the Middle East and North Africa (MENA) are continuing to roil, and so, rather than the review of the countries that I have been discussing in the posts of the last few Sundays, I thought I would just briefly review the status of the countries that are now in various stages of unrest, and include their relative production and exports of oil. I am not going to discuss the natural gas situation since, in relative terms, there is currently a significant excess of natural gas available to the world market. As a result,…

• HSBC Report Warns we Only Have 50 Years of Oil Left

  The world may have no more than half a century of oil left at current rates of consumption, while surging demand from emerging markets threatens to create “very significant price rises” before substitutes like biofuels can serve as viable alternatives, the British bank HSBC warns in a report. “We’re confident that there are around 50 years of oil left,” said Karen Ward, the bank’s senior global economist. The bank, the world’s second largest in assets, further cautioned that growth trends in developing countries like China could put as many as one billion more cars on the road by midcentury. “That’s…

• Oil Supply Crisis From War in Libya? Free Trade Begs to Differ

  The recent news from Libya suggests that a transitional government is already being put in place as BBC reports that Libya's opposition groups is set to export first oil shipment, and are making plans to load a tanker due to dock at a terminal near Tobruk. And there were unconfirmed reports that the tanker en route to Libya was the Liberia-flagged Equator vessel, owned by Greece-based Dynacom Management, according to BBC. Rebels Making Oil Deal That news came following the annoucement by Ali Tarhouni, the finance minister for the Libyan opposition, a University of Washington lecturer who returned to Libya…