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Page added on January 23, 2018

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Art Berman: Like It Or Not, The Future Remains All About Oil

Art Berman, 40-year veteran in the petroleum production industry and respected geological consultant, returns to the podcast this week to talk about oil.

After the price of oil fell from its previous $100+/bbl highs to under $30/bbl in 2015, many declared dead the concerns raised by peak oil theorists. Headlines selling the “shale miracle” have sought to convince us that the US will one day eclipse Saudi Arabia in oil production. In short: cheap, plentiful oil is here to stay.

How likely is this?

Not at all, warns Berman. World demand for oil shows no signs of abating while the outlook for future production looks increasingly scant. And the competition among nations for this “master resource” will be much more intense in future decades than we’ve been used to:

Since the 1980s, we simply have not been replacing reserves with new discoveries. So how does that work? Well, obviously, we’ve got a lot of oil on production and in reserves, so we’re essentially drawing down our savings account if you want to think about it that way. You can do that for a long time if you’ve got a whole lot of money in your savings account, and we as a planet do. But you can’t do it forever.

Eventually, you either have to stop spending as much so you don’t draw down your savings, or you need to put some money back in the account. And it doesn’t seem like we’re doing much of either, and haven’t been doing much of either for a long time. So the concern is tremendous, at least, in my estimation(…)

We have to go back to FDR to understand that the centerpiece of U.S. foreign policy ever since World War II has been to maintain supply of oil. And, of course, back in FDR’s time, the U.S was 100% oil self-sufficient. I think we produced something like 52% of the world’s supply. So here’s a guy who, without any immediate supply issues even on the horizon, said “We’ve got to look after our own oil security” and made a deal with Saudi Arabi to provide that. But now we’ve had the Obama and the Trump administration saying, “We don’t need your stinking oil any more. We’re the big guys on the block.” China’s saying, “Whoa. Here’s an opportunity for us.”

What does that mean to us other than political gamesmanship? Well, whatever else people might believe, the United States still imports 7+ million barrels a day of crude oil. Even if you work to net out our exports, we still import, pretty nearly on average, 6 million barrels a day. That’s a huge volume. We get an awful lot of it from the Middle East. Well, if the Middle East is diverting their supply to countries like China, guess what? It’s not available to us, or it’s not available at the price that we want it. Not to mention that fact that Saudi Arabia’s population is exploding. They’re using more and more of their oil output for domestic consumption, so there’s increasingly less to export.

These should be primary concerns to anyone who even remotely thinks about the future. Certainly to anyone who connects the supply and usage of petroleum to economic wellbeing.



25 Comments on "Art Berman: Like It Or Not, The Future Remains All About Oil"

  1. Boat on Tue, 23rd Jan 2018 10:21 pm 

    The eia has a chart showing imports and exports that is up dated every week. Net imports the last 4 weeks average around 3.5 mbpd not 6 million as written above. Blatent bs for whatever reason.

  2. tita on Wed, 24th Jan 2018 1:55 am 

    @Boat
    Art is talking about net crude oil imports. You are talking about net oil products imports.

  3. Dredd on Wed, 24th Jan 2018 5:00 am 

    “… warns Berman. World demand for oil shows no signs of abating while the outlook for future production looks increasingly scant

    Not enough poison so civilization goes down.

    Sounds link a predicament (Oil-Qaeda & MOMCOM Conspire To Commit Depraved-Heart Murder- 3).

  4. Antius on Wed, 24th Jan 2018 6:48 am 

    Boat wrote: “The eia has a chart showing imports and exports that is up dated every week. Net imports the last 4 weeks average around 3.5 mbpd not 6 million as written above. Blatent bs for whatever reason.”

    This is a low-demand time of year. Take a look at the charts:

    http://www.seasonalcharts.com/classics_rohoel.html

    http://www.usfunds.com/investor-library/frank-talk/holiday-season-good-for-oil-stocks/#.Wmh_wMtLHcs

    And of course we are drawing down stocks.

    At this time of year, oil spot prices should be relatively low and stocks should be growing in preparation for summer. The fact that neither appears to be happening is a cause for concern.

  5. Antius on Wed, 24th Jan 2018 7:03 am 

    US crude stocks:

    https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WTTSTUS1&f=W

    Look carefully at the trajectory of the curve at the beginning of each year. Every single year until this one, stocks rose at the beginning of the year, peaked around mid-year and declined until about Christmas time, when the upward trajectory would begin again. That doesn’t seem to be happening this time. This suggests that real US import demand is being dampened by eating into stocks. When the summer season arrives, imports will either experience a rapid surge or reserve decline rate will increase. Either way, high oil prices look stable this year.

  6. Boat on Wed, 24th Jan 2018 9:30 am 

    Tita,

    That crude is run through refineries and turned into product then sold to other countries. Art is playing games with the numbers to make US imports seem worse by 2.5 mbpd.

  7. Boat on Wed, 24th Jan 2018 9:51 am 

    AntiUS,

    Lets use your weekly chart, Crude imports were 6.701 mbpd. Imported products were -3179. That is a minus in front of that number. Those products were exported. The total which is the same as net is 3179 bpd.

    Almost half of *Arts claimed crude imports end up refined products every day. Click on the historical button to see the dramatic fall in imports over time.

  8. bobinget on Wed, 24th Jan 2018 10:03 am 

    Total products supplied over the last four-week period averaged 20.5 million barrels per
    day, up by 8.1% from the same period last year. Over the last four weeks, motor gasoline
    product supplied averaged 8.7 million barrels per day, up by 5.4% from the same period
    last year. Distillate fuel product supplied averaged about 4.0 million barrels per day over
    the last four weeks, up by 15.3% from the same period last year. Jet fuel product supplied
    is up 10.1% compared to the same four-week period last year.

  9. dave thompson on Wed, 24th Jan 2018 6:27 pm 

    Asking Google; “The U.S. Energy Information Administration (EIA) includes biofuels in consumption of petroleum products. In 2016, the United States consumed a total of 7.21 billion barrels of petroleum products, an average of about 19.69 million barrels per day. EIA uses product supplied as a proxy for U.S. petroleum consumption.Sep 27, 2017”

  10. twocats on Wed, 24th Jan 2018 8:00 pm 

    https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mttntus2&f=a

    From what I can see from EIA Boat is correct. The point Berman was making there started with oil policy dating back to FDR, who was president until 1945. So we are talking a timeline stretching 70 years. To find a time in which the phrase “pretty nearly on average 6+ million barrels net imported” is true, you’d only have to go back to 2013, 4 years, or 5% of the timeline he was referring to. His degrees are in Geology and History – his time frame for how he thinks about “now” is probably a little wider than the last couple blips on a 15-minute candle stock chart.

  11. twocats on Wed, 24th Jan 2018 8:05 pm 

    bobinget – I’m assuming those aren’t net numbers?

  12. Boat on Wed, 24th Jan 2018 8:08 pm 

    Twocats,

    That chart and many other FF reports are updated weekly, monthly and yearly. Any oil reporter with any salt should keep up with the Eia, Iea and OPEC on a continious basis. I do just for fun so I knew he was full of shyt as anyone would who actually follows oil and energy.

  13. twocats on Wed, 24th Jan 2018 9:04 pm 

    He’s not an “oil reporter” he’s a geological analyst. you’re picking out one sentence from an hour long discussion (4.7 million versus 6 million isn’t that big a deal, and for all we know he’s specifically thinking conventional and not all the distillates the US has been peddling) – and trying to dismiss the whole thing which is on the whole spot on – well it’s disingenuous, but that’s who you are, so there’s no point fighting it, I was doing it more the edification of others, not your sorry ass.

  14. Sissyfuss on Wed, 24th Jan 2018 10:43 pm 

    Twocats paries, thrusts, and we have a kill. Quite clean actually.

  15. deadly on Thu, 25th Jan 2018 3:39 am 

    Google China buys Bakken crude.

    Oklahoma City-based Continental Resources said this week it’s piping more than 1 million barrels of Bakken shale oil from North Dakota down to Texas ports to export to China.

    http://www.chron.com/business/energy/article/U-S-crude-petroleum-exports-hit-new-records-as-12288178.php

    So the Chinese are now buying oil from the United States.

    Not that much, but it’s a start.

    Must be something the Chinese are willing to try.

    Venezuela has been hit with delining oil production, so the Chinese went shopping for some somewhere else.

    Nobody knows, all I know is they are buying oil.

    Not too difficult to wonder why. Oil is the name of the game when it comes to dense energy sources made usable.

    Chop it, slice it, dice it, oil won’t go away until it is gone. There it was, gone. It will take some more time, so get that oil while you can.

  16. Davy on Thu, 25th Jan 2018 4:28 am 

    The Chinese are like any other good businessmen looking for a good deal plus the government may be promoting US purchases because of the trade imbalances.

  17. Davy on Thu, 25th Jan 2018 4:32 am 

    “he’s specifically thinking conventional and not all the distillates the US has been peddling”

    Yea, I agree, but it is amazing to me how the US has managed to take what it has in all the different forms and make it marketable. A few years ago all these unconventional liquids where talked about as camel piss. It is camel piss compared to the good stuff but the US oil industry has come a long way in utilization of everything.

  18. Mad Kat on Thu, 25th Jan 2018 4:53 am 

    “… the US oil industry has come a long way in utilization of everything.”

    Yep! Subsidized by the taxpayer for the benefit of the 1%. Of course you would say that. You are one of the vampires. Not to mention that the oil companies are very deep in debt, supported by the negative interest rates that will soon end and bring about a lot of bankruptcies in the oil industry. Then we shall see who is left standing. 3% interest will end the capitalist system for good.

  19. Pat on Thu, 25th Jan 2018 4:57 am 

    ‘And the competition among nations for this “master resource” will be much more intense in future decades than we’ve been used to’the world does not have decades more, already is four decades late in preparing for post oil era. the signals of impending oil crisis are already visible and damages are huge huge. global demand is rising rapidly at unprecedented pace with not even miniscule replacement of oil and soon see huge oil shortages where the oil can rocket to new highs150$. Prepare…..

  20. Davy on Thu, 25th Jan 2018 5:56 am 

    Yep! Subsidized by the taxpayer for the benefit of the 1%.
    Do you have data to support that or is that just your populous vomit? It sounds good to all the people who operate on emotions like you.

    “Of course you would say that. You are one of the vampires.”
    Explain mad kat? I am in the oil industry? LIAR

    “Not to mention that the oil companies are very deep in debt, supported by the negative interest rates that will soon end and bring about a lot of bankruptcies in the oil industry.”
    Sounds like what is going on in the rest of the world too mad kat. Debt and relatively low rates are everywhere especially in China. Yet, that is OK for an emotional Sinophile.

    “Then we shall see who is left standing. 3% interest will end the capitalist system for good.”
    Look at the armchair expert. When you say 3% what do you mean mad kat. There are many rates out there to talk about. Not knowing what rates you are talking about I would say in general I doubt your undefined 3% will end the global economy but maybe 6%. I doubt rates will go that high in the next year or two because of rate repression and central bank economic management. China is where the economic controls along with imbalances are the most draconian. This is why China is the most fragile of economic powers with all the imbalances of credit and its reliance on an export economy. Non-preforming loans are the highest in China where the banking system is one huge bubble. If exports drop too quick China is in a world of hurt.

  21. Cloggie on Thu, 25th Jan 2018 12:45 pm 

    RIP ASPO-USA!

    https://www.investorvillage.com/groups.asp?mb=19168&mn=128848&pt=msg&mid=17920944

    After theoildrum.com has bitten the dust years ago, now ASPO-USA has seen the (solar) light and calls it a day.

    Peak oil supply has been called off.

    How are we going to bring this sad news to millimind?

  22. MASTERMIND on Thu, 25th Jan 2018 5:30 pm 

    Clogg: The show must go on! MasterMind will take it from here!

    Existing oil reserves are scheduled to begin a catastrophic crash within 1 to 3 years. When it hits the economic and social damage will be catastrophic. The end of Western Civilization, from China to Europe, to the US, will not occur when oil runs out. The economic and social chaos will occur when supplies are merely reduced sufficiently….

    https://imgur.com/a/6dEDt
    http://www.nature.com/nature/journal/v481/n7382/full/481433a.html
    http://www.sciencedirect.com/science/article/pii/S0301421509001281
    http://www.sciencedirect.com/science/article/pii/S030142151300342X
    http://www.sciencedirect.com/science/article/pii/S0016236114010254
    http://www.geo.cornell.edu/eas/energy/the_challenges/peak_oil.html
    http://www.energybulletin.net/sites/default/files/Peak%20Oil_Study%20EN.pdf
    http://www.scribd.com/document/367688629/HSBC-Peak-Oil-Report-2017

  23. MASTERMIND on Thu, 25th Jan 2018 5:34 pm 

    Clogg

    As M. King Hubbert (1962) shows, Peak Oil is about discovering less oil, and eventually producing less oil due to lack of discovery.

    https://imgur.com/a/6dEDt
    IEA Chief warns of world oil shortages by 2020 as discoveries fall to record lows
    https://www.wsj.com/articles/iea-says-global-oil-discoveries-at-record-low-in-2016-1493244000
    Saudi Aramco CEO sees oil shortage coming as investments, oil discoveries drop
    https://www.reuters.com/article/us-aramco-oil/aramco-ceo-sees-oil-supply-shortage-as-investments-discoveries-drop-idUSKBN19V0KR

    Peak Oil Vindicated by the IEA and Saudi Arabia

    Clogg are you going to listen to the worlds two biggest energy authorities?

  24. Boat on Fri, 26th Jan 2018 8:50 am 

    Twocats,

    What you proved is your just another idiot that can’t read charts. Antius posted a weekly chart that was up to date. You came back with a chart that ended at 2016. Were in 2018 dude. Art
    Was off on net US imports around 2.8 mbpd not 1.3 as you stated. Hell that is a Year and 1/3 of world consumption per day. Like you, Art shouldnt be talking oil if you cant use easily available correct numbers.

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