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Page added on January 26, 2017
Oil oversupply double world’s needs for 50 years
The world has access to more than twice as much oil as it will need between now and 2050, which will dampen the long-term outlook for prices, according to BP.
There was an “abundance of oil” globally and it was “increasingly likely” that some resources would be left in the ground, Spencer Dale, the oil major’s chief economist, said. This would prompt competition, keeping long-term prices below $US100 a barrel.
BP’s latest Energy Outlook report, published overnight, estimates that more than 2.5 trillion barrels of oil have been discovered worldwide and technically could be extracted.
Although the company sees continued growth in oil demand into the 2040s, the rate of demand is slowing because of fuel efficiencies and the drive for greener energy. That means there should still be “enough oil to meet the world’s entire demand of oil out to 2050 twice over”, Mr Dale said.
Faced with this long-term supply glut and the prospect of an eventual decline in demand, lower-cost producers including OPEC, Russia and America’s shale drillers, may change their strategy and pump more crude, he suggested.
To date “many low-cost producers have, in effect, rationed their supplies, with the view that if they don’t produce a barrel today they can produce a barrel of oil tomorrow”, Mr Dale said. In future, they may “use their competitive advantage to gradually increase their market share relative to the share of high-cost producers”.
The extent to which this would happen would depend on how high-cost producers responded and how quickly low-cost producers could, or were willing to, increase production.
While BP’s annual outlook report focuses on long-term trends, Bob Dudley, its chief executive, warned at its launch of continuing short-term volatility. “Last year was notable for its unpredictability and this year is promising more of the same,” he said.
“Oil prices have risen a little recently, following the production commitments from OPEC and others, but prices remain low compared with a few years ago. Oil inventories remain at high levels. And we are not yet seeing the full effects on supply of the cutbacks in investment in new energy projects made over the past two years.”
While much short-term attention has focused on competition between OPEC and America’s shale producers to ride out lower prices and benefit from their resurgence, Mr Dale pointed to changing dynamics in the longer term.
“Over a 20-year period, OPEC and US tight oil aren’t competing against each other,” he said. “It’s the higher-cost forms of supply [that] the low-cost producers — Middle East OPEC, Russia, US tight oil — are competing with.”
He said that present low prices did not appear to be sustainable, but he did not see a return to long-term prices above $US100 a barrel. “There [are] quite significant pressures which should dampen long-run prices,” he said. “Where in that big gap between current [prices] and $US100 we end up, I will let you speculate.”
He suggested that recent prices of about $US55 a barrel would not be “a settling point”, but equally it was unlikely that the long-term price would return consistently to very high levels.
Mr Dale said that BP did not specifically forecast when oil demand would peak. However, if the company’s forecasts for slowing demand growth were extrapolated beyond 2035, they would point to a high point in about the mid-2040s.
If global action to tackle climate change was tougher, oil demand would peak earlier, possibly within the next 20 years. On the other hand, if economic growth was stronger than expected, it was “quite conceivable” that oil demand would not peak until the second half of the century.
“The punchline from us is, we don’t know,” he said. “I would argue nobody knows.”
37 Comments on "Oil oversupply double world’s needs for 50 years"
shortonoil on Thu, 26th Jan 2017 7:19 am
“The world has access to more than twice as much oil as it will need between now and 2050,”
All of this oil, says BP, but not producer on the planet is replacing the reserves that they are extracting?
Must be some new kind of oil?
Cloggie on Thu, 26th Jan 2017 7:21 am
Poor Shortonoil, the peak-oil-now crowd (formerly including me until 2014-2015) looks really silly.
Thank God we still have global warming to worry about. Perhaps that our local Google copy & paste service Friday can provide us with our highly needed daily portion of doom and rummage us a tiny flood somewhere in Farawaystan to prove that we’re f*. A flooded basement in Kirghistan will do, thank you very much.
Cloggie on Thu, 26th Jan 2017 7:21 am
Oops, crossed.
pointer on Thu, 26th Jan 2017 7:25 am
“the rate of demand is slowing because of fuel efficiencies and the drive for greener energy”
No effect on demand from tepid economic growth?
In any case, as most posters here know, it’s not a matter of if, but when.
Davy on Thu, 26th Jan 2017 7:26 am
Those who are not blinded by techno optimism are reviewing what short has to say with an open mind. Too bad someone claiming to be so scientific would dismiss this very important analysis because he finds the outcome too disturbing.
https://www.theautomaticearth.com/2017/01/what-is-this-crisis-of-modernity/
Cloggie on Thu, 26th Jan 2017 7:33 am
Since the Heinberg debacle, I have more faith in sober BP professional types a la Rockman, than amateur “Great Thinkers” like Bardi from your link, who have a vested interest in telling spectacular tall tales, to ensure they will be invited as speaker for the next doomer conference.
Cloggie on Thu, 26th Jan 2017 7:34 am
In any case, as most posters here know, it’s not a matter of if, but when.
Absolutely, but by that time renewables will have taken over, so nobody cares anymore.
Davy on Thu, 26th Jan 2017 7:36 am
Ah, this is about faith then not balanced analysis with a sober understanding. I knew I had techno’s pegged!
pointer on Thu, 26th Jan 2017 7:57 am
Cloggie, I’m still with ShortOnOil. The mid-2000’s peak triggered thrashing — price spike, crazy investment, debt collapse, crash, rescue, desperate pumping to get oil out of the ground immediately, price and market share wars, neglected exploration. No doubt that there will be more spikes, crashes, crazy investment and who knows what else, as the system continues to thrash. Accurate modeling is impossible once a system is thrashing, even if you try to factor in things like delusional US presidents, military conflicts, erratic halts and starts by politically-unstable countries, and famines in places that usually don’t have famines. What you can be sure of is that it is painful to be in the oil business when the market is thrashing. In short, Hubbard was right, and what we’re seeing now is an under-damped response to the event of demand outrunning supply in the mid-2000’s. Anyone have a rosier interpretation of the events of the last 15 years?
pointer on Thu, 26th Jan 2017 7:59 am
Sorry, “Hubbert”.
Cloggie on Thu, 26th Jan 2017 8:02 am
pointer, agree with most of what you said… but the $64k question is:
is BP right or Shortonoil?
Why would BP lie?
They can out-consult SoO in a heartbeat.
pointer on Thu, 26th Jan 2017 8:29 am
Cloggie, Perhaps BP is providing alternative facts for some strategic purpose. I can only speculate.
Davy on Thu, 26th Jan 2017 8:33 am
Why must they both be considered right are wrong? They are talking to different people about different aspects of the same thing. IOW they are both useful and neither can be dismissed considering how complex the economy and oil complex are together. It is those who micro analyze these issues for an agenda or are selling something that choose a hard position. We are grownups here we can talk about collapse or not. If the BP energy outlook talked about a collapse who is going to read it and believe them? If BP did publish a dire message it would cause an uproar and discredit them from the mainstream. Here on this board we dismiss and discredit mainstream news as the only source. We are digging deeper because there is a deeper story.
Mark on Thu, 26th Jan 2017 8:41 am
Will this must extra oil, BP will have to give it away! I’m waiting for 30 cents/gallon gasoline like when I was young.
paulo1 on Thu, 26th Jan 2017 9:09 am
April Fools!!
I always go back to EROEI.
The crumbs have stopped falling off the table, people. Look for passionate unrest as this continues.
rockman on Thu, 26th Jan 2017 9:13 am
“…the rate of demand is slowing because of fuel efficiencies and the drive for greener energy”. Exact same statement of FACT phrased differently: demand for oil will continue increasing despite improvements in efficiency and the drive for greener energy.
Pointer – All I can say about the BP statement: 1) reduced drilling = a decrease in new reserve development; 2) depletion, like rust, of existing proved reserves never sleeps; the growing population + desire of folks at the bottom of the economic pyramid to climb = increased demand for energy.
And how is that demand for energy being met today and how will be be met in the future. Here’s the answer from the EIA:
“In 2011, fossil fuels accounted for approximately 82 percent of the world’s primary energy use, but this is expected to fall to 78 percent by 2040, meaning that the use of fossil fuels is expected to be on a decline.”
IOW as energy demand INCREASES in the next 23 years a combination of depletion of fossil fuels + declining fossil fuel development + growing population/consumption – increased efficiency – green energy development = a decrease of fossil fuel energy of less then 0.2% per year thru 2040.
If you accept the EIA’s analysis how do you see the future compared to BP’s vision?
rockman on Thu, 26th Jan 2017 9:16 am
“Perhaps BP is providing alternative facts for some strategic purpose.” According to federal law via the SEC the BP management is REQUIRED to present a positive forward view as long as no false facts are utilized.
rockman on Thu, 26th Jan 2017 9:26 am
Mark – The last time gasoline was 30¢/gal (nominal price) in the eaerly 50’s the inflation adjusted price was around $2.40/gal. Currently the national average price is a tad lower. So there you go: BP et al have delivered.
On behalf of the rest of the oil patch: you’re welcome. LOL.
BobInget on Thu, 26th Jan 2017 10:05 am
https://www.fxempire.com/markets/crude-oil/chart
Location, location, location.
Our brand new President is banning certain major Muslim nations, Allah is laughing. Why ?
https://theintercept.com/2017/01/25/trumps-muslim-immigration-executive-order-if-we-bombed-you-we-ban-you/
IRAN: Iran was the site of a 1953 coup that was assisted by the CIA. The coup brought the Shah Mohammed Reza Pahlavi to power — a dictator who ruled the country until his overthrow in the 1979 Islamic Revolution. Following that revolution, the United States government supported Iraqi leader Saddam Hussein’s war on Iran, even as he used chemical weapons against Iranians. In 1988, the U.S. Navy also mistakenly shot down an Iranian civilian airliner, killing all 290 people on board. More recently, Iran was subjected to one of the world’s first state-sponsored cyberattacks, as the Stuxnet virus was deployed against its nuclear program.
IRAQ: Four presidents in a row have bombed Iraq. After a decade of brutal sanctions that primarily harmed Iraq’s civil society, rather than its government leadership, the U.S.-led invasion in 2003 has led to hundreds of thousands of deaths, and the resulting destabilization has made Iraq the “world capital of terrorism.”
LIBYA: From 1986 air strikes to the 2011 military intervention to more recent attacks against ISIS camps in Libya, the country has almost continually been a site of U.S. military actions. Some of the refugees fleeing the country have said they would rather “die at sea” than return to their country.
SOMALIA: Somalia has been one of the focal points of the drone war, and U.S. support for the Ethiopian invasion of the country did little to help stabilize a territory that is in perpetual humanitarian crisis.
SUDAN: In 1998, the U.S. blew up the Al-Shifa pharmaceutical plant, which manufactured over half of the country’s pharmaceutical products. Although the attack was supposedly aimed at Osama bin Laden’s terrorist network, no such link ever emerged.
SYRIA: The U.S. and other countries have been supporting rebel groups in Syria’s civil war for years. The U.S. is also targeting ISIS and other extreme groups in an extensive air-war campaign. Violence on all sides has led to millions of Syrians fleeing the country, fomenting the worst refugee crisis in modern times.
YEMEN: Yemen is another ground zero for the drone war. The U.S. has also played a functional role in supporting the Saudi-led intervention into the country’s civil war, which has left over 10,000 dead and has millions facing starvation — and led to a resurgence of anti-American terrorist groups that the drone war was supposed to be curtailing.
And consider that Iran, where al Qaeda, ISIS, and other anti-American terrorist organizations have no significant foothold, is included —
—- but Saudi Arabia, where 15 of the 9/11 hijackers came from and which has been a funding source for extremist groups, is not included. (30)
bug on Thu, 26th Jan 2017 11:10 am
What will happen in 2051? So a kid born today will have what to replace oil for his 2049 SUV?
GregT on Thu, 26th Jan 2017 11:17 am
“According to federal law via the SEC the BP management is REQUIRED to present a positive forward view as long as no false facts are utilized.”
Thanks for that little tidbit Rockman. It’s no wonder that their ‘view’ makes no sense.
Cloggie on Thu, 26th Jan 2017 12:13 pm
“According to federal law via the SEC the BP management is REQUIRED to present a positive forward view as long as no false facts are utilized.”
Thanks for that little tidbit Rockman.
Oil oversupply double world’s needs for 50 years
GregT on Thu, 26th Jan 2017 12:34 pm
“Oil oversupply double world’s needs for 50 years”
The ‘world’ doesn’t ‘need’ oil cloggie. It’s the humans who want the oil.
Cloggie on Thu, 26th Jan 2017 12:42 pm
Agree.
rockman on Thu, 26th Jan 2017 3:14 pm
Greg – Pubcos do have to walk a tightrope when making public statements. Such press releases can have unintended positive or negative effects on stock prices. Which is why nothing gets released with clearly a thorough review by the lawyers. The SEC doesn’t have death squads. LOL. But they will come after you if for no other reason then collect fat fines.
The SEC is one money raising bitch for the feds. LOL. Some examples:
Citigroup’s principal U.S. broker-dealer subsidiary with misleading investors: The court approved a settlement of $285 million which will be returned to harmed investors.
Deutsche Bank agreed to pay a $55 million penalty.
Goldman Settled Charges – Firm agreed to pay record penalty in $550 million settlement
J.P. Morgan agreed to pay $153.6 million in a settlement that enables harmed investors to receive all of their money back.
Merrill Lynch agreed to pay $131.8 million to settle the charges.
Mizuho Securities USA agreed to pay $127.5 million to settle the charges.
NIDO settled the charges by paying $30.4 million
A long list:
https://www.sec.gov/spotlight/enf-actions-fc.shtml
joe on Thu, 26th Jan 2017 3:30 pm
Did Cloggie seriously ask ‘why would BP lie’?
BAW HAHAHAHAH!
As for banning muslims? Another distraction. When he issues an arrest warrant for those in Saudi they know were involved in 9-11 then it’s all bullshit, that includes 8 years of Obamas tolerance for the head-chopping pedophiles.
kenxxx3000 on Thu, 26th Jan 2017 4:09 pm
So the oil companies can pump 200 mb per day for the next 30 years? Ok this site is too gay. Get double dose of fake news.
Mark ziegler on Thu, 26th Jan 2017 4:43 pm
Just looking at Canadian tar sands it appears there are approx. 176 billion barrels available. Last year Canada’s production was 3.2 million barrels a day. That should increase over time but at that rate it will take 150 years to extract.
The same scenario would apply to other tar sands type oil.
Cloggie on Thu, 26th Jan 2017 4:50 pm
Did Cloggie seriously ask ‘why would BP lie’?
BAW HAHAHAHAH!
Joe, could you please Rockman’s post of “Thu, 26th Jan 2017 3:14 pm”. Eye-opener.
Thanks in advance.
Harquebus on Thu, 26th Jan 2017 5:10 pm
It is the central bankers that are propping up the oil industry.
Davy on Thu, 26th Jan 2017 5:21 pm
Harqu, it is a symbiotic relationship becuase oil is a foundation to our fiat system. It is the depletion of oil and stagflation of the economy that is putting the hurt on both.
Kenz300 on Thu, 26th Jan 2017 6:09 pm
The world is moving away from fossil fuels.
China to Invest $100 billion in Wind Power Projects by 2020
http://www.renewableenergyworld.com/articles/2017/01/china-to-invest-100-billion-in-wind-power-projects-by-2020.html
GregT on Thu, 26th Jan 2017 7:55 pm
“Joe, could you please Rockman’s post of “Thu, 26th Jan 2017 3:14 pm”. Eye-opener.”
“The world has access to more than twice as much oil as it will need between now and 2050”
This is an open ended statement cloggie, and can mean pretty much whatever a person would like it to mean. It isn’t a lie, and it isn’t a fact either.
Even if it is a lie, there would be no way to prove it as such until 33 years into the future. Very carefully worded to mean everything, and nothing at all, at the same time.
rockman on Thu, 26th Jan 2017 11:35 pm
Greg – ” It isn’t a lie, and it isn’t a fact either.” Exactly. Anyone, including a pubco CEO, can offer an OPINION. And 99.9% of the global population might not agree but that doesn’t make it a lie.
Anyone, including a pubco CEO, can interpret data and reach a conclusion. And 99.9% of the global population might come to a completely opposite conclusion. We can point to a hundred reasons why that conclusion is wrong but it just means it might be a dumb interpretation but it doesn’t make it a lie.
The pros that write the press releases know how to thread that needle very well. The problems develop when folks on either side of an issue misrepresente what those PR statements offer. And often either side will do so intentionally to make their case.
As an example how many times have we seen someone use reserve volumes to counter the idea of peak oil. And with the HUNDREDS of times that often intentional misrepresentation of PO is corrected we still see that strawman argument presented.
If you think back you may notice the Rockman rarely argues against anyone’s opinions. He might challenge an opinion when erroneous data is presented to support it but that’s a different matter. Opinions per se are never right or wrong. But one is free to agree or disagree with an opinion.
I’m all for free speech. But we do piss away a lot of space here arquing about opinions, don’t we? LOL.
Pat on Fri, 27th Jan 2017 12:52 am
already seeing the effects of oil age end on the world economy, now showing signs of collapse with end to BAU. If analyse the actual reserves, they are all pure hugely exaggerated numbers, as seen the reserves inflated many times overnight. The fact is world is at last stages of oil age, the bau is over…
Hubert on Fri, 27th Jan 2017 6:58 am
MEXICO IN MELTDOWN – Mass Looting All Over Mexico After 20% Gasoline / Petrol Price Hike
https://www.youtube.com/watch?v=GxJyPnFft48
Revi on Fri, 27th Jan 2017 12:59 pm
They might be right. We may have twice the oil we need when we are all in the ground…