It's official: New monthly world crude oil production record

[pstarr]

The corny has peripheral vision problems. His blinders prevent him from associating all sorts of evidence for peak. Record high prices/supply, the 40-year discovery decline, declining individual well production rates, well drilling /well volume ratio, especially in shale, World-wide recession sparked by high gas/diesel prices, etc. etc. etc.

The corny also has a depth perception problem. He keeps expecting peak to be a single sharp point on a graph. You know, like a Pyramids at Luxar. Dude. It's took 150 years of exploration and development to get to this point. It took Mother Earth 500 million years to develop the crude. We shouldn't expect the peak to be announced with God Rays. Or Celestial Trumpets. A five-year plateau followed by a crash really is quite a short event, geologically speaking.

[kublikhan]

This bump is for pstarr, with a bit of emphasis added. No lighter fluid. No corn liquor. Crude and condensate - same as it's always been, since the EIA first started publishing the data in the early 70's. I wonder how many more times I'll have to bump this?

So it is clearly a new peak. But the graph you posted still looks like a bumpy plateau to me. Doesn't it look like that to you as well? Since '85, we have managed to bump up our c&c production by at least 3% every 5 years. Except for the last 5 year period, where we are at less than a .4% increase. This does not seem like very corny news to me.

year -- c&c ----- Increase
1985 - 53,965
1990 - 60,496 -12.1%
1995 - 62,433 - 3.2%
2000 - 68,522 - 9.8%
2005 - 73,671 - 7.5%
2011 - 73,964 - 0.4%

[OilFinder2]

Going back once again to the long-term graph, this time with the latest month's data in, it appears we're more-or-less continuing the trend in place since about 1983. Lots of bumps and valleys, of course, but in general it's a pretty steady upward trajectory.

[AgentR11]

Again, I see the solid upward pace until it hits about 2005 and falls away from the trendline; I wouldn't think anything of it if prices were continuously low, discouraging new drilling, new production, more tech, etc, but that's not the case. Prices are high, and have been high through most of that period, and are high now. If producers were able, we'd have much stronger production gains, but its not happening. Will there be record's scored in the future along this bumpy plateau? Sure. But I see no reason to suspect we'll ever tap the trendline that runs from 1980 to 2004.

What's so horrible about admitting that producers are delivering product as fast as they can, and price vs demand are now determining the equilibrium point?

Oh wait... our economic growth model was dependent upon that 1980 to 2004 trendline continuing... hmmmmm.

[OilFinder2]

Here, let's do this. Draw a range roughly following the bottoms and tops of the post-1982 channel. You can see we're well within the channel. Maybe in the bottom half (though the last data point is close to the middle), but in it nonetheless.

[AgentR11]

I'll restate my point, lest it get lost.

If this *isn't* what the plateau is supposed to look like, then there doesn't really exist a possible curve that would satisfy, until a good twenty years after the fact.

I kinda think that's a little bit too late to be of any use to any observer, no?

Yes, six years is a fairly short interval, and so I wouldn't ever claim extreme certainty; but the pieces do fit. Economic resistance, high prices, lack of any strong increase in supply in reaction to those prices, companies willingly bringing very high production cost oil to market, etc; current production running within a single percentage point of where we were six years ago. It honestly can't get any flatter that it is without some deity on high saying, "though shalt produce 73,955 mbl/day, no more, no less."

[kublikhan]

I guess it depends on where you draw your lines. Your bottom line seems to miss most of the bottoms and instead has the bottoms in the middle. When I drew the bottom line to hit all those bottoms you missed, mine comes out showing us falling out of the trend.

[rangerone314]

Interesting how in the middle of a crappy economy oil manages to be $105/bbl, considering what it was in early 2007, when the economy was much better than it is now.

[Pops]

Of course if you make the recent low the lower bound of your channel anything above that will be in the channel.



The period between 89-95 might be somewhat similar - if you conveniently forget that in the current period we've had 2 record high price points and the current 12 month average is the highest ever.

Higher price = lower demand. This is Economics 101.

The flip side is just as valid, higher price = greater supply. And isn't that the cornerstone of the corny argument?

According to my lines, the highest average price ever is barely keeping production in the channel, not looking too good for permanent abundance.

Oops Kub beats me to the submit button lol.

[OilFinder2]

The flip side is just as valid, higher price = greater supply. And isn't that the cornerstone of the corny argument?

Unlike widgets in a factory, companies cannot start producing large new supplies of oil overnight. The Saudis are about the only exception. Otherwise it takes years of exploration efforts, production plans, etc. to all get up to speed. It's more of a slow-motion thing.

Anyway, in reference to your chart, using that very high peak somewhere around 88 or early 89 skews the whole channel up. Plus, if you look at the chart you can see the channel that starts just after the 81-82 recession, so that would serve as the base of the channel. Then you get 3 bottoms - 2 in the 80's (including the first low point of the channel) and one last year after Libyan production got cut off.



Sure, we could debate all day what to use as the tops and bottoms, but even your own chart shows the past few months within your channel. The only parts below it were during the end half of the Great Recession (and very shortly afterward), and during last year's Libyan oil cutoff.

[OilFinder2]

BTW, I would usually define a "channel" (at least for something like this) as something with reasonably consistent differences between highs and lows. Your chart here shows a narrowing channel which, if taken out much longer, would eventually result in a zero difference between highs and lows ... which of course would no longer be a channel. A zone like you've drawn gives oil production increasingly less room to go both up or down, which isn't realistic. Oil production always fluctuates.

[Pops]

The top boundary isn't the question, set it where you want.
Whether the lines are parallel or not doesn't matter either, set them where you want.

I don't expect you to take my point but I'll repeat it once just for grins,

If you set the bottom boundary at the last low it is impossible to be outside the channel, ever, . . . ever.

Look, no decline!



The point is to see if the area in question looks different from the past, so you draw a line using points before the area in question.
otherwise you wind up looking silly:




.

[OilFinder2]

If you set the bottom boundary at the last low it is impossible to be outside the channel, ever, . . . ever.

No, because it obviously violates the "rule" of keeping a consistent-sized distance between highs and lows. A triangle isn't a "channel."

Your second chart was better.

[meemoe_uk]

However I think someone investing in oil between now and 2020 would do well anticipating an inflation adjusted Annual Average Crude Oil Price of more than $70.

Yes, I expect prices to stay 'high' for a few more years.

I'm not sure what level you see oil prices falling to by 2020, but if you are investing your money expecting an inflation adjusted Annual Average Crude Oil Price of what we saw in the 90s, say in the $20-$40 range, I think you will lose alot of money.

It could be 2025, but it'll come.

There could be a massive recession that temporarily drives prices down like we saw in 2009.

Yes I think that's likely, but 2009 wasn't a massive recession.

Do you have any money invested in oil?

No, not enough spare cash.

I don't invest in commodities, but I am currently long several oil & pipeline stocks. When I saw oil stocks crash in 2009, I bought up a bunch of them on the cheap. The stock prices have since gone way up. Thus far, this strategy has rewarded my handsomely.

Good, this strat should work for a few more years.

[AirlinePilot]

We are dancing around some key things which make the last few years...since about 2005 almost completely different since any time BEFORE that.

A. Price has reached historic highs.
B. Global Demand remains in the positive growth region DESPITE the global slowdown AND the high price!
C. Global Net Exports are falling
D. Discovery rates do not look like they did 40 or 50 years ago. We are falling behind.

Any econ 101 professor will happily define a resource whose price is high and remains there as growing. Its a classic take on commodities.....the higher price CREATES more. One of the most important points which has accompanied our local plateau is C. If this continues I personally believe that the plateau will not hold for very much longer. We aren't there yet, but I think we are very close. The entire paradigm for markets will change with this realization.

[AirlinePilot]

This chart helps understand the trends a bit better. Sure appears things are slowing. I will caveat this as it appears that this chart is talking about total liquids and not C&C, but the point is still valid IMHO.

[OilFinder2]

I will caveat this as it appears that this chart is talking about total liquids and not C&C, but the point is still valid IMHO.

Ehhh ... nice try, but EPIC FAIL. The actual data on your chart only goes through 2010. It's now 2012. Here's what happens when you include post-2010. As you can see, your point isn't remotely valid anymore, as there is a clear new upward trajectory.


LINKY

[ralfy]

Reposted: "Running Dry"

http://www.economist.com/blogs/dailycha ... onsumption

with a chart showing oil production and demand from 1971 onward.

The major increase took place from 1985 to 2005 (prior to that 1971 to 1980). Compared to those, production from 2003 to the present is flatter.

What should concern us more is demand, which has been higher than production since 2005. What is meeting that difference is production from non-conventional sources.

[AirlinePilot]

My quick take is that the "trend" is still somewhere slightly below the 1.5% line. Epic fail? Not quite Oily, more like a slight miss. The entire point of the trend graph is to show how huge the trajectory change has been. A lot of that change has to do with both EROEI and discovery.

You really do like that chart dont you? There you go posting it again.

[OilFinder2]

You really do like that chart dont you? There you go posting it again.

Hey Einstein, it was you who first showed a graph of all-liquids at the top of the page. That's the only reason I showed it here.