When oil crossed $120 a barrel for the first time in May 2008, oil cornucopians knew they were in trouble. Prices had quadrupled in just five years, yet had failed to bring new production online. Regular crude had flatlined around 74 million barrels per day (mbpd). The case for peak oil was looking stronger with every new uptick in crude futures.
The following month, prominent peak oil critic and cornucopian Daniel Yergin of IHS-CERA changed his stance: The peak oil threat would be neutralized by peak demand. Gasoline consumption had peaked in the U.S. and Europe, he argued, due to the combined effects of increasing efficiency, biofuels, and the recession.
The first was a Reuters report that the last quarter of 2009 had “wiped out” the equity of Mexican state oil monopoly Pemex, leaving it $1.4 billion in the negative. Falling crude output, falling refining margins and a burgeoning dependency of the state on its revenues had squeezed it to death.
Not only did the report offer further confirmation that the oil export crisis has arrived, but it also confirmed my growing suspicion that the oil production everyone has assumed will come online in five to ten years might, in fact, fail to materialize. Negative equity companies have a hard time raising capital for new exploration.
As we enter the post-peak phase of global oil supply sometime around 2012-2014, the price that heavily import-dependent countries like the U.S. would have to pay for that marginal barrel will become increasingly intolerable. In a weakened economy, $100 a barrel (or less) could be the new $120.
The true import of peak oil, therefore, may not be sustained high prices, but economic shrinkage. Demand will be destroyed long before oil gets to $200 a barrel, but it will not be destroyed by improved efficiency.
AirlinePilot wrote:The refinery business will come back when we work through the inventory a bit and gasoline prices are allowed to climb. Otherwise we are in for a very big wakeup call. Shutting down refineries right and left, losing refining capacity..its ok for the moment, but when we need them, where will they be? If they cant make money, they go out of business.
I guess there is some hope for demand to be low enough for that paradigm to succeed, but frankyl I doubt it, especially with any sort of economic recovery no matter how small it is.
If you want to see how quickly credit is contracting take a look at this:
AirlinePilot wrote:I specifically talked to Jeffrey about this and he has allowed me to post his relevant stuff right here...just so you know
TheDude wrote:
In other words, the average change year to year of Norway Net Exports over the years was 55 mb/d.
GoghGoner wrote:TheDude wrote:
In other words, the average change year to year of Norway Net Exports over the years was 55 mb/d.
55 mb/d kb/d.
Interesting way to look at exports/imports -- made me realize who really upped their exports during the Seventies and Eighties. Mexico had about 30 good years. Suadi Arabia had about 40 good years
truecougarblue wrote:Dude, in your opinion which are the next five countries to slip from net exporter to net importer?
pstarr wrote:We are still getting what we need from these four declining exporters. That tells me some country somewhere is not receiving their share. Could it be Zimbabwe? Haiti? Ireland? Portugal? Greece?
Nah. Those problems are mortgage related
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