I just followed this link back from my Site Meter, and thought some of these comments – especially those by “pstarr”, warranted a response.
pstarr wrote:Robert Rapier was among the more optimistic (David Cohen being another) regulars at the Oildrum. Those two are in decendence as the very convincing argument for SA decline by Westexas, Stuart, Euran (and tons of others) continue to gain validity.
pstarr wrote:By itself the model is open to constant interpretation and Rapier's point is nothing new
Well, you should tell Stuart that. He certainly felt like it was something new, as nobody had gone back and attempted to validate the model in real time as I did. Also, ask Stuart if my analysis changed his opinion on the predictability of the HL. Based on your comments here, I think you may be surprised at what Stuart might tell you. We do communicate on a daily basis.
pstarr wrote:kjmclark, if Robert's "extra understanding" of the refinery system did not include previous analysis by Stuart at the Oildrum then it is not complete.
My extra understanding comes from my actual refining background. Again, e-mail Stuart and ask him where he goes for information on refining issues. Ask him how many refining discussions we have had over the past 6 months or so.
pstarr wrote:Stuart correlated current world refinery maintenance and shortage issues…
Um, no on the refinery maintenance issues. They have behaved as they have behaved for years and years. Maintenance is done in the spring and fall, when demand is lower and the weather is better. This year’s pattern was the same, except there were more problems than normal. But the fact that crude inventories in the U.S. and throughout the OECD are solid demonstrates that we have a refinery bottleneck, and not that refineries are having issues because of shortages.
pstarr wrote:it appears the majority at the Oildrum agrees that Mr. Rapier is no longer a major player…
Aw, now that hurts. You mean I can no longer speak and rock the world oil markets? I don’t even know what you mean by “major player.” I do get about 100 e-mails a day wanting information of one sort or another – including e-mails every single day from various TOD contributors and editors. Maybe if I put “no longer a major player” in my profile, I can slow some of that traffic down.
Again, I don’t know what “major player” means. Here is what I can tell you. I have spent my entire career as a chemical engineer, starting in graduate school with cellulosic ethanol – in the energy business. My job prior to this one was in a refinery in Montana, and from that I was sought out to be the Team Lead for a group of 13 process engineers in the North Sea. Now, the people who sought me out for this job apparently thought I knew what I was talking about. Several government agencies involved in energy issues have offered me jobs. Vinod Khosla offered me a job. I get regular e-mails from “major players” whose names you would immediately recognize. Sometimes they are asking me to do a technical vetting on something. Sometimes they ask for my opinion. But they trust that I know what I am talking about.
But it seems that you have gotten 2 issues confused. As someone has already pointed out, my issue is not whether Saudi has peaked. I don’t think they have, but that’s another issue. My analysis of the HL – of which Stuart was very complimentary both in public and in private – showed that it is not a predictive tool. Yet that was how some were using it. My analysis demolished that notion (again, talk to Stuart if you doubt this since you value his opinion).
Stuart’s analysis is far removed from the HL stuff. His analysis is top notch. But, at the end of the day it is speculation, albeit it based on a meticulous analysis of the information that is public. He doesn’t know whether there are fields yet to be developed, or what the overall production plan is. While I do not advocate energy policy based on trusting the Saudi’s claims, the fact of the matter is that they have always done what they said they would do. As I told Stuart, what we may be seeing is that they have misgauged demand, and therefore the fields they have online are showing depletion – but they have more projects in the pipeline. As long as that is the case, we may continue to see the sort of pattern that we have seen from them. Decline, decline, and then a step back up.
I did make a $1,000 bet this year that oil prices would not reach $100 a barrel
. I did that based on my opinion that Saudi has not yet peaked. If they had peaked, and suffered another 8-10% (involuntary) decline in 2007, then $100 oil would be a distinct possibility. But the fact that oil is trading right where it was a year ago suggests that the market is amply supplied, and that the Saudi cuts have been justified (if the desire is to maintain oil prices in the $60-$70 range). They say their cuts are voluntary, you say they are involuntary. Yet I note that if the cuts had not been made, we would certainly be seeing severe downward pressure on oil prices. So, as I have said before, if they peaked, they certainly did so at a convenient time – just when demand for their oil was falling.
Cheers, Robert Rapier