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The Coming World of “Peak Oil Demand,” Not “Peak Oil”

Public Policy

In a Greater Middle East in which one country after another has been plunged into chaos and possible failed statehood, two rival nations, Iran and Saudi Arabia, have been bedrock exceptions to the rule.  Iran, at the moment, remains so, but the Saudi royals, increasingly unnerved, have been steering their country erratically into the region’s chaos. The kingdom is now led by a decrepit 80-year-old monarch who, in commonplace meetings, has to be fed his lines by teleprompter.  Meanwhile, his 30-year-old son, Deputy Crown Prince Mohammed bin Salman, who has gained significant control over both the kingdom’s economic and military decision-making, launched a rash anti-Iranian war in Yemen, heavily dependent on air power.  It is not only Washington-backed but distinctly in the American mode of these last years: brutal yet ineffective, never-ending, a boon to the spread of terror groups, and seeded with potential blowback.

Meanwhile, in a cheap-oil, belt-tightening moment, in an increasingly edgy country, the royals are reining in budgets and undermining the good life they were previously financing for many of their citizens.  The one thing they continue to do is pump oil — their only form of wealth — as if there were no tomorrow, while threatening further price-depressing rises in oil production in the near future.  And that’s hardly been the end of their threats.  While taking on the Iranians (and the Russians), they have also been lashing out at the local opposition, executing a prominent dissident Shiite cleric among others and even baring their teeth at Washington.  They have reportedly threatened the Obama administration with the sell-off of hundreds of billions of dollars in American assets if a bill, now in Congress and aimed at opening the Saudis to American lawsuits over their supposed culpability for the 9/11 attacks, were to pass. (It would, however, be a sell-off that could hurt the Saudis more than anyone.)  Even at the pettiest of levels, on Barack Obama’s recent arrival in Saudi Arabia for a visit with King Salman, they essentially snubbed him, a first for a White House occupant. All in all, a previously sure-footed (if extreme) Sunni regime seems increasingly unsettled; in fact, it has something of the look these days of a person holding a gun to his own head and threatening to pull the trigger. In other words, in a region already aflame, the Saudis seem to be tossing… well, oil onto any fire in sight.

And in a way, it’s little wonder.  The very basis for the existence of the Saudi royals, their staggering oil reserves, is under attack — and not by the Iranians, the Russians, or the Americans, but as TomDispatch energy specialist Michael Klare explains, by something so much larger: the potential ending of the petroleum way of life.  Tom

Debacle at Doha
The Collapse of the Old Oil Order
By Michael T. Klare

Sunday, April 17th was the designated moment.  The world’s leading oil producers were expected to bring fresh discipline to the chaotic petroleum market and spark a return to high prices. Meeting in Doha, the glittering capital of petroleum-rich Qatar, the oil ministers of the Organization of the Petroleum Exporting Countries (OPEC), along with such key non-OPEC producers as Russia and Mexico, were scheduled to ratify a draft agreement obliging them to freeze their oil output at current levels. In anticipation of such a deal, oil prices had begun to creep inexorably upward, from $30 per barrel in mid-January to $43 on the eve of the gathering. But far from restoring the old oil order, the meeting ended in discord, driving prices down again and revealing deep cracks in the ranks of global energy producers.

It is hard to overstate the significance of the Doha debacle. At the very least, it will perpetuate the low oil prices that have plagued the industry for the past two years, forcing smaller firms into bankruptcy and erasing hundreds of billions of dollars of investments in new production capacity. It may also have obliterated any future prospects for cooperation between OPEC and non-OPEC producers in regulating the market. Most of all, however, it demonstrated that the petroleum-fueled world we’ve known these last decades — with oil demand always thrusting ahead of supply, ensuring steady profits for all major producers — is no more.  Replacing it is an anemic, possibly even declining, demand for oil that is likely to force suppliers to fight one another for ever-diminishing market shares.

The Road to Doha

Before the Doha gathering, the leaders of the major producing countries expressed confidence that a production freeze would finally halt the devastating slump in oil prices that began in mid-2014. Most of them are heavily dependent on petroleum exports to finance their governments and keep restiveness among their populaces at bay.  Both Russia and Venezuela, for instance, rely on energy exports for approximately 50% of government income, while for Nigeria it’s more like 75%.  So the plunge in prices had already cut deep into government spending around the world, causing civil unrest and even in some cases political turmoil.

No one expected the April 17th meeting to result in an immediate, dramatic price upturn, but everyone hoped that it would lay the foundation for a steady rise in the coming months. The leaders of these countries were well aware of one thing: to achieve such progress, unity was crucial. Otherwise they were not likely to overcome the various factors that had caused the price collapse in the first place.  Some of these were structural and embedded deep in the way the industry had been organized; some were the product of their own feckless responses to the crisis.

On the structural side, global demand for energy had, in recent years, ceased to rise quickly enough to soak up all the crude oil pouring onto the market, thanks in part to new supplies from Iraq and especially from the expanding shale fields of the United States. This oversupply triggered the initial 2014 price drop when Brent crude — the international benchmark blend — went from a high of $115 on June 19th to $77 on November 26th, the day before a fateful OPEC meeting in Vienna. The next day, OPEC members, led by Saudi Arabia, failed to agree on either production cuts or a freeze, and the price of oil went into freefall.

The failure of that November meeting has been widely attributed to the Saudis’ desire to kill off new output elsewhere — especially shale production in the United States — and to restore their historic dominance of the global oil market. Many analysts were also convinced that Riyadh was seeking to punish regional rivals Iran and Russia for their support of the Assad regime in Syria (which the Saudis seek to topple).

The rejection, in other words, was meant to fulfill two tasks at the same time: blunt or wipe out the challenge posed by North American shale producers and undermine two economically shaky energy powers that opposed Saudi goals in the Middle East by depriving them of much needed oil revenues. Because Saudi Arabia could produce oil so much more cheaply than other countries — for as little as $3 per barrel — and because it could draw upon hundreds of billions of dollars in sovereign wealth funds to meet any budget shortfalls of its own, its leaders believed it more capable of weathering any price downturn than its rivals. Today, however, that rosy prediction is looking grimmer as the Saudi royals begin to feel the pinch of low oil prices, and find themselves cutting back on the benefits they had been passing on to an ever-growing, potentially restive population while still financing a costly, inconclusive, and increasingly disastrous war in Yemen.

Many energy analysts became convinced that Doha would prove the decisive moment when Riyadh would finally be amenable to a production freeze.  Just days before the conference, participants expressed growing confidence that such a plan would indeed be adopted. After all, preliminary negotiations between Russia, Venezuela, Qatar, and Saudi Arabia had produced a draft document that most participants assumed was essentially ready for signature. The only sticking point: the nature of Iran’s participation.

The Iranians were, in fact, agreeable to such a freeze, but only after they were allowed to raise their relatively modest daily output to levels achieved in 2012 before the West imposed sanctions in an effort to force Tehran to agree to dismantle its nuclear enrichment program.  Now that those sanctions were, in fact, being lifted as a result of the recently concluded nuclear deal, Tehran was determined to restore the status quo ante. On this, the Saudis balked, having no wish to see their arch-rival obtain added oil revenues.  Still, most observers assumed that, in the end, Riyadh would agree to a formula allowing Iran some increase before a freeze. “There are positive indications an agreement will be reached during this meeting… an initial agreement on freezing production,” said Nawal Al-Fuzaia, Kuwait’s OPEC representative, echoing the views of other Doha participants.

But then something happened. According to people familiar with the sequence of events, Saudi Arabia’s Deputy Crown Prince and key oil strategist, Mohammed bin Salman, called the Saudi delegation in Doha at 3:00 a.m. on April 17th and instructed them to spurn a deal that provided leeway of any sort for Iran. When the Iranians — who chose not to attend the meeting — signaled that they had no intention of freezing their output to satisfy their rivals, the Saudis rejected the draft agreement it had helped negotiate and the assembly ended in disarray.

Geopolitics to the Fore

Most analysts have since suggested that the Saudi royals simply considered punishing Iran more important than raising oil prices.  No matter the cost to them, in other words, they could not bring themselves to help Iran pursue its geopolitical objectives, including giving yet more support to Shiite forces in Iraq, Syria, Yemen, and Lebanon.  Already feeling pressured by Tehran and ever less confident of Washington’s support, they were ready to use any means available to weaken the Iranians, whatever the danger to themselves.

“The failure to reach an agreement in Doha is a reminder that Saudi Arabia is in no mood to do Iran any favors right now and that their ongoing geopolitical conflict cannot be discounted as an element of the current Saudi oil policy,” said Jason Bordoff of the Center on Global Energy Policy at Columbia University.

Many analysts also pointed to the rising influence of Deputy Crown Prince Mohammed bin Salman, entrusted with near-total control of the economy and the military by his aging father, King Salman. As Minister of Defense, the prince has spearheaded the Saudi drive to counter the Iranians in a regional struggle for dominance. Most significantly, he is the main force behind Saudi Arabia’s ongoing intervention in Yemen, aimed at defeating the Houthi rebels, a largely Shia group with loose ties to Iran, and restoring deposed former president Abd Rabbuh Mansur Hadi. After a year of relentless U.S.-backed airstrikes (including the use of cluster bombs), the Saudi intervention has, in fact, failed to achieve its intended objectives, though it has produced thousands of civilian casualties, provoking fierce condemnation from U.N. officials, and created space for the rise of al-Qaeda in the Arabian Peninsula. Nevertheless, the prince seems determined to keep the conflict going and to counter Iranian influence across the region.

For Prince Mohammed, the oil market has evidently become just another arena for this ongoing struggle. “Under his guidance,” the Financial Times noted in April, “Saudi Arabia’s oil policy appears to be less driven by the price of crude than global politics, particularly Riyadh’s bitter rivalry with post-sanctions Tehran.” This seems to have been the backstory for Riyadh’s last-minute decision to scuttle the talks in Doha. On April 16th, for instance, Prince Mohammed couldn’t have been blunter to Bloomberg, even if he didn’t mention the Iranians by name: “If all major producers don’t freeze production, we will not freeze production.”

With the proposed agreement in tatters, Saudi Arabia is now expected to boost its own output, ensuring that prices will remain bargain-basement low and so deprive Iran of any windfall from its expected increase in exports. The kingdom, Prince Mohammed told Bloomberg, was prepared to immediately raise production from its current 10.2 million barrels per day to 11.5 million barrels and could add another million barrels “if we wanted to” in the next six to nine months. With Iranian and Iraqi oil heading for market in larger quantities, that’s the definition of oversupply.  It would certainly ensure Saudi Arabia’s continued dominance of the market, but it might also wound the kingdom in a major way, if not fatally.

A New Global Reality

No doubt geopolitics played a significant role in the Saudi decision, but that’s hardly the whole story. Overshadowing discussions about a possible production freeze was a new fact of life for the oil industry: the past would be no predictor of the future when it came to global oil demand.  Whatever the Saudis think of the Iranians or vice versa, their industry is being fundamentally transformed, altering relationships among the major producers and eroding their inclination to cooperate.

Until very recently, it was assumed that the demand for oil would continue to expand indefinitely, creating space for multiple producers to enter the market, and for ones already in it to increase their output. Even when supply outran demand and drove prices down, as has periodically occurred, producers could always take solace in the knowledge that, as in the past, demand would eventually rebound, jacking prices up again. Under such circumstances and at such a moment, it was just good sense for individual producers to cooperate in lowering output, knowing that everyone would benefit sooner or later from the inevitable price increase.

But what happens if confidence in the eventual resurgence of demand begins to wither? Then the incentives to cooperate begin to evaporate, too, and it’s every producer for itself in a mad scramble to protect market share. This new reality — a world in which “peak oil demand,” rather than “peak oil,” will shape the consciousness of major players — is what the Doha catastrophe foreshadowed.

At the beginning of this century, many energy analysts were convinced that we were at the edge of the arrival of “peak oil”; a peak, that is, in the output of petroleum in which planetary reserves would be exhausted long before the demand for oil disappeared, triggering a global economic crisis. As a result of advances in drilling technology, however, the supply of oil has continued to grow, while demand has unexpectedly begun to stall.  This can be traced both to slowing economic growth globally and to an accelerating “green revolution” in which the planet will be transitioning to non-carbon fuel sources. With most nations now committed to measures aimed at reducing emissions of greenhouse gases under the just-signed Paris climate accord, the demand for oil is likely to experience significant declines in the years ahead. In other words, global oil demand will peak long before supplies begin to run low, creating a monumental challenge for the oil-producing countries.

This is no theoretical construct.  It’s reality itself.  Net consumption of oil in the advanced industrialized nations has already dropped from 50 million barrels per day in 2005 to 45 million barrels in 2014. Further declines are in store as strict fuel efficiency standards for the production of new vehicles and other climate-related measures take effect, the price of solar and wind power continues to fall, and other alternative energy sources come on line. While the demand for oil does continue to rise in the developing world, even there it’s not climbing at rates previously taken for granted. With such countries also beginning to impose tougher constraints on carbon emissions, global consumption is expected to reach a peak and begin an inexorable decline. According to experts Thijs Van de Graaf and Aviel Verbruggen, overall world peak demand could be reached as early as 2020.

In such a world, high-cost oil producers will be driven out of the market and the advantage — such as it is — will lie with the lowest-cost ones. Countries that depend on petroleum exports for a large share of their revenues will come under increasing pressure to move away from excessive reliance on oil. This may have been another consideration in the Saudi decision at Doha. In the months leading up to the April meeting, senior Saudi officials dropped hints that they were beginning to plan for a post-petroleum era and that Deputy Crown Prince bin Salman would play a key role in overseeing the transition.

On April 1st, the prince himself indicated that steps were underway to begin this process. As part of the effort, he announced, he was planning an initial public offering of shares in state-owned Saudi Aramco, the world’s number one oil producer, and would transfer the proceeds, an estimated $2 trillion, to its Public Investment Fund (PIF). “IPOing Aramco and transferring its shares to PIF will technically make investments the source of Saudi government revenue, not oil,” the prince pointed out. “What is left now is to diversify investments. So within 20 years, we will be an economy or state that doesn’t depend mainly on oil.”

For a country that more than any other has rested its claim to wealth and power on the production and sale of petroleum, this is a revolutionary statement. If Saudi Arabia says it is ready to begin a move away from reliance on petroleum, we are indeed entering a new world in which, among other things, the titans of oil production will no longer hold sway over our lives as they have in the past.

This, in fact, appears to be the outlook adopted by Prince Mohammed in the wake of the Doha debacle.  In announcing the kingdom’s new economic blueprint on April 25th, he vowed to liberate the country from its “addiction” to oil.”  This will not, of course, be easy to achieve, given the kingdom’s heavy reliance on oil revenues and lack of plausible alternatives.  The 30-year-old prince could also face opposition from within the royal family to his audacious moves (as well as his blundering ones in Yemen and possibly elsewhere).  Whatever the fate of the Saudi royals, however, if predictions of a future peak in world oil demand prove accurate, the debacle in Doha will be seen as marking the beginning of the end of the old oil order.

Michael T. Klare, a TomDispatch regular, is a professor of peace and world security studies at Hampshire College and the author, most recently, of The Race for What’s Left. A documentary movie version of his book Blood and Oil is available from the Media Education Foundation. Follow him on Twitter at @mklare1.

Tom Dispatch



41 Comments on "The Coming World of “Peak Oil Demand,” Not “Peak Oil”"

  1. onlooker on Fri, 29th Apr 2016 7:50 pm 

    with all due respect to this site, but this is the same old tired monologue of peak oil and its consequences. We all are now all too familiar with it. It will change everything economically for the worse. KSA has no fallback strategy other than to perhaps invest whatever money it has wisely. Peak demand, Peak useful oil, peak this and that. Oh yes we are now on the downward side of Hubberts curve.

  2. makati1 on Fri, 29th Apr 2016 8:04 pm 

    Onlooker, I agree. How many times can the writers cry “WOLF” before they are ignored? Those of us who see and understand how oil affects our lives and how they will change as we lose that energy source in the near future, get tired of hearing about it. Those who are in deep denial or are so embedded in the oily world of finance/BAU because of investment, career or both, will never see that end coming until it is too late, no matter how many articles try to tell them what is coming. Prepping for the worst and hoping for the best is all we can do.

  3. Boat on Fri, 29th Apr 2016 8:27 pm 

    onlooker,

    ” Oh yes we are now on the downward side of Hubberts curve.”

    Gas prices suggest a glut. Lots of oil out there. 2015 was the last peak and there will be more of them. I will let you know when that happens.

  4. Survivalist on Fri, 29th Apr 2016 8:36 pm 

    This is the same article from 3 days ago. It’s just reprinted at multiple sources. This is the second time in 3 days this article has been posted on this site.

    http://peakoil.com/publicpolicy/debacle-at-doha-the-collapse-of-the-old-oil-order

  5. GregT on Fri, 29th Apr 2016 8:57 pm 

    “Gas prices suggest a glut. Lots of oil out there.”

    The average US regular gas price at the pump today is $2.22 per gallon. Gasoline prices in 2015 dollars have only exceeded $2.00/gal three times since 1959. All three times were during periods of economic downturns.

    Current gasoline prices suggest a shortage, or an economy that is in recession. Gasoline prices are not cheap right now.

    http://energy.gov/eere/vehicles/fact-915-march-7-2016-average-historical-annual-gasoline-pump-price-1929-2015

  6. Boat on Fri, 29th Apr 2016 9:24 pm 

    Since $25 oil isn’t sustainable you’ll need to pick a higher number.

  7. GregT on Fri, 29th Apr 2016 9:31 pm 

    “Since $25 oil isn’t sustainable you’ll need to pick a higher number.”

    Doesn’t matter to me Boat. I’ve already weaned myself off of the system. Couldn’t care less if the economy never recovers.

  8. geopressure on Fri, 29th Apr 2016 11:17 pm 

    Possibly off topic, but can anyone answer this::

    Why are traders not buying crude oil for $45/BBL @ the CME in Chicago & have it delivered to places like Nigeria where they have no oil or fuel & sell it for $100/BBL???

    Nigeria has 4 refineries, all of which have been shut down since around September of 2015 so that those 400,000 BOPD could be exported to the US… Nigeria’s taxi drivers & shipping companies are willing to pay much higher prices & they are willing to wait in line for days to get 1/2 a tank of gas…

    How is it that Traders are not able to buy oil or gasoline here & ship it to Nigeria to double their money? How does the US Government stop this from happening???

  9. Boat on Fri, 29th Apr 2016 11:59 pm 

    geo,

    Who is going to buy a tanker of gasoline? The army does it’s best to stop the black market.The government is mismanaged and broke. Like Venezuela and Brazil.

  10. GregT on Sat, 30th Apr 2016 12:43 am 

    “Who is going to buy a tanker of gasoline?”

    There are at least a couple of people on the planet Earth, who make more than 10K per year on their investments Boat.

  11. Boat on Sat, 30th Apr 2016 1:05 am 

    Apparently they don’t sell gasoline in Nigeria. Lol

  12. GregT on Sat, 30th Apr 2016 1:16 am 

    Apparently they don’t need to sell gasoline in Nigeria, or they would. Lol

  13. makati1 on Sat, 30th Apr 2016 3:01 am 

    Reply to Boat’s comment: “I have made over $30,000 in the last 3 years while you pined for a crash. I have saved and invested. I traveled when I was young. It’s overrated unless you golf. I did enjoy that.” … in a previous article that may roll over before he sees it:

    Boat, I made over $50,000.00 in the last three years from your tax money. Thanks! I was forced to “invest” in a scam called Social Security for almost 50 years. It is now paying off. I have received over $150,000.00 of your tax money so far and hope to double that in the next 8-9 year’s before the Us is not able to pay because it either does not exist as a country, or is a 3rd world economy in reality.

    My income from my SS “investment” is guaranteed to last longer then your Wall Street Casino income by far. Yours is about to crash and burn, never to return. Mine will last as long as you pay your taxes. BTW: I pay ZERO taxes except sales tax/VAT on what I buy. I sleep well at night.

    My other “investments” don’t rely on an income to continue. Nor do they rely on some fictitious exchange rate or government numbers. I enjoy my life and freedom after 50 years of working for a living.

    As for travel, my carbon foot print is less than 1/3 what it used to be and would be if I lived in the Us. I don’t own a car. I walk most places I go. I fly to the Us annually, but that consumes less than 1/3 of the fuel I used to use in the Us. And those trips are about over because my mom passed on last month and I will go back less often. Then my carbon foot print will be about as low as you can go and still be alive. How about you?

  14. peakyeast on Sat, 30th Apr 2016 4:45 am 

    @geo:

    Nigeria is on par with the US in corruption at the highest levels of power.

    I suppose they want their foreign currency more than they care about their country and citizens.

  15. Davy on Sat, 30th Apr 2016 7:40 am 

    If we fail to include the cycle of demand and supply destruction that is occurring in our global economy then you can’t understand peak oil dynamics properly. If you don’t include the demand and supply destruction of the economy which is broad based deflation, depletion, decay, and overshoot then you will be stuck arguing narrow issues of peak oil dynamics. This is a systematic thing with minimum operating levels that are thresholds just as we have threshold with climate.

    Our economy is approaching thresholds. We see that clearly now with the financial crisis issues that were extended and pretended into a new and worse economic predicament of debt and growth currently. Demand may be growing and supply may be growing but this is a deceptive situation. It does not matter the amount what matters is the trend and it is not our friend. What matters is quality. How is demand good if it is bad demand that equates to malinvestment that will yield a negative return? How is supply good if it is growing supply of what we don’t need? Oil at the wrong price is not good for the economy. An oil sector that is foundational and vital to the economy cannot be damaged and result in something good for the economy.

    This supply issue is with the kind of production from the global economy. We are producing the wrong stuff in excess. Just in time economies and economies of scale gone haywire. Growing development from a population growing dangerously away from a carrying capacity we left 2 generations ago. This development is in many cases a waste stream like in China with ghost cities or the west with complex living arrangements with no future. We are supplying this cancer at all cost and in doing so we are infecting healthy demand with bad debt. We are infecting quality of supply with overcapacity that causes economic damage. You can grow supply and destroy your supply base. Eat your seeds you need to plant next year. You can destroy healthy demand by destroying a healthy economy.

    In the end this dangerous systematic vortex of “REAL” demand and supply destruction marks the end of our global economy and the next step is the devolution of our civilization into something lower with consumption and population. How much lower and when should be the questions instead our questions are if we are even facing any issues. What a joke and what a tragedy.

  16. Davy on Sat, 30th Apr 2016 8:10 am 

    “Nigeria is on par with the US in corruption at the highest levels of power.”
    Of all the places I did business Europe was the most corrupt. It is one of those corrupt places where they are corrupt to the core and live a high standard of living at the expense of the rest of the world including the US that has giving them security and stability for a couple of generations. Europe profited on the backs of the US rape and pillage of the world free of charge. You can argue the US screwed the place up but it was part of keeping the dumbass Europeans from killing each other. Europe is hypocrisies and corruption at its highest level. Europe is in no position to bitch about anything considering its dark gifts to humanity throughout history. Europe infected the world with evil at every level from colonialism to capitalism. It was the two world wars that created the historical dynamics of today. If Europe would never of happened the world would have been in a far better place.

  17. geopressure on Sat, 30th Apr 2016 8:40 am 

    I imagine that you are correct & the Nigerian Leaders are being bribed to sell as much oil as absolutely possible & that is why they shut down all 4 of their refineries last year… That’s like 410K BOPD extra that they can export…

    Their plan was to import fuel, but the CIA had their credit rating lowered so that they are unable to secure a revolving credit facility to buy fuel (not that there is any for sale anyway, we are about out – running on fumes)…


    I cannot understand though why some rich person like The ROCKMAN doesn’t just buy a few tanker loads of gasoline here, charter some tankers, mark it up 300% & sell it in Nigeria & stack a little more paper…

    Nigeria is not the only place that is out of fuel, it’s happening in most 2nd & 3rd world countries, but the media is silent…

  18. geopressure on Sat, 30th Apr 2016 8:44 am 

    HAHA!

    I just read a tweet that said that Nigerian Crude oil is stacking up due to no buyers…

    That is like 180 Degrees from the truth… If that was the case, then they would restart their refineries & sell gasoline to their people who are desperate for it…

  19. geopressure on Sat, 30th Apr 2016 8:45 am 

    Same Story in Yemen… I have a Link handy on Yemen’s shortage…

    http://tradearabia.com/news/OGN_298736.html

    If there is such a big glut, then why the heck was there no crude available for Yemen’s refineries back in January (when seasonal demand is at it’s lowest)…

  20. platinumshore on Sat, 30th Apr 2016 9:58 am 

    Yeap peak demand.. but as the net energy value of oil has already peaked ?(but little information to confirm as IEA/EIA for odd reasons don’t report net energy weighted figures) the consequence’s will be the same. Production can increase, but if the net energy value of that production cannot support global structures, than the demand must fall below supply figures. So yeah peak demand, but only cuz the net energy value of the production ‘glut’ cannot support the structures like Chinese debt packages.

  21. cipi604 on Sat, 30th Apr 2016 10:21 am 

    Holy denial

  22. geopressure on Sat, 30th Apr 2016 10:38 am 

    platinumshore; surely you are not yet another person who is of the opinion that the amount of diesel required to drill a well is so high that drilling projects are barely breaking even?


    Peak Demand??? More Like Peak Market Manipulation…

  23. Davy on Sat, 30th Apr 2016 10:43 am 

    Geo, peak demand is about the economy and the economy is more than oil but the economy is everything for oil. Why have the shit if it is not of use?

  24. Boat on Sat, 30th Apr 2016 10:47 am 

    geo,

    How much do things like health care, OSHA, and environmental regulations drive up drilling costs.

  25. geopressure on Sat, 30th Apr 2016 10:50 am 

    Peak Demand is yet another talking point designed to make potential buyers of oil, oil ETFs, or Oil & Gas Securities think that the upside is limited…

  26. Boat on Sat, 30th Apr 2016 10:54 am 

    State of emergency declared in Baghdad as protesters take Iraqi parliament

    https://www.washingtonpost.com/world/protesters-storm-iraqi-parliament-in-baghdad/2016/04/30/0862fd3a-0ec1-11e6-8ab8-9ad050f76d7d_story.html

  27. Davy on Sat, 30th Apr 2016 10:54 am 

    My take on peak demand as a talking point is demand destruction, deflation, and decline IOW bankruptcies and insolvencies. I want to know how it would point to an upside unless you are a speculator that will profit handsomely from low prices.

  28. geopressure on Sat, 30th Apr 2016 10:55 am 

    I’m not a good person to ask that too… Oil Companies employ relatively few people… The healthcare & OSHA cost all factored into the Rig’s Day-Rate & the Service Company’s Day-Rates… I have no idea on those…

    Environmental Regulation has been rather lax where I operate, though I have a feeling that will be changing in the next few months… I have a sneaky suspicion that the EPA is going to start charging Oil & Gas Companies by the MCF for all natural gas that is vented or flared… That’s just a hunch though…

  29. geopressure on Sat, 30th Apr 2016 11:15 am 

    I don’t know, Davy… I don’t believe that “Demand Destruction” or “Peak Demand” exists… I just think they are propaganda tools…

    Right now, demand is off the charts practically everywhere…

    On FBN & CNBC I hear people say all the time that China’s Demand is collapsing, their economy is tanking, etc, etc… But the numbers prove otherwise…


    The CIA has a program where they issue priority talking points to News Anchors, Corespondents, Contributors & Pundits on a daily basis… Every time someone says the desired talking points or views or phrases on TV, they get paid… This is where I believe that terms like Demand Destruction & such came from…

  30. peakyeast on Sat, 30th Apr 2016 11:31 am 

    @Davy: I COMPLETELY agree

    There is no democracy – there is no freedom – there is a mockery version of both.

    I dont see a leadership difference btw. Europe and US – they are more or less part of the same mafia.

  31. peakyeast on Sat, 30th Apr 2016 11:37 am 

    @Davy: I have a feeling you think I am pro-Europe or pro-Denmark. I am NOT.

    Its ALL stinking rotten and short of armed rebellion there is nothing to do about it. – The same as the US. The same with Russia and countless other nations.

  32. Davy on Sat, 30th Apr 2016 12:20 pm 

    Sure, peaky, I am just doing what you are doing and pointing out the obvious. What’s the problem?

  33. Davy on Sat, 30th Apr 2016 12:38 pm 

    Geo, do you believe all that demand is productive healthy demand? Do you believe some of that demand you mentioned is malinvestment setting up to be a huge write off to the global economy? Do you think maybe things are just a little of a mess….just a little?

  34. peakyeast on Sat, 30th Apr 2016 1:17 pm 

    No Davy – Now you are lying. You are not doing what I am doing and I know you are clever enough to know that.

  35. onlooker on Sat, 30th Apr 2016 1:23 pm 

    The entire world is run Mafia style nowdays. No sense pointing out who is doing more of it or doing it better. Oh and have to agree with Davy, Europe paved the way for US to become what it has.

  36. peakyeast on Sat, 30th Apr 2016 2:04 pm 

    Well onlooker – its a little like peak-oil – all the regulars know it here. The same with the corruption in the governments.

    I did not write these things to target Davy or any other person. I wrote it for those that think otherwise and perhaps as a sort of self-medication ooops I meant self-preparation :-D. Just like we go over peak oil again and again.

  37. Davy on Sat, 30th Apr 2016 2:10 pm 

    Your lying Peaky and doing the same thing I am doing and cleverly hiding your true intentions. You know what I am talking about.

  38. peakyeast on Sat, 30th Apr 2016 2:25 pm 

    LOL. Davy is reminding me of conversations with a 1980s elisa program I painstakingly typed in from a magazine.

  39. geopressure on Sat, 30th Apr 2016 4:07 pm 

    elisa program???

  40. geopressure on Sat, 30th Apr 2016 4:12 pm 

    Davy… Yes, the economy could crash…

    Everyday I think the odds are better & better…

  41. rockman on Sun, 1st May 2016 12:22 pm 

    “Who is going to buy a tanker load of gasoline?” Easy answer: go to the govt web site and see where the refined products of almost 1 BILLION BBLS OF US OIL PER YEAR are exported to. LOL.

    Geo – who gets those $BILLIONS in refinery products is determined by who can pay for them. If Nigeria can’t compete on the price they don’t get it. Not any more complicated then that.

    And that held true for the hundreds of MILLIONS OF BBLS OF US OIL exported in recent years…years during which some foolish folks still argue there was a “ban” on US oil exports.

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