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THE OPEC Thread pt 9

General discussions of the systemic, societal and civilisational effects of depletion.

OPEC Countries Become the Biggest Fans of Solar Energy

Unread postby Graeme » Sat 18 Jul 2015, 17:34:55

Energy Revolution? OPEC Countries Become the Biggest Fans of Solar Energy

Wouldn't it be ironic if the biggest oil exporters in the world became the biggest solar energy investors with plans to export solar energy?

That may seem like a far-fetched idea but it's exactly what Saudi Arabia has in mind. Here's a telling quote from one of the companies looking to provide some of the country's solar energy needs.

I think in 2020 we're going to look back and say -- if we pick one year as a point of inflexion -- I'm very confident it will be 2015."

-- Paddy Padmanathan, CEO of ACWA Power, a renewable energy developer in the Middle East

What's driving the world's largest oil exporter to solar may tell us more about the future of energy than you think.

Saudi Arabia is better off selling oil than consuming it
One of the challenges being a developing nation that's made its money on oil exports is that a rising standard of living can eat into previous energy exports. Over the past decade, Saudi Arabia's oil consumption has risen 53% while its production is up just 5%. The result is falling oil exports, which is where the country makes its money.

A recent Chatham House paper suggested that at its current pace Saudi Arabia would actually become a net oil importer by 2038. That's only 23 years away, hardly a long time in the oil industry.

On top of the fact that Saudi Arabia would like to export more oil instead of consuming it, oil is a relatively expensive way to produce electricity. Renewable energy is much cheaper than oil power generators today, particularly in desert areas. A project bid below $0.06 per kWh in Dubai earlier this year showed the potential solar energy has in the Middle East and with Saudi Arabia getting 55% of its electricity from oil, there's an economic driver to making a change.


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Re: OPEC Countries Become the Biggest Fans of Solar Energy

Unread postby C8 » Sun 19 Jul 2015, 19:13:19

not sure where I read the article but the reality of SA solar is pretty grim so far. It appears their engineering is not very reliable and the solar units made have lots of slipshod problems. They also have a terrible time with sandstorms. Some guy has to use a broom and wipe the sand off of the panels. When you get to thousands of panels this becomes very expensive to have an army of people do this- many panels do not function anyway.

There seems to be a big gulf between the PR reports and the reality. I am not sure the sandstorm issue can be overcome at all given the resources it requires.
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Re: OPEC Countries Become the Biggest Fans of Solar Energy

Unread postby ennui2 » Mon 20 Jul 2015, 09:28:23

pstarr wrote:It's why Iran has embraced nuclear


That may be true, but do you have any reference to back this up?
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THE OPEC Thread pt 9

Unread postby shortonoil » Fri 30 Sep 2016, 06:52:39

OPEC "says" it is ready to cut 0.4 to 0.9 mb/d for a market that is 4.75 mb/d oversupplied.

<i>Now, that should really solve the problem?</i>

As we have been saying for almost three years the market will never again come back into balance, and for almost 3 years it has not. Petroleum production is the act of producing energy, not volume. As long as that is not understood, and appreciated they will just keep pushing on a string.

http://www.thehillsgroup.org/
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Re: OPEC to cut oil production 9-28-2016

Unread postby ROCKMAN » Fri 30 Sep 2016, 07:05:06

"I've been at a loss to explain this long drop in prices." And can you explain why the current oil price (after the "long drop") is 30% higher then the inflation adjusted average oil price for the great majority of the last 60 years?
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Re: OPEC to cut oil production 9-28-2016

Unread postby peripato » Fri 30 Sep 2016, 07:07:56

rockdoc123 wrote:
Entropy mate, entropy. The world economy is weaker than it was two years ago. And far weaker than in 2008. It could only support oil at $140+ up to 2008 and only $100+ up to 2014.


as has been argued numerous times here there is zero evidence that high oil prices had much effect given the reason for the 2008 collapse according to pretty much any financial analyst including the special commission that was struck by the US government to analyse the reasons for the great crash concluded it was all to due with the sub-prime mortgage fiasco complicated by related derivative trading in North America and Europe. The collapse in 2014 was a supply related issue which is easily seen in any supply demand curve out there, again the explanation supported by pretty much every financial analyst out there. The fact that global GDP continued to increase through theses periods does not support a weaker economy. If you can supply actual data to support your claims rather than anecdotes or "well it makes sense" arguments then please do.

Ordinary people are unable afford oil at those old prices since they have to pay so much more today for the necessities of life, like food, housing, education etc thanks to all the bubble blowing.


what's your proof for this? GDP has been increasing, inflation has been at at an all time low averaging somewhere around 1.5% over that period of time. Us unemployment rate is currently around 5% versus 9% when oil was at $100/bbl. From 2014 to 2015 the CPI increased 0.5% but average salaries increased 1.5%. None of this seems to support your claims.

If you say so... :lol:

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Re: OPEC to cut oil production 9-28-2016

Unread postby ROCKMAN » Fri 30 Sep 2016, 10:10:36

p - Come on, bro, is that all you got??? LOL.
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Re: OPEC to cut oil production 9-28-2016

Unread postby ROCKMAN » Fri 30 Sep 2016, 10:33:57

How a "production cut" can actually lead to no decrease in production...or even a slight increase:

Reuters: The Algiers agreement seems to have been designed to engineer an increase in prices by changing market sentiment rather than reducing the physical supply of crude. OPEC issued a statement:

(1) OPEC’s 14 members committed themselves to a collective production target ranging between 32.5 million and 33.0 million barrels per day.

(2) A high-level committee will be established to study and recommend the implementation of the production level by individual member countries and consult with non-OPEC oil producing countries.

But the critical question is whether the production target will affect the actual number of barrels being marketed by the organization's members. Should the collective production target be characterized as a cutback, a freeze or continued, albeit restrained, growth? The answer depends on the baseline against which the target is measured and what would have happened in the absence of a deal.

OPEC members produced an average of 33.24 million barrels per day in August, according to estimates by secondary sources published in the organization's own monthly oil market report. If the production target is compared with the production level in August, then it represents a cut of somewhere between 250,000 and 750,000 barrels per day. But OPEC members, led by Saudi Arabia, boosted their production during the summer, in part to meet strong domestic demand for power generation. Saudi Arabia’s own oil production showed a seasonal increase of around 400,000 barrels per day between May and August.

In most years, Saudi Arabia’s output has been reduced once the summer heat is over and the need for direct crude combustion in power plants falls. Before the summer, OPEC members were producing around 32.25 million barrels per day, with an extra 200,000 barrels per day being produced by Gabon, which rejoined OPEC on July 1. If the production target is compared with pre-summer OPEC+Gabon output of 32.5 million barrels per day, it represents a production freeze compared with the first half of 2016 or even a slight increase.
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Re: OPEC to cut oil production 9-28-2016

Unread postby ROCKMAN » Fri 30 Sep 2016, 10:49:10

Reuters - Lukoil, Russia's second biggest oil producer, is not ready to reduce its oil output but will join oil market stabilization measures if Russia joins them, RIA news agency quoted Lukoil Chief Executive Vagit Alekperov as saying. TASS news agency also cited Alekperov as saying that all Russian oil producers could sign a protocol on stabilizing oil production. It later clarified in Alekperov's quote that he was talking about the need to sign such a protocol in case Russia decides to join the process of output stabilization.

And while the right side of the mouth says the above the left side of the mouth says:

Reuters - Russia's Pacific island of Sakhalin is expected to increase oil production by 8 percent in 2016 from a year ago, a regional official said, which would add to the global glut the industry currently faces.

Vera Sherbina, head of Russia's regional government of Sakhalin, told a conference on Wednesday that oil and gas condensate production at the island, which comes mostly from offshore, will climb to 18.1 million tonnes, or about 362,000 barrels per day (bpd), this year, up from 16.7 million tonnes in 2015.
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Re: OPEC to cut oil production 9-28-2016

Unread postby rockdoc123 » Fri 30 Sep 2016, 11:22:00

total nonsense. An insult to thinking Americans. More oil industry/mainstream economist lies.

I wonder if rockdoc would argue high oil prices have no effect on individual American consumers? Whether the rapid rise from $30 to $80/barrel oil after 2006 (which sent $200 billion American dollars every year thereafter overseas to our foreign oil suppliers) had no effect on the aggregate American consumer base


So everyone should believe this because you have a "sense" this was the case or because you think it is "reasonable to believe this"? Please show us some definitive data. Otherwise your argument is nothing more than special pleading. A sense check on this is that given an average vehicle tank mileage of 30 mpg, a tank size of 16 gallons and a high end average commute estimate of 20 mi/d the comparison between gasoline prices today and back in 2011 would result in an extra $450/year expenditure or about 1% of the average middle class income. On a daily basis that would require an individual to order a regular starbucks coffee rather than the cinammon dulce latte :cry:

Others were forced to forgo mortgage payments. That resulting collective catastrophe almost ruined the United States. And these economists and oil-industry flacks want you to believe white is black and black is white. Shame. :-x


Completely fabricated. The reason people didn't pay off their mortgages in 2007-2008 was because they were over-leveraged. The sub-prime loans were made to people who could not afford to pay their mortgages in the first place. You need to educate yourself on what was happening during that period of time and stop making things up that suit your beliefs. People who qualified for regular prime rate mortgages would not have had to miss mortgage payments. At current rates (which are much lower than in 2011) a fixed rate 30 year mortgage requires a $550/month payment for a $150,000 mortgage. Anyone who would be seriously affected by a drop in their annual disposable income of $450 would not qualify.
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Re: OPEC to cut oil production 9-28-2016

Unread postby ennui2 » Fri 30 Sep 2016, 11:45:12

The reason people didn't pay off their mortgages in 2007-2008 was because they were over-leveraged...


Which can all be condensed down into this single image which has been posted dozens of times since 2008.

Image

It's funny how the people plugging ETP the most seem to be unable to concede that liar-loans and ARM resets are what caused the credit crisis. Only within the bizarro world of the peak-oil remnants would people who hold such ignorant views be seen as credible at all. The portrait it paints is people with such a sense of insecurity for peakoil having been (at best) delayed that they have to cook the books. And if they're cooking the books regarding 2008, wouldn't it also make sense that their ETP argument is equally suspect?

Back to the topic... If Open goes ahead and cuts production and oil spikes OUTSIDE of the ETP "triangle of doom" what then will ETP zealots say to defend the faith? Such a response by the market would validate traditional supply/demand in the sense that supply going down will mean prices go up. And yet ETP advocates continue to say the opposite is true, that as oil depletes, it loses value rather than becoming more precious.

It's unfortunate Adam didn't take Whatever's bet because we may get into a situation where oil spikes and Whatever would have lost the best. However, I fully expect if oil does spike that ETP zealots will respond this way:

1) Sorry, it isn't spiking "enough"
2) Sorry, the price isn't holding long enough (that long enough will be always a day longer than the spike is lasting)
3) Oh, no. We never argued that prices can't spike. ETP doom and Mad Max doom can coexist!

Missing from these hypotheticals is to simply wise-up and admit being wrong.
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Re: OPEC to cut oil production 9-28-2016

Unread postby shortonoil » Fri 30 Sep 2016, 11:55:59

"I've been at a loss to explain this long drop in prices." And can you explain why the current oil price (after the "long drop") is 30% higher then the inflation adjusted average oil price for the great majority of the last 60 years?"

Absolutely not true. For example, an inflation adjusted barrel of oil for 1980 would presently be $63.04. For 1960 it would be $23.44. For 2015, the last year that we have a full annual price, it was $48.67.

When the BLS computes inflation numbers they include ALL products sold in the market. That includes baby diapers, and hair spray. There is absolutely no reason to believe that the inflation rate of baby diapers, and toilet paper maps the inflation rate of oil. If plotted they don't even produce the same form of curve. The only thing that they have in common is that both slope up, and to the right. Using inflation adjusted numbers on oil prices is using two numbers for which there is no reason to believe they have anything to do with each other. It is a red herring.
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Re: OPEC to cut oil production 9-28-2016

Unread postby rockdoc123 » Fri 30 Sep 2016, 15:30:10

You do the math. Please! It's real easy: $50*barrels_imported/a_year.


I already did the math for you upthread. People don't buy barrels of oil they buy gasoline mainly and other by products secondarily and the impact is not as severe as you suggest. Also you misunderstand the housing crisis of 2008, not surprising given you still want to hold onto the story that oil prices caused the depression regardless of all the evidence to the contrary and the paucity of evidence in support. :roll:
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Re: OPEC to cut oil production 9-28-2016

Unread postby ROCKMAN » Fri 30 Sep 2016, 17:28:20

"...the current oil price (after the "long drop") is 30% higher then the inflation adjusted average oil price for the great majority of the last 60 years?"

Absolutely not true. For example, an inflation adjusted barrel of oil for 1980 would presently be $63.04. For 1960 it would be $23.44. For 2015, the last year that we have a full annual price, it was $48.67."

Once again the sad use of cherry-picking to defend the indefensible. Forks can look at this chart and decide for themselves. As far as the implication that inflation adjusting isn't important I wonder how many here would accept their current job for the salary it was earning in 1960. BTW the adjustments typically use the ge in the value of the $...not any particular product. Here's a published chart similar to most you'll find.

http://inflationdata.com/Inflation/Infl ... _Chart.asp

For 28 years (1946 - 1974) tthe price ran about 50% below the current price. And for the 28 years (1986 - 1994) the price averaged around $35/bbl. But let's make it simple: does anyone think oil selling at the UNADJUSTED PRICE of $39/bbl in 1979 (I. A. = $117/bbl) oil was "worth" less the it is today?
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Re: OPEC to cut oil production 9-28-2016

Unread postby peripato » Fri 30 Sep 2016, 19:30:34

ROCKMAN wrote:p - Come on, bro, is that all you got??? LOL.

What's wrong with them? These charts are all collated from information that's freely available in the mainstream media.

The only thing wrong with them is that they do not conform with your blinkered belief in the so-called recovery.
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Re: OPEC to cut oil production 9-28-2016

Unread postby ROCKMAN » Fri 30 Sep 2016, 22:52:36

p - You need to tune up your sarcasm meter, bro...I was agreeing with your view. You need to keep your "rock's" straight. LOL
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OPEC MOMR, monthly reports

Unread postby tita » Mon 13 Nov 2017, 13:36:19

OPEC is releasing a monthly report on oil markets that contains aggregate data from various sources about oil supply/demand and economic perspectives.
http://www.opec.org/opec_web/en/publications/338.htm

I was looking at the supply/demand balance part in the releases from jan to nov, and their recent numbers are quite bullish. In just two months, we went from a little bit oversupplied market (+0.06 MMbbls/d in Q2) to a strong deficit market (-0.47 MMbbls/d in Q2 and -1.3 MMbbls/d in Q3). The reason for this is because demand estimations for 2015 and 2016 have been constantly revised upward (+ 0.5MMbbls/d for each year from initial estimations), while the supply has not much increased. Add to this the upward revisions of demand forecast for 2017 (+1.53 in november instead of +1.16 in january), and you end up with an increasing deficit instead of a balanced market. These revisions have been going on all the year. If they continue, this imply that the deficit will increase.

They also forecast that the supply from non-OPEC producer will be mainly driven by the USA, increasing by 0.59 MMbbls/d in 2017 and 0.87 MMbbls/d in 2018 (both include NGLs). The other non-OPEC production staying the same. IMHO, they are quite right... more than the eia.

OPEC production has been quite stable, most members respecting the cuts while production growth from Iran and Lybia was compensated by the decrease of Venezuela. They have something like 1.2 MMbbls/d of cuts... And may be able to produce a little more than 34 MMbbls/d. Which is precisely the value of the demand minus non-OPEC oil production they forecast in Q3 and Q4 2018.

Which raise the million dollar question: What will they decide on their next meeting? Prolonging the pact till the end of 2018 while forecasting supply/demand deficit is a call for higher prices... And a boost for US shale production. Probably a 3 months extension is enough to keep the market happy, while the door is still open for an extension in their june meeting.
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