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Page added on June 26, 2023
Peak oil is another reason to shun OPEC club
Guyana is the Groucho Marx of oil producers. The comedian famously didn’t want to belong to any club that would accept him as a member. The tiny South American nation is similarly resisting overtures to join the Organization of the Petroleum Exporting Countries, the Wall Street Journal reported on Monday, preferring to pump the black stuff while it can. Cartels are hard to maintain at the best of times. But when future demand is finite, there’s even less incentive to cooperate.
The group known as OPEC+, which includes the organization’s 13 oil-producing members as well as allied nations like Russia, produces over 40% of the world’s oil. Consumers have few alternatives to crude. If producers can constrain production, as they recently agreed to do until 2024, prices should rise.
Guyana’s economic fortunes are heavily linked to the oil price. Its GDP grew 62% last year thanks to booming production. A consortium led by Exxon Mobil (XOM.N), for example, aims to triple offshore production to more than 1 million barrels per day by 2027. Guyana’s recoverable reserves of around 11 billion barrels in that field alone make it an obvious candidate to join OPEC.
However, oil’s future is dimming. The International Energy Agency said earlier this month that growth in global demand is set to nearly halt by 2028. It will then probably start to decline. Hence Guyana’s desire to sell as much oil as possible now.
It’s not the only one thinking this way. Non-OPEC oil nations, such as the United States, Brazil and Canada, are growing production. Even OPEC+ members aren’t united in their desire to prioritize price over production. Some of the recent agreement to limit output comes from the likes of Nigeria, which can’t fill its quota. The United Arab Emirates got a blessing to pump more.
Cooperation will get even harder as demand wanes. If the parties know they will be working together for decades, it’s easier for nations to see the long-term rewards from keeping prices high. Moreover, Saudi Arabia has some ability to punish all players if production rises too fast.
With oil’s days numbered, the incentives change. Members may increasingly think sacrifice is for suckers. After all, tomorrow’s profit – and today’s punishment – may never appear.
6 Comments on "Peak oil is another reason to shun OPEC club"
Ted Wilson on Tue, 27th Jun 2023 10:53 am
World energy statistics for the year 2022 has been released. Some highlights
Solar is fastest growing
Post covid recovery led to rapid increase in oil consumption
War decreased natgas growth
Coal production increased 12%, but big chunk of it was moved to inventory or blended or just fault in data.
But this chart shows it all. Paste it in spreadsheet and see.
Fuel Exajoules % Share % Growth over 2021 Power gen (in TWh) Power gen % Share)
Oil 190.7 31.6 3.2% 728.6 2.5
Natgas 141.9 23.5 -3.1% 6,631.4 23.0
Coal 161.5 26.7 0.6% 10,317.2 35.7
Nuclear 24.1 4.0 -4.8% 2,679.0 9.3
Hydro 40.7 6.7 0.7% 4,334.2 15.0
Solar 12.4 2.1 24.4% 1,322.6 4.6
Wind 19.8 3.3 13.1% 2,104.8 7.3
Bio & Geo 8.7 1.4 3.4% 776.9 2.7
Biofuel 4.3 0.7 5.8% 0.0 0.0
Total 604 100 1.10% 28,894.7 100.0
Dredd on Wed, 28th Jun 2023 9:46 am
It is time to use Benford’s Law on petroleum projections (On The Origin of The Containment Entity – 9).
dordle on Mon, 3rd Jul 2023 2:54 am
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Theedrich on Sun, 9th Jul 2023 1:27 am
Well, Biden has run out of normal munitions, so he has decided to resort to criminal weapons: cluster shells. Yep, lets start killing women and children in perpetuity with long-lasting explosive devices. Nothing new here. Just more deviant and moral turpitude from America the almighty, only yet more perverse. What next? Nukes? The bottomless moral hypocrisy underlying the foundations of the United States is made glaringly manifest by this aim to kill innocents forever. The U.S. always fornicates for virginity.
After all, if Bidey the boor loses his criminal aggression in Ukroidland, he might lose his election next year. Oi vey!
𝖁𝖊𝖗𝖎𝖙𝖆𝖘 𝖑𝖎𝖇𝖊𝖗𝖆𝖇𝖎𝖙 𝖛𝖔𝖘.
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