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Wall Street History
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06/22/2007
The Latest on Oil
The debate continues as to whether or not world oil production is in the process of peaking. It seems to me from just looking at some numbers, globally, it’s increasingly difficult to find, and then extract, new supply. Surveys may show that an abundance of crude exists in some spots, such as a recent ‘find’ in the Gulf of Mexico, but getting it out of the ground is quite another task.
And, of course, these days you’re dealing with unstable governments and/or their state oil companies, as best exemplified by the likes of Venezuela, Nigeria and Russia. They may have the oil, but it’s either tough to get it out because it’s downright dangerous to put workers there, or, because of a lack of investment and expertise, the oil never finds its way to market. Then there is the Middle East and little needs to be said here.
So I just glanced at British Petroleum’s “Statistical Review of World Energy” and thought I’d pass along a few key stats on the consumption, production and reserve fronts.
Consumption / Production of Oil
Over the past ten years, 1996-2006, consumption of oil in the United States rose from 18.3 million barrels daily to 20.6 mmbd, or 24.1% of global consumption of 83.7 mmbd in 2006.
Europe & Eurasia consume 24.9% of the world’s crude and the Asia Pacific region 29.5%.
Today, consumption is estimated to hit 86.1 mmbd by 12/07, according to a recent upward revision by the International Energy Agency.
So where is it coming from?
The United States only produces 8% of the world’s petroleum, 6.87 mmbd (for 2006); or another way to look at it is the U.S. imports 67% of what it consumes.
Canada produces 3.147 mmbd (3.9% of the global total) Mexico 3.683 (4.7%)
Venezuela 2.824 (3.7%)
Norway 2.778 (3.3%) Russia 9.769 (12.3% UK 1.636 (2.0%)
Iran 4.343 (5.4%) Iraq 1.999 (2.5%) Kuwait 2.704 (3.4%) UAE 2.969 (3.5%) Saudi Arabia 10.859 (13.1%)
Libya 1.835 (2.2%) Nigeria 2.460 (3.0%) Algeria 2.005 (2.2%) Angola 1.409 (1.8%)
China 3.684 (4.7%)
OPEC 34.202 (41.7%)
Regarding the above, some items of note.
U.S. production has declined over the past ten years from 8.295 mmbd to 6.871. It has risen slightly in both Canada and Mexico.
Production has declined in Venezuela from 3.137 to 2.824 mmbd over that same period.
Norway has seen production decline sharply from 3.232 to 2.778 mmbd, while Russia’s has risen from 6.114 to 9.769 mmbd.
In Iraq, production was a mere 0.58 mmbd in 1996, rose to 2.614 in 2000, but then has had a tough time reaching that figure again, especially since the invasion in 2003, in falling to under 2.0 mmbd. Production in Kuwait, UAE, and Saudi Arabia has risen from 1996 to 2006.
And production has increased steadily in the above mentioned African nations.
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But what of proven reserves (assuming the numbers the governments, geologists and engineers give you are accurate)?
For the 20-year period from 1986 to 2006
[thousand million barrels]
United States 35.1 to 29.9 Canada 11.7 to 17.1 Mexico 54.9 to 12.9!
Venezuela 55.5 to 80.0
Russia n/a to 79.5
Iran 92.9 to 137.5 Iraq 72.0 to 115.0 Kuwait 94.5 to 101.5 UAE 97.2 to 97.8 Saudi Arabia 169.7 to 264.3
Libya 22.8 to 41.5 Nigeria 16.1 to 36.2
OPEC currently accounts for 74.9% of proved reserves. Non-OPEC 14.4% Former Soviet Union 10.6%
Notes on reserves:
Peak oil adherents focus in on Mexico’s huge declines in reserves, while in Norway, in just the past year (2005-2006) proven reserves have declined from 9.6 mmbd to 8.5 mmbd.
And there is serious question as to whether or not the secretive Saudis are jerking us around with their stated reserve figure.
But the bottom line is when you look at just the past year, the BP statistical review shows that proven reserves have actually declined 1 billion barrels, globally 1209.5 to 1208.2.
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The China Factor
While for the period 2002-2006, consumption in the U.S. is basically flat 19.761 to 20.589 mmbd, in China over the same period it has risen from 5.288 to 7.445 mmbd. Going back to 1996, China produced 3.170 mmbd and consumed 3.702 mmbd. Today, for the 7.445 mmbd it consumes, it produces 3.684 mmbd. Ergo, it is importing a helluva lot more crude.
For its part, India consumed 2.575 mmbd in 2006 vs. 1.700 mmbd in ’96. Obviously, you can see why between China and India, the 4.5 mmbd+ [today, well over 5.0 mmbd] increase in consumption is a huge swing factor in the price of crude, even as consumption in much of the developed world has stagnated . which helps explain today’s high prices.
Sources: BP.com; iea.org
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Wall Street History returns next week.
Brian Trumbore
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