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HAS OLILPRODUCTION ALREADY PEAKED? - 19 JULY 2009
The following graph shows that the spike in West Texas Intermediate Oil of 7 per barrel may have signaled that global oil production has already hit its peak.
There are two telling signs:
July 2004 – September 2007: Daily oil production remained flat while prices doubled and consumption was on an upward trajectory. Perhaps OPEC wanted to create a tightening bias in the world oil markets to force prices to rise. But more realistically, OPEC likely knew it had limited production slack and did not want to use up its last ‘bullet’ before price rises started destroying demand.
May 2007 – February 2008: Daily oil consumption rose by 3.6 million barrels and daily oil consumption peaked at nearly 88 million barrels per day during February 2008. The supply response during the same period was a meaningless 1.7 million barrels of extra production. During the same period, prices rose from per barrel to per barrel (eventually spiking to 7/barrel during July 2008). Given that as of May 2007 prices had already tripled from 2002 levels it is difficult to argue that OPEC wasn’t satisfied with market prices and wasn’t beginning to worry about demand destruction. The problem was that excess capacity simply didn’t exist and production couldn’t be increased meaningfully to offset destructive price increases.
Production was eventually increased to 86.71 million barrels per day by July 2008. This was still below peak demand.
Regardless, by that point demand destruction had already begun. The twin ravages of high prices and a developing economic recession pulled the plug on oil demand thereby temporarily alleviating the supply-demand imbalance.
Bottom Line
7 per barrel oil prices were caused by supply-demand characteristics that illustrated global oil production had peaked. A global near-depression only resulted in a 6% decline in oil demand.
Therefore, a return to tepid global growth could be enough to push consumption back to the 85-86 million barrels per day point. As of June 2009, world consumption is already back above the 84 million barrel mark.
Given the supply-side constraints (lack of capacity, depleting reserves, delayed projects) any form of a global economic recovery would risk pushing oil prices back up to the triple-digit range.
http://seekingalpha.com
There are two telling signs:
July 2004 – September 2007: Daily oil production remained flat while prices doubled and consumption was on an upward trajectory. Perhaps OPEC wanted to create a tightening bias in the world oil markets to force prices to rise. But more realistically, OPEC likely knew it had limited production slack and did not want to use up its last ‘bullet’ before price rises started destroying demand.
May 2007 – February 2008: Daily oil consumption rose by 3.6 million barrels and daily oil consumption peaked at nearly 88 million barrels per day during February 2008. The supply response during the same period was a meaningless 1.7 million barrels of extra production. During the same period, prices rose from per barrel to per barrel (eventually spiking to 7/barrel during July 2008). Given that as of May 2007 prices had already tripled from 2002 levels it is difficult to argue that OPEC wasn’t satisfied with market prices and wasn’t beginning to worry about demand destruction. The problem was that excess capacity simply didn’t exist and production couldn’t be increased meaningfully to offset destructive price increases.
Production was eventually increased to 86.71 million barrels per day by July 2008. This was still below peak demand.
Regardless, by that point demand destruction had already begun. The twin ravages of high prices and a developing economic recession pulled the plug on oil demand thereby temporarily alleviating the supply-demand imbalance.
Bottom Line
7 per barrel oil prices were caused by supply-demand characteristics that illustrated global oil production had peaked. A global near-depression only resulted in a 6% decline in oil demand.
Therefore, a return to tepid global growth could be enough to push consumption back to the 85-86 million barrels per day point. As of June 2009, world consumption is already back above the 84 million barrel mark.
Given the supply-side constraints (lack of capacity, depleting reserves, delayed projects) any form of a global economic recovery would risk pushing oil prices back up to the triple-digit range.
http://seekingalpha.com
Industrial Action
The National Union of Mineworkers expresses its support for fellow trade unionists in the Public Sector who today are having to resort to withdrawing their labour (a fundamental right of any worker) and take strike action against these unfair cuts to their pensions and terms and conditions.
T
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Funeral of Gerry Gibson
It is with deep regret that the NUM (Yorkshire Area) announce the Funeral Service details for Gerry Gibson who tragically lost his life at Kellingley Colliery on Tuesday 27th September 2011.The Service in dedication to Gerry a much respected member,work mate & fellow miner will be held in
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Statement from Gerry's Family
We are all truly devastated by Gerry's sudden and tragic death.
We would like to pay tribute to everyone involved in attempts to rescue Gerry - all work colleagues; Kellingley rescue team; the air ambulance team and all other medics who were on site. Their tireless efforts were not i
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Fatality at Kellingley Colliery
it is with deep regret that the national union of mineworkers has to confirm that as a result of a tragic accident at kellingley colliery one of our members has lost his life.
the whole workforce at the colliery are devastated at the loss of a friend and colleague as a result of a roof fall on 502s
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