Only Saudis & Russians pump more oil
According to the International Energy Agency (IEA), US will surpass Russia in total production of liquid fuels in 3rd Qtr. 2013 – that includes crude oil plus biofuels like ethanol. Moreover, US is now the third largest crude oil producer behind Saudi Arabia and barely trailing Russia. Saudi oil minister Ali Naimi, acknowledging the new geopolitical realities, recently conceded that the increased US fuel production has “increased depth and stability for the (global) oil markets.”
Despite the increased US production, however, oil prices have been hovering above $100/barrel lately due to uncertainties about military action in the Middle East. More US production, however, has had little impact on global prices. The only reason prices haven’t gone even higher is that Saudis have been pumping record amounts of oil making up for the diminished Iranian and Libyan exports. It is rather ironic that those who said oil at $100/bbl was too dear only a few months ago, now long for $100 oil.
Source: Energy Spectrum, 9 Sept 2013
Higher oil prices, if they persist, are also likely to accelerate the peak oil theory – on the demand side that is – as explained in last month’s lead article. The article, titled “Peak Oil is Real – On the Demand Side“, was a hit with many favorable responses from subscribers – and others who must have seen it one way or another. A reprinted version appeared in the Energy Spectrum on 9 Sept 2013 and Breaking Energy on 20 Sept.
Current projections by the Energy Information Administration (EIA) and others for future oil demand show continued growth, albeit it a declining rate as reflected in table below. EIA’s latest projections predict 109 million b/d in 2035 and 115 in 2040 (table below).
Future demand for oil, of course, depends on a number of variables, not just price of natural gas but also restrictions on future use of coal, future evolution of renewable energy technologies, the revival of nuclear energy – something that does not seem likely in the West – among others.
At current high prices, there is no doubt that the peak oil demand is real – the debate is no longer about if, but when. Rising oil prices will accelerate the trend, but the writing, as they say, is already on the wall.
