November Non-OPEC Oil Production Ticks Up

225 thoughts to “November Non-OPEC Oil Production Ticks Up”

1. More Permian problems!

   https://twitter.com/ShaleUnikitty/status/1502444290055753728?t=6bB9fZmIJbRqG3B37a1XGg&s=19

2. Another fantastic post. Thanks for the work Ovi!

3. Schinzy

   Thanks. Much Appreciated.

4. I love your blog. but can you correct the name of columbia for colombia? Thank you.

   1. Miguel

      Sorry for the error.

      Thank you for pointing that out. Fortunately the charts use the correct spelling. In Canada, we have a province that is called British Columbia and a retailer called Columbia. I think that is the source of my error.

      If perchance you are from Colombia or close by, could you provide a comment on where oil production in Colombia is headed.

      1. Ovi , no error . I am bailing you out . You owe me one . 🙂
         https://www.youtube.com/watch?v=G2wkO0DhpEY&ab_channel=EllaFitzgerald-Topic

5. https://www.bloomberg.com/news/articles/2022-03-10/world-s-oil-giant-adds-to-diesel-strain-with-rare-buy-tender
   “Oil kingpin Saudi Arabia is seeking to purchase an unusually large amount of diesel in a surprise move for the net exporter, adding strain when diesel markets already are in short supply.

   “Aramco Trading sought 1.2 million to 4.6 million barrels of low sulfur diesel for delivery to several ports in Saudi Arabia by mid-March to April via a tender, said traders close to the matter…

6. John Kemp .
   https://www.reuters.com/business/energy/global-diesel-shortage-raises-risk-oil-price-spike-kemp-2022-03-11/
   Running down inventory .

7. Caps on diesel sales in Hungary . Shortages of diesel also reported in Germany, France, Sweden and Poland .
   https://financialpost.com/pmn/business-pmn/austrias-omv-restricts-hungary-fuel-sales-as-supply-fears-grip-europe#:~:text=OMV%20has%20capped%20refueling%20at,the%20company%20said%20on%20Friday.

   1. Diesel demand is inelastic, gasoline less so.

      Life without Lorries

      https://www.alanmckinnon.co.uk/uploaded/PDFs/Papers/Life-without-Lorries-(Report-for-Commercial-Motor–Dec-2004).pdf

   2. Heating oil is now 1.8€ / Liter in Germany. Delivery in May!

      Nat gas for heating is even more expensive.

8. How does STEO project oil production out to 2 years with such precise granularity? It must be based on the assumed completion of DUC’s? I imagine?

   1. Peter

      Their projections change every month.

9. Your work is very much appreciated Ovi.
   It seems that the next 3-5 years will be the last great hurray for global oil production, stimulated by high prices and then winding down by depletion. The production ‘action’ as shown in many projections will now be compressed, giving the world less time to adjust to the reality of peak oil.

   Repercussions of the Russian economic isolation discussed in this brief article,
   highlighting three big impacts
   -The Green-Energy Revolution Goes Into Warp Speed (I would not characterize this as ‘green’ as it will include coal, wood, and anything with energy content)
   -A New Chinese Empire (more on that below)
   -A Global Food Fight

   https://www.theatlantic.com/newsletters/archive/2022/03/russia-economic-sanctions-wheat-oil/627004/?utm_source=pocket-newtab

   A lot hinges on China. They must tread carefully since their trade with Russia is dwarfed by trade with the ‘west’. Likely they will find a way to benefit longterm from the rearrangement of the global cards on the table, such as an ownership stake in Russian oil and mineral production.

   

   1. China has lots of issues. They are also trending down the path of authoritarian aggressor like Russia. And Omicron has finally arrived making this a year of lockdowns, and just might prick their debt bubble. China could be the catalyst for a huge lurch downwards in oil prices in the second quarter.

      https://www.reuters.com/business/healthcare-pharmaceuticals/china-daily-local-covid-infections-exceed-1000-symptomless-cases-spike-2022-03-11/

      1. Stephen , just dusted my book by Tainter ” Collapse of complex societies ” . I am having an eerie (gut) feeling we are headed for what David Korowitz called a ” Synchronized System Failure ” . This would be the absolute collapse of the financial system . USA , EU and China collapse simultaneously . I am not the only one calling this . I have long said ” Complexity and connectivity are the Achilles heel of IC ” . When Martin Armstrong speaks you better start tying your shoelaces . Complexity kills and complexity without sufficient energy will lead to a collapse .
         https://www.armstrongeconomics.com/products_services/socrates/the-great-economic-destruction-complexity/

      2. Omicron is pretty mild especially with vaccination rate almost 60% in China. Debt bubbles have become impossible to gauge when they are the primary engines of growth in this Super-Late Capitalist stage where natural profits are anemic. There is no real evidence China’s in any real danger, despite what Kyle Bass’ of the world would like to believe (and have believed for years now). If Peak Oil has taught us anything it’s that no financial (i.e. artificial) collapse will really hold things down for long. These rules are completely arbitrary and just made up out of thin air. Only real physical limits: climate change, peak oil, pandemic will ever stop this train a-rolling.

         1. Most cases are asymptomatic. But if you shut down your financial capital with a population of 26 million over a handful of cases, it will have consequences.

            1. Hint:
               In the USA it has killed, in 2 years, about the same as all wars combined, from the revolutionary war to the present.
               1 out of every 330 people in the USA.

      3. Very hard to believe that China escaped covid19 by spraying disinfectant around city center.
         I’m a bit sceptical about the timing….

   2. I think the high prices are a wake up call – at least here in Europe.

      Who likes windmills and despices nuclear plants, now builds windmills in double speed.

      And who like nuklear plants speeds up construction, too. And perhaps even a few solar cells and a hand full wind mills.

      From this side this is better than a few more years with enough oil and low prices – no incentive to do much.

      1. Eulen , too little too late . The problem is transportation fuel and not electricity . See my several posts on diesel above . Diesel is king and oil is the master resource . Read Alice Friedman’s ” When the trucks stop running ” .

         1. Still luxury problems – there are some easy to get sollutions, and there is still Diesel.

            Some very low hanging fruits.
            Bring more on rail and ship (there is still some spare capacity) – and drive slower. In container shipping they made this step a few years ago, saving a lot of fuel by going 30% slower. Perhaps you need more drivers – but that’s a money and burocracy problem mostly. Redirect the billion incentives from electric cars to truck drivers.

            Yes there will be more logistic chaos, but adaption is fast here (I work on logistics).

            Some harder thing would be reserve electric transportation battery capacity to busses and short range trucks with priority – cars are more inefficient.
            A single electric bus or short range truck saves 0.5-1 barrel Diesel / day. You really need Diesel with current tech only for the long haul trucks, which is only a part of all truckage.

            So a nice brand new Tesla is nice to look on – but a bumpy 7.5 ton truck delivering stuff in urban enviroment, going 100 miles a day, will get much more oil avoidence out of the battery pack. And can be electric with today tech.

            1. Eulen “Yes there will be more logistic chaos, but adaption is fast here (I work on logistics). ” .
               So do I my dear friend but I cater to the JIT category . Life saving medicines , human organs , parts for Volvo/ Scania trucks stranded on the road carrying live animals , refrigeration gases and components for food stores(Aldi, lidl etc) . Been there done that . The system has run out of road . Time we went from denial , anger, bargaining , depression to acceptance .

      2. I could definitely see Nuclear making a come-back. Sure Fukushima was only about 10 years ago and that accident will carry-on for a little while longer (try finding THAT number amidst the propaganda!!) . But hey, gotta stay warm. And interestingly, the Fukushima incident happened in 2011, and that masked the eye-popper that was oil prices north of $80/barrel for five years. I know Dennis likes to cite that as the reason oil prices could go and stay much higher without tea-bagging the economy, but I believe that should have been setting off alarm bells and that the global economy will NEVER be able to sustain anything like that again.

         1. Twocats , nuclear is not coming back . As ESG is driving the nails in the coffin of the FF industry , similarly NIMBY will not permit the building of nuclear plants . Second ,have earlier informed that their is only a division of Nippon Steel, Japan that makes the special steel for the dome . Their capacity is for 2-3 domes per year .Third technical manpower . Laplander has informed of the problem propping up in a nuclear plant being setup in Finland/Sweden with untrained Romanians and Bulgarians on the work site . Now we have a new one . The plants use uranium, U235 . The processing facilities for this ( more than 50% of the world’s capacity) is in the Russian sphere of influence . Russia has all energy sources oil, gas, coal and nuclear under its control .I am not even talking about the cost to put one up as it is prohibitive . Nuclear Fission and molten salt etc are experimental and will remain so .

            1. I guess I should be checking out the non-oil side of POB more. I’ll take your word for it, though if you have any reliable articles summing up these situations I’d appreciate it. I’ll try to read them before they are banned for being on the wrong thread 😉

               1. Two cats , here is link to worldwide Uranium production . Kazakhstan is 41% . Add all others that are in Russia’s sphere of influence . Probably about 60 % .
                  https://www.world-nuclear.org/information-library/nuclear-fuel-cycle/mining-of-uranium/world-uranium-mining-production.aspx
                  As to other 3 points you have to take them at face value . Maybe Laplander will confirm about the Romanians and Bulgarian issue .

               2. Short comment, regarding foreign workers at Olkiluoto 3, Finland see:
                  https://yle.fi/news/3-6323719
                  For reactor build times and costs, plenty more to find about Olkiluoto 3 on the net, but also check out Hinkley point C, UK and Flamanville 3, France.

               3. Tks , laplander for the assistance .

               4. Olkiluoto 3 started to produce electricity yesterday. Will produce 14% of Finland’s electricity next summer

                  https://yle.fi/news/3-12356596

               5. HiH & Laplander – much appreciated. I would agree. We’ve seen an inability to engage in projects on a national / international level as society has begun to break down (covid response is exhibit A), and considering the complexity of building nuclear reactors they would probably fall into that category.

                  It’s much easier to let people freeze to death and just higher a public relations firm to manage the fall out and make people feel “heard”

   3. Hicks , the action of the FED to nullify Russian USD reserves and assets is having a ripple effect with all the Sovereign Wealth funds mostly in the Middle East . Countries are now going to choose . Food security or border security . Financial security is now under threat for the ROW with actions of Washington . Suggested reading Zoltan Pozsar who says a new currency backed by commodities will be Bretton Woods 2.0 . Powell has now admitted ” There can be more than one reserve currency ” Get ready . Putin now received a second call from Macron the midget and he told him to ” FO ” . This is a fight to the finish .
      A new order is in formation , . When did anyone in ME had the guts NOT to take a call from POTUS ? MBS said in an interview when asked ” Don’t you worry about what Biden thinks of you ? ” . His answer was ” I don’t care ” . The world is changing .

      1. As we have known for a long time, poor choices for everyone.
         Thats what happens when overshoot realities take effect.

      2. Luke Gormen thinks the attack against the Russian Central Bank will be a huge new steps in the direction that makes everything more unstable (the last part is my interpretation)

         https://www.podbean.com/media/share/pb-y2e9u-11ccab3?utm_campaign=w_share_ep&utm_medium=dlink&utm_source=w_share

      3. Right-wingers (and initially Left-Wingers) have been worried and warning against the New World Order for a couple decades now. But the reality is the NWO has existed quite comfortably for a while, and only now is being seriously threatened. Connections are being broken and some or many of these connections may never resuscitate in the wake of Peak Everything.

      4. I’m give my two cents on the topic of the rest of the world or part of the world moving away from the dollar or petrodollars or Eurodollars.

         Let’s just say that it happens. Is it a big negative for the dollar? Hell no! It’s the opposite. Supply of dollars falls fast as they aren’t being borrowed into existence. Value of the dollar goes through the roof. Which will absolutely crush the value of other currencies.

         Think of all the borrowed dollars that are invested globally and that are used in finance. Think about how big of an unwind that could be. I don’t see there being an alternative to the dollar because if you try it your currency will be plummeted into oblivion.

         1. You’re saying the dollar will be more valuable if less functional?

            1. Less supply of dollars equals greater value. If less dollars are borrowed into existence inevitably more dollars will be destroyed than are created.

               Dollars are created through the process of making a loan and are destroyed when a loan is paid back or default on. If dollars aren’t borrowed at all. Way more money gets destroyed than gets created. Equals more valuable dollar.

               Oil, natural gas, and coal are all priced in dollars. The Chinese yuan and Russian ruble are also priced in dollars. India rupee is priced in dollars.

               If dollars aren’t borrowed that’s ok. Because the dollar gains purchasing power pushing down the value of other currencies

               I’m well aware of the narrative that the dollar is going to crash. I’m also well aware that those pushing that narrative either don’t understand money or are trying to sell you something.

   4. Hickory

      Thanks. Much appreciated.

   5. Hickory,

      By 2030 to 2035, demand for oil will be falling faster than supply is falling iif oil prices remain around $100 per barrel.

      The problem will be too much oil and prices will be falling to balance the oil market.

      In the mean time high oil prices will accelerate the transition to electric transport, much needed to reduce the chance of a climate catastrophe.

      Unfortunately the latest science suggests this may be too little too late. We will likely need efforts to remove excess carbon from the atmosphere, an expensive proposition.

      Also those that want to reduce human suffering will choose to have one child rather than two.

      1. Dennis
         “The problem will be too much oil ”

         I have trouble digesting this possibility.
         I can’t see it.
         I’m trying to imagine it.

         1. I agree Hickory. I am having a hard time imagining that also.

            1. Hickory and Iron Mike,

               Note there is only too much oil in a high price environment (say $100/bo or more) after 2032 when much of light transport is done with electricity rather than petroleum products.

               In chart below we have a conservative oil supply scenario (where demand is high enough to keep oil prices high so that oil is profitable to produce at this level). The demand curves (low, high and average demand for oil) is based on higher and lower EV transition, dependent on prices, policy, and technology, with the average scenario being the average of the low and high scenarios.

               The “too much oil” scenario would start between 2028 and 2032, this does not even consider middle east OPEC nations ramping up development of resources in a battle for market share, in that case the supply curve might be on plateau from 2030 to 2037, with oil prices falling steeply as more expensive deep water, tight oil, and extra heavy oil are driven from the market.

               Just think back to 2015 or 2020 when there was a glut of oil on the World market and oil prices crashed. This is what will occur some time around 2030+/-2, if my EV scenarios and oil supply scenarios prove correct. Note that the supply scenario has a URR of about 3000 Gb, fairly close to a 2018 estimate by Jean Laherrere.

               

               1. Thank you for putting thought to this.
                  I’m trying to picture the EV transition over the next ten years, as it goes from infancy to dominant.
                  [I have said 90% of new light vehicle sales in 2030 will have a plug, but I am still trying to digest what that will look like]

                  Of course the transition is going to happen, but how fast…
                  Some big variables to all this
                  -does the vehicle battery cost/power/weight scenario improve
                  -what does global prosperity (or lack thereof) do these trends

               2. “I am still trying to digest what that will look like] ” .
                  Don’t try you are going to suffer from indigestion . Get some laxatives .

               3. With due respect Dennis, I reject your analysis. It’s too simple and linear. The world is complex and non-linear.

                  Your assumptions are based on induction, which is itself not a logical phenomena but a psychological one as Hume showed many centuries ago.

               4. Iron Mike,

                  You are free to provide your own analysis, but any analysis of the future requires induction and every model is less complex than reality which would require an infinite set of variables and an infinite set of assumptions. I will get back to you when I have finished such a model (requiring an infinite amount of time).

                  I agree the EV transition scenario is both too simple and likely incorrect, just like every other scenario of the future ever created.

               5. Hickory,

                  I have focused on oil demand for land transport and made the simplifying assumption that demand for all other uses of crude plus condensate remains constant after 2021.

                  The chart below has the plugin annual sales growth and annual plugin fleet growth rates that I have assumed for the low oil demand EV transition scenario. Note that the average annual growth rate for plugin sales worldwide was about 39% from 2014 to 2021.

                  Click on chart for larger view.

                  

               6. I don’t have any particular suggestions for changes to assumptions.

                  My inclination is that new vehicles sales will be less than the past decade despite a growing population (about 80 million/yr). This due to
                  -lower purchasing power in the face of stagflation, and
                  -the tendency to delay a big capital purchase when a better product is just over the horizon, and
                  -supply chain disruptions of various components

               7. Hickory,

                  Not so sure about that, smart phone sales have been pretty good over the years and they are constantly improving. Many buy the newer models due to improvements, perhaps the same will be true of vehicles. In addition EVs may last longer than ICEVs due to fewer complex moving parts and the used vehicle market may eventually be dominated by EVs as sales expand and ICEVs get junked. I assume sales stop growing when light vehicle sales reach about 100 million per year, and I also assume self driving vehicles never get regulatory approval (or not befor 2050). A change in that assumption might make TaaS very economical using self driving vehicles and only the very rich would own a light duty vehicle (except perhaps trades people) and sales of light duty vehicles would plummet in that case. It would also cuae the total vehicle miles travelled by light duty vehicles increase as each self driving EV might travel 55k per year rather than 11 k per year, thus increasing the market penetration of EVs by a factor of 5.

      2. “Also those that want to reduce human suffering will choose to have one child rather than two.” – D Coyne

         Goodnight!

         1. Sean,

            Not clear what you mean by good night. Note that I say this is a choice people can make, not all will do so, but it would help with the overshoot problem and limited resources.

            1. Dennis, only a tiny fraction of the world’s population knows we are in overshoot. Africa is where the world’s population is really exploding. Do you think the average citizen of Sub-Saharan Africa is really concerned about world overshoot?

               Obviously, you, along with just about everyone else in the world, have no idea what caused overshoot or what is causing the current destruction of the world’s environment. What happened, and what is continually happening, is nothing more than human nature.

10. Resource scarcity, thoughts by Charles Hugh Smith

    http://charleshughsmith.blogspot.com/2022/03/the-only-non-totalitarian-solution-to.html

11. Ovi,
    Can you create your final chart on global oil production, but going back to 2012 or so? I want to see the impact that the late 2014 price crash had on global oil production.
    thanks

    1. Bob

       Production and WTI on two charts.

       

    2. WTI Price

       

       1. Thanks Ovi,
          The interesting things to me are that the big price drops in 2008 and late 2014 were not accompanied by big production drops, but that did happen in 2020. In fact the price drop in 2014 is hardly reflected in the production – maybe not til early 2016. Is that the difference between a supply driven price drop (2014) vs a demand drive price drop (2020)? Was 2008 more of a supply driven or demand driven price drop? Just speculating here,,

          -note that my posts are taking a long time to appear, I get a prompt that are they waiting on moderation. I have access to the admin site, but am not able to approve the posts myself. thanks

          1. Bob
             I think the March 2020 drop set a different and exaggerated benchmark. Big is Big until something Bigger comes along.

             The 2008 drop of 3,000 kb/d occurred very rapidly between July 2008 and January 2009 and was unprecedented at the time. The drop seems small today relative to 2020, but at the time it was Big. The demand destruction that followed the price spike in early 2008 was absorbed by OPEC. Saudi Arabia cut 1,587 kb/d, Iraq 293 kb/d, UAE 290 kb/d and Kuwait 264 kb/d. The rest of the world just kept on producing. Appreciate that OPEC at the time said that their job was to moderate prices and prices did recover fairly quickly in 2009. I would classify 2008 as a demand driven price drop.

             2014 was arm wrestling between the US and OPEC. In 2014, the US increased production by 1,300 kb/d (Unheard of production growth. See chart) and OPEC cut production to offset US production to try to stabilize prices. Didn’t work and prices crashed to the mid 20s which also resulted in a US drop in production. 2014 was a supply driven price drop.

             2020 is not your typical economic scenario. 2020 was a pandemic driven event that did follow standard economic theory after the fact. Businesses and travel shutdown, oil demand dropped but production didn’t drop initially because Russia wouldn’t agree to cut production. SA said to Russia, so you won’t cut, so I and a few other countries will go to Max production. As prices dropped, P then understood real power and meekly agreed that Russia would cut, but it was too late and the oil price collapsed to below zero. The first super over supply induced super price crash.

             Now we are in a demand driven price rise that may not be correctable because supply may not be capable to keep up with demand at this time.

             

             1. Thanks Ovi, and thanks for all the work on the site, along with Dennis.

             2. My anecdotal comment is we shut in for about 4 weeks in April, 2020.

                Recall the price didn’t go just a little negative, our price that day was -$39. We discussed this with the crude purchasers. Nobody had ever seen anything like this. They both told us if the average price at month end was negative, we would have to pay them for the barrels we had “sold” them that month. We had already “sold” about 3,500 barrels that month.

                Both crude purchasers were predicting at best single digit pricing for the next couple of months at least, maybe negative for May. They didn’t know. Nobody did.

                So we shut in, as many did in the USA and around the world. Had we been able to predict the actual prices for May and June, we wouldn’t have shut in. There were a few wells we kept going, but not many. We sold 0 tanks of oil May, 2020.

                In conjunction with the very negative settle on 4/20/20, we saw a tremendous layoff of employees in the field, from which we still haven’t recovered, and probably never will. Many employees decided this was it for them, they’d already ridden the volatility of the previous 10-15 years and had enough. Wages exploded at factories, which was a big deal.

                There is a guy that does some well pulling on his days off from a factory job. He worked in the oilfield for about 15 years. He says he’s making $28 per hour plus good benefits. So why would he want to come back full time? Even if it’s in his blood so much he comes out on days off?

                1. Shallow sand,

                   How much do these guys make in the oil field (say the guy you are referring to). Typically when there is a shortage, the price goes up.

                2. They can make more but the work is harder, benefits are less and chances of getting laid off due to a bust are high.

                3. Not that factory work around here is the greatest, but it pays a lot more and has better benefits than it used to. Wasn’t too many years ago $10 an hour was a starting wage in most factories.

                   Now it’s closer to $20. Benefits kick in much quicker too.

                4. Shallow sand,

                   At $110/bo, I would think operators would raise wages to make it worthwhile for the qualified workers to come back, otherwise they are leaving money on the table as it were.

                5. Dennis.

                   If this price holds, they will. It’s early and most think this price won’t last long.

                6. Right now, or at 8:30 AM EDT, Monday, WTI was at $104.74.

                7. Shallow sand,

                   I would think those in the oil industry that are paying attention would realize that oil will be in short supply for a while. The high prices will not last forever, the sweet spot is now until 2030 (when oil prices will be high). After that the World may have moved on from needing so much oil (due to a transition to EVs, rail, and possibly natural gas for transport) and at that point there may be a chronic oversupply of oil as middle east producers vie for market share.

                   Waiting may be a mistake, but your business is a risky one and oil prices are indeed volatile, that is not likely to change.

                   Ron,

                   The question is will prices rise or fall from $104/bo in the future. My guess is that oil prices are likely to rise because demand is likely to rise faster than any increase in the supply of oil over the next 6 to 8 years.

                8. There is a much higher probability that oil prices will stay elevated/go up vs dropping in the coming weeks (based on signals), but is that any reason to radically change your short-term business model? I mean, we banned Russian exports, but what about a deal with Iran? It doesn’t LOOK like Venezuela gives two f&*%s about US proposal, but who knows. What if the war ends within the next month? Hey, why don’t you turn on the news, there’s a super-reliable source of information (/sarc).

                   If I were an oil field operator I wouldn’t necessarily see this price action as a good thing since its occurred with a huge increase in volatility. Might it just be easier to buy hedges when those prices are high as opposed to actually pumping more oil?

                9. Two cats,

                   Whether someone changes their behavior depends on their expectations of the future.

                   I am not talking about what happens in the next couple of weeks but the long term trajectory of oil prices. Buying hedges only makes money if one can accurately predict short term oil price movements (a suckers bet). Short term business decisions are closely tied with long term expectations. The decisions made by an oil producer who expects long term oil prices between $100 and $120/b will be different from the decisions of a producer who expects future oil prices in the $50 to $60/bo range. The first will expand output and the second will not.

                10. Two cats,

                    Whether someone changes their behavior depends on their expectations of the future.

                    I am not talking about what happens in the next couple of weeks but the long term trajectory of oil prices. Buying hedges only makes money if one can accurately predict short term oil price movements (a suckers bet). Short term business decisions are closely tied with long term expectations. The decisions made by an oil producer who expects long term oil prices between $100 and $120/b will be different from the decisions of a producer who expects future oil prices in the $50 to $60/bo range. The first will expand output and the second will not.

                11. D. Coyne – exactly my point. Even if oil stays above $100 for six months, it’s still born out of crises. No legit business would make decisions based on that potential scenario. So you could have an interesting set up where NO surplus country/company turns on the spigot (based entirely on self-interest and flagging economics) and oil goes incredibly high. We will find out soon enough.

                12. Two cats,

                    My guess is that some operators will be tempted by the high oil prices, different people have different tolerances for risk. If suppy is inadequate prices continue to rise until demand is destroyed in the absence of any supply increase.

                    It will be interesting to see how it plays out. There will be a narrow window of 7 to 9 years or so that oil prices will be high, waiting a year to drill new wells leaves money on the table, but only if I am correct (which is not very likely). No doubt Shallow sand is correct and he has been in this business for a long time and obviously it would be his money on the line. His business is high risk/high reward by nature.

          2. Sorry Bob.

             I will adjust that.

          3. Bob Meltz,

             I think the difference in 2020 was that the price dropped to below lease operating expense, there is a thresh hold that was reached that had rarely(or maybe never) been seen. Certainly a negative price for WTI is rare.

             In 2008 real oil prices dropped to $47/bo (2021$), in 2016 oil prices dropped to $32/b (2021$) and in 2020 they dropped to $18.50/bo (2021 $). These are average monthly prices for the lowest monthly price in those 3 years.

             Chart below has the monthly percentage change in the real oil price (adjusted for inflation), the biggest monthly drop since January 1974 was in April 2020 at 41%, in 2008 the biggest monthly drop in real oil price was 30% and in 1886 there was a 27% monthly decrease in real oil price.

             

          4. Chart with US real imported crude oil prices in 2021 US$/bo.

             Data from EIA at link below

             https://www.eia.gov/outlooks/steo/realprices/

             

    3. Bob,

       I think you may now be able to approve your comments. Note that you may have more than one user name in the system, so the dumb software doesn’t know you under both names.

       A longer term chart of World C plus C from Jan 1973 to November 2021, there have been many big drops in the past, the biggest in 1979 to 1982 (Iranian revolution and Iran-Iraq war) a severe supply shock.

       

       1. Thanks Dennis,
          Great chart above. Quite enlightening to see how much global oil production has been able to increase over the last 40+ years. I know we’ve had alot of informed discussion about whether the peak in late 2018 is “The peak” or will we ever exceed that. I give it about a 70% chance that we will never exceed it.

          1. Bob Meltz,

             You’re welcome. If oil prices remain near current levels (say $100 to 120 per barrel in 2021$ for Brent Crude) my odds for 2018 (12 month centered average) being the ultimate peak for World C plus C output would be more like 3 in 10, I expect that by 2025 we will see a new peak and that the ultimate peak will be 2027/2028 at around 87 Mbpd (say +/-1 Mbpd).

       2. World chart for centered 12 month average of C plus C output, if output were to continue to increase at the rate of the past 12 months until July 2022 and then revert to long term rate of increase of 800 kb/d per year in August 2022, we would see a new World peak in the centered 12 month output for C plus C in November 2022. Note that I doubt output will rise this fast, I expect the rate will slow after November 2021 and we will not see a new centered 12 month peak until 2024 or 2025.

          

12. The oil will flow .
    https://www.zerohedge.com/markets/biggest-commodity-trading-houses-west-continue-buy-russian-oil-and-gas
    https://www.pehalnews.in/oil-supertanker-from-russian-port-to-dock-in-southampton/1749175/

13. Hole in Head

    Your comments on this. The longer article is behind the paywall of Zero Hedge

    https://remarkboard.com/m/wall-street-stunned-by-zoltan-pozsar-s-latest-prediction-of/1ghgr5npz7eph?fbclid=IwAR2xdVbvBr8eIv2XskE8NHcacDyh3KYki_DJKW_4AzzYmDmmn9bVE7EzdmQ

    More than a week ago, when looking at the latest price dynamics in the commodity sector in general and oil in particular, where Russian-produced oil was suddenly toxic and could not find a willing buyer anywhere in the Western world despite record discounts while non-Russian oil hit the highest price since 2008, we summarized this dynamic as “Russian oil bidless, non-Russian oil offerless”

    One day later, one of Wall Street’s most respected voices, Credit Suisse repo guru (formerly the NY Fed’s most erudite expert on market plumbing) Zoltan Pozsar took this analogy and extended it into a lengthy explanation why the disconnect in the commodity world between “Russian” commodities (and as a reminder Russia is one of the world’s biggest exporters of raw commodities) and “non-Russian” commodities has set the stage for a “classic liquidity crisis” as the world suddenly finds itself locked out of trillions in commodities that serve as collateral in subsequent monetary transformations which are critical in keeping the existing financial system well-oiled (so to speak) and whose absence could lead to unprecedented shocks across virtually all asset classes (that is a rough summary, for a much more detailed explanation see here) .

    1. Seppo etc , This post by Tom Luongo goes deeper into the subject . Interesting his is take on the crisis if the nickel market . How many here know that LME is Chinese owned ? Not me , till I read this article . OFM etc , yes the Chinese are playing the long game .
       https://tomluongo.me/2022/03/13/ins-outs-whose-money-is-it-anyway/

    2. Zero Hedge is a Russian propaganda outlet. It isn’t surprising that they are claiming the sky will fall if Russian exports are boycotted.

       1. ZH is a news aggregator just like Naked Capitalism and The Drudge Report . It does not make the news or have an opinion , just reports it . Yes , maybe what it reports is not to your liking but “Tyler Durden ” does not care .

14. Tks , Seppo for bailing me out . Some here say my identity is appropriate for my comments . Who said this ? ” It is a tragedy to be ahead of your time ” . I think it was my Guru Matt Simmons but I could be wrong . Be well .

15. Looking beyond the situation in Ukraine. And where to next for global economy. The US treasury yield curve is extremely flat and starting to invert at the long end.

    FED hasn’t even done the first rate hike yet an yield curve is about to invert. And only 26 basis points between the 2’s and 10’s

    We going to get a credit event and the high yielding nongovernment bonds like shale oil uses. Yields are going to blow out and cause carnage in the financing of shale oil and gas.

    1. HHH,

       At current oil prices, tight oil can self finance out of operating cash flow and still would have plenty of excess cash to pay down debt quickly.

       1. Well prices won’t stick around in a recession Dennis. I implied that when I said credit event. Yields are going to blowout in HY corporate bonds equals credit squeeze or money cut off and it also means much lower oil and other commodity prices.

          So no they won’t be able to self finance out of cash flow.

          1. HHH,

             If demand falls the oil won’t really be needed, in the unlikely event that your predictions are correct.

             It’s always a severe credit crash right around the corner from you, as long as you say this every day for 20 years or so, you might one day be correct.

             1. Just look at a 15 year chart of HYG (High Yield bond) and you will see that HHH is not making this up. It’s in the process of happening. Great Recession, Covid collapse. Will this be a bigger unwind than the end of the First Shale Boom? That remains to be seen, but its already gotten very serious in High Yield / Shale Oil Financing space. The mistake people make is that this is somehow going to “end the world”. Sorry, this bullshit is going to just keep getting worse day after day, but only slightly.

                1. FED’s interest rate hikes are going to invert yield curve. And bring on recession. As banks can’t make money borrowing on short end and lending on the long end.

                   And it’s going to happen rather quick. And only solution they will have is to take nominal interest rates negative. To un-invert the yield curve. Otherwise a whole lot of debt is going to be defaulted on.

                   They will get the cover to take interest rate negative when prices have crashed to much lower levels. This is going to be messy.

                2. Absolutely agreed HHH. Interest inversion is definitely in the cards. About a month ago I was expecting it within the next year, but now… 2s and 10s is within 0.2%! Whenever it inverts a recession is almost always to follow.

                   Expect Long-Dated Bonds to be the winners in this environment. Anyone still Long Equities, High-Yield, Tech, Discretionary is either not paying attention or is just a HODLer. Btw finally got the correction you were looking for in Energy. Probably not going to $80 at this point, but the sentiment was correct (if not the price action – which is why I never make price predictions).

                3. Interest rate spread 10 year to 2 year maturity from link below

                   https://fred.stlouisfed.org/series/T10Y2Y

                   Note that this has been happening from time to time since 1976, when the spread becomes negative a recession usually follows.

                   Click on chart for larger view.

                   

16. Russia seeks military equipment from China after Ukraine invasion

    This may not be the right place for this headline. Just hoping it may be a hint that there could be a peace agreement shortly. Difficult to believe that P miscalculated so much. Did the generals lie to him or just didn’t know what their capabilities really were?

    https://www.reuters.com/world/russia-seeks-military-equipment-china-after-ukraine-invasion-reports-2022-03-13/

    1. Ovi,

       It is unclear that China would want to piss off the West. Russia is a tiny market by comparison to the west and sales of arms to Russia might result in sanctions imposed on China as well, from the Chinese perspective it might not be a risk worth taking.

       1. Dennis

          I agree. My point is that this huge country takes on this small neighbour and after two weeks of fighting starts to run out of armaments and supplies.

          The downside of this is that maybe they thought building up their nuclear arsenal was enough.

          Just trying to understand the full significance of that request. Imagine how embarrassed Russia would be if the Ukrainian forces could rout the Russians.

          1. Ovi,

             Difficult to predict how this will go.

             1. I think it’s pretty safe to predict that it won’t end quickly. So in that sense, to replay to Ovi, Putin either miscalculated, or he decided that now was the best chance he had, because the odds of victory were getting worse. Or Both.

          2. Iraq invasion should be considered the model for how these wars are going to go. Countries are perpetually getting hemmed in by narrowing rates of return – the world is just too globalized and interconnected for countries to gain any sort of “competitive advantage”. For many countries, their bloated militaries are the only button they have left to push. So why not “Push the Button” and see what happens? Russia is seeing the same results as the US – failure to seriously reorder the board. For the US victory was only important for the NeoConLibs. For the military manufacturers chaos is the preferred outcome. Maybe Russia could turn Ukraine into THAT for the Chinese – trade oil for arms and (otherwise sanctioned) goods and you have a virtuous cycle bathed in blood.

          3. There’s a very real possibility, according to some very real intelligence experts, that Putin is living in a bubble surrounded entirely by yes men, including generals, who are afraid for their careers if not their very lives, to tell him anything he doesn’t want to know.

             And if he really is on high doses of steroids to control a medical issue such as some cancers…… well, ‘ roid rage is a very real thing too.

             I wouldn’t be at all surprised if Putin’s advisers are in the same position as people reporting bad news to Hitler during WWII…… doing so was a fast way to find yourself out of the warm, well fed, and ( most safe until near the end) inner circle and out someplace in the cold, hungry, getting shot at……. if not just shot out of hand.

             1. Perhaps true, but it also entirely possible that Putin is not on steroids and that as the authoritarian leader of ‘his’ country,
                he is proceeding with his big goal of re-establishing the Russian empire regardless of borders, treaties or the wishes of other countries.
                And to him it is entirely rational, reasonable, within his established powers, and with the belief that he has taken other positions into account.

                As you say, the inner circle to authoritarians must be above all else loyal to the whims of the leader regardless of truth, laws or ethics.
                Goes for Putin, just as it did for Trump.

                1. Not everyone is a savvy operator like Shoigu. I’d say the pre-invasion dressing down of the foreign intel. director for the FSB which was recorded and deliberately broadcast, indicates the issues with Putin’s inner circle. He even shouted down the PM twice when discussing potential sanction threats if going through with the invasion.

                   Putin is no fool, yet he seems to have bought into his own propaganda which may have been enforced by surrounding himself with yes men. On top of the decrepit way they run the military like some mafia protection racket, it’s not really surprising we’re seeing some hard limits on force projection come about after the blitzkrieg idea totally failed to garner a quick surrender by Zelensky. Ukraine just needs to prolong this and let sanctions bite and whittle away at ever more Russian material and troops with NATO support. There is no permutation of this that delivers a win for Putin. If he takes Ukraine, he can’t hold it. If he’s really lucky, he gets The Troubles: Slavic Edition. But more than likely he gets mass insurrection and civil war for his new annexed property.

             2. Medical steroids are the opposite of body builder steroids. But they can result in excessive optimism about one’s own abilities (look up hypomania rather than ‘roid rage) . That is, he may have wildly overestimated the likelihood of rapid success. He sure doesn’t look well.

             3. It is very unlikely that steroids explain the behavior/decisions of Putin.

                Much more likely he is just acting in accordance with his belief system. It may seem ludicrous or nutty to us, but to him the decisions are entirely coherent with his ideas on how history and the world is structured.

                Look no further than the US for bizarre examples of such a thing.
                In 2016 the republican voters en masse looked at the slate of republican candidates onstage and made an absolutely bizarre selection for president- Least qualified, least dignified, least trustworthy, least ‘tested’, and least respectful of US traditions of democracy and international relations.

                Don’t tell me all those voters were on steroids too.

       2. Not sure about that, one thing for sure, China will be happy to get gas and oil from Russia at a great discounted price, and even wheat. And in the process it can continue pushing manufactured products to the west.

       3. Hi Dennis,

          If there’s one continuous thread in Chinese culture, it’s probably that they think long term.

          The Chinese used to mind their own business……. due to a desire to be peaceful according to naive but well intentioned idealists in the West…… but because they lacked the capacity to play the empire game……. until recently.

          The Chinese economic model, in the fewest possible words, is to import damned near anything and everything, in the largest possible quantities, and keep the people happy, working and living better over time, exporting damned near anything and every thing in the way of manufactured goods.

          Now they have the opportunity to get the Russians by the balls, and cut deals enabling them to have dibs on just about everything that REALLY matters, in exchange for supplying Russian needs.

          Russia has more minerals, more oil, more farmland, etc, than just about any other country in the world…… and China wants to control that supply.

          And these days…. they have both the opportunity and quite possibly the power to do so.

          The Hill is a lousy messenger, but you should always listen to messengers before you dismiss the message out of hand.

          https://thehill.com/opinion/international/597943-putin-and-xi-look-to-beijing-for-the-real-reason-behind-the-ukraine

          1. OFM,

             China needs to balance the need for imported raw materials with a very large export market (US and European Union) that they may alienate. There are plenty of places that China can get their raw materials besides Russia, but there are not many export markets as large as North America and Europe.

    2. Ovi , PSCYHOPS . The sources is as usual leaked reports ( who leaked) and the media involved is WaPo and NYT . In the meanwhile the Chinese ambassador in Washington says ” Never heard of that ” . Trash .
       https://www.zerohedge.com/geopolitical/russia-urging-chinas-military-help-ukraine-biden-admin-says-sunday-afternoon-media

    3. I wonder if the request for military equipment is related to the stories about improper maintenance of vehicles (and particularly tires), resulting in a large number of sidewall failures. I actually have experience with Chinese tires. I purchased my Yaris used from a Toyota dealer, and the tires had just been replaced with Chinese ones. I didn’t give it any thought at the time. 3 years later, there was plenty of tread left but there were cracks between the treads and in the sidewalls, and I had to replace them.

       If this is typical of Chinese rubber chemistry, it explains the tire failures, and to some extent, the logistical/ maintenance problem, in that they expected the tires to last longer (though of course they should have tested the tires).

       Perhaps it’s not a purchase order at all….maybe it’s a giant warranty claim.

       1. Still have my original tires on Yaris (I do put winter tires on) after 165,000 miles.
          Dealership did say the fronts needed replacement soon.

       2. It’s possible it’s more to do with precision guided munitions. The use of Iskanders that suddenly hit residential blocks hundreds of metres from anything potentially to be targeted means their ability to project accurate strikes is severely limited. Some would say that’s a feature not a bug now, if you want to just raze everything and terrorise the populace.

          Of course, if giving up on taking Ukraine and moving to scorched earth is the game now, that’s even dumber. The West will simply replace all that is lost with newer equipment, and NATO is already seeing the limits of Russian equipment and training in this current war post-massive doctrine changes. Syria and Chechnya and Georgia were nothing like a true war with a peer power as we see here, so it’d be like the US going into WWIII with only the tactics and lessons learned from asymmetric MOUT ops. in Fallujah or Kabul, rather than true modern warfare.

    4. Ovi , clearing the fog of war . China is the second biggest importer of arms and ammunition from Russia . India is number one . So now Russia seeks military equipment from China ??? . Trash .
       https://www.statista.com/statistics/1102702/countries-where-russia-is-a-major-arms-supplier/
       https://www.statista.com/statistics/1102701/russia-main-destinations-of-arms-exports/

17. HIH

    Could be, but I think there is some truth in this one. Don’t forget, Russia is asking for Syrian fighters to come and help him.

    Also, this was supposed to be a walk in the park for P. We will have to look for more clues to see what the real story is.

    1. Syrian fighters ? Another piece of trash . Just like 16,000 fighters coming from Syria to fight for Zelensky . Disinformation wars . He doesn’t need Syrians. He has the Chechen brigade still on standby . 10,000 strong and bloodthirsty, boy they do know how to clean up a mess . Mr Putin reads SunTsu .

       

       1. Putin ordered to bring in mercenaries from Syria. That’s a fact. https://www.reuters.com/world/europe/putin-says-volunteers-welcome-help-fight-against-ukrainian-forces-2022-03-11/

    2. Hole in head is particularly vulnerable to PhsyOps by authoritarian sources, given his preference.

18. Ovi , the West has no strategy and no tactics . The interests of USA , Europe and NATO are conflicting that is why poor decision making .

19. So markets have decided the ukrainian and oil crisis is over. Peace everywhere, supply chains work again and oil is plentiful available.

    Wallstreet…

20. I used to refer to myself as the token conservative here, as best I can remember, and on some other sites as well.

    My values and my votes generally belong to the left liberal establishment, but this does NOT mean traditional conservatism ( NOT the same thing as t RUMP and present day American Republican Party style conservatism, which is mostly just plain old fascism) is all bullshit…… a critical fact that most liberals somehow conveniently manage to forget these days.

    One thing old time Democrats up until a few decades back, and Republicans, up until fairly recently, understood and acted upon is the fact that history isn’t over, and that countries such as Russia ( former USSR) and China will use their economic and military power to get what they want, assuming they HAVE sufficient power to do so.

    Sometimes publications such as The Hill run pieces that make one hell of a lot of scary sense.

    This is one of them…….

    It’s about the long term economic and political interests of China, and how China can take advantage of the current political and economic landscape.

    It absolutely applies to any informed understanding of the oil market, medium and long term. Ditto other natural resource markets as well.

    https://thehill.com/opinion/international/597943-putin-and-xi-look-to-beijing-for-the-real-reason-behind-the-ukraine

21. I wonder to what degree the Russian invasion is a resource grab. Russia and China entered into a long term supply contract just a few days ago:
    https://www.reuters.com/world/asia-pacific/exclusive-russia-china-agree-30-year-gas-deal-using-new-pipeline-source-2022-02-04/
    So it would make sense to send gas in from the east to China.
    https://www.naturalgasintel.com/could-russia-look-to-china-to-export-more-oil-and-natural-gas/

    Ukraine has tons of resources:
    https://en.wikipedia.org/wiki/Natural_gas_in_Ukraine
    and already has the pipeline structure in place so it would make sense to grab them and sell them to Europe.
    https://www.businesstoday.in/latest/world/story/are-ukraines-vast-natural-resources-a-real-reason-behind-russias-invasion-323894-2022-02-25

    It is unlikely that this is 100% of the reason for Russia’s adventure but it very well may play a part.

    Rgds
    WP

    1. I have also wondered about the resource grab and it works both ways. We know that the Iraq war was about oil. It did not matter that the West did not occupy the country permanently, as long as the oil began to flow and with petrodollars at play USA would still manage the world financial system. That is what the discussion between Grant Williams and Luke Gormen to which I provided a link above was about. So, the western powers wanted to bring Ukraine into its orbit and later try a regime change in Russia. That would have opened up the resources of Russia to the world even more than now. At the same time they would have eliminated Putin and liberated the Russian people from the oligarchs. Of course this would have introduced them to a new kind of kleptocracy such as we have in the west where income inequality has grown greatly. That is, the west is great at stealing the future from ordinary folks. It is not done at a gunpoint but in a very sophisticated way, and ordinary people are not in the position to connect the dots. “You own nothing and you are happy”, as Klaus Schwab and the Devon crowd is propagating. We are heading to a new feudalism.

       1. Oil on water.

          

          1. Tks Seppo . I was going to post a request to you and Pollux for this info . Looks like we are using 3 mbpd per day from inventory so 85/3 = 28 days and then what ?

       2. This guy basically thinks Russia is dying from within. First I’ve heard of him, anyone here?

          https://www.youtube.com/watch?v=gj7irIrmN0Q&ab_channel=ZeihanonGeopolitics

    2. From frequent reports of Ukraine needing gas from Russia in the past, it would seem that Ukraine is not self-sufficient in energy from its own reserves. Thus Ukraine would appear to be a net sink of energy resources and thus not a helpful contributor to Russia’s reserves if ‘captured.’. I understand that Russia has actually increased gas transith through Ukraine to supply Europe during the crisis, and presumably Russia is still paying the transit fees and Europe is paying for the gas delivered. Interesting times.

       1. Agree but it is not clear why that is the case. It does not seem to be a case of lack of resources, but more one of a lack of resource development.
          rgds
          WP

22. I think the tide is turning on prices. Dollar funding is coming under pressure. It’s starting to get scarce. Rate hikes will amplify dollar scarcity.

    Hong Kong is a dollar based goods center. And you can visually see dollar’s becoming a problem in the exchange rate. I believe that peg brakes within a year or so as they don’t have the FX reserves to defend it. Mainland China might not be too far behind them.

    A lot of dollars that make their way to China come via Japanese banks. Something I’m also keeping an eye on.

    As the dollar tide turns a lot of people will be caught on the wrong side of the inflation trade. A lot of oil bulls will be left scratching their heads.

    1. Oil volatility.

       The only thing regarding oil prices that I am willing to bet on.

       1. Shallow sand,

          A safe bet indeed.

          

          1. Option and future games at work – lot’s of traders bought short term calls, when the first too much sells a stampede is triggered.

             Stampede up, stampede down, stampede …

             1. There’s normal oil volatility, and then there’s this – which is double normal oil volatility. Real volatility is still above market perception which is usually dangerous waters. Still, the bullish bets are beginning to pile up with such a huge correction (technically it just crashed!). Glad that’s not my job. But oil companies should definitely definitely hire dozens of workers and drill tons of wells – I want to fill my tank up for free!

    2. https://www.wsj.com/articles/saudi-arabia-considers-accepting-yuan-instead-of-dollars-for-chinese-oil-sales-11647351541?mod=lead_feature_below_a_pos1

       “Saudi Arabia is in active talks with Beijing to price its some of its oil sales to China in yuan, people familiar with the matter said, a move that would dent the U.S. dollar’s dominance of the global petroleum market and mark another shift by the world’s top crude exporter toward Asia.

       The talks with China over yuan-priced oil contracts have been off and on for six years but have accelerated this year as the Saudis have grown increasingly unhappy with decades-old U.S. security commitments to defend the kingdom, the people said.

       The Saudis are angry over the U.S.’s lack of support for their intervention in the Yemen civil war, and over the Biden administration’s attempt to strike a deal with Iran over its nuclear program. Saudi officials have said they were shocked by the precipitous U.S. withdrawal from Afghanistan last year.

       China buys more than 25% of the oil that Saudi Arabia exports. If priced in yuan, those sales would boost the standing of China’s currency.”

       Rgds
       WP

23. Straws in the wind.

    https://www.huffingtonpost.co.uk/entry/nazanin-iran-prisoner-boris-johnson_uk_62306a82e4b0d1329e8a7a62

    Rumours are that the UK government has paid the debt for those cancelled tanks. I can’t believe they would do that without getting approval from the US first.

    My money is on a new deal with Iran fairly soon. And it looks to me that the markets are pricing that in with recent falls in the oil price.

    1. The Saudi’s, Iran and any potential Venezuelan oil can’t cover the expected shortage of Russian oil even if they tried. Yet WTI is under $95 again.

       1. Just read financial press: They just need to “pump some more” and the problems are solved.
          That’s priced in in the markets.

       2. HHH,

          Unclear at this point. Russian oil may be sold to China reducing imports to Chimne from elsewhere. Also Europe is still importing Russian oil at present, the amount imported by the US is relatively small in comparison. Iranian increase in output, plus increased tight oil output and perhaps some increased Venezuelan output along with Canadian, Brazilian, and Norwegian, may keep World oil prices in the $90 to $110 per barrel range, as long as central banks have modest rate increases, inflation may be kept under control without a severe recession.

          1. My concern is prices don’t react to the first couple of hikes. Then they keep going and at around the 4th rate hike the yield curve inverts.

             And prices react to the inverted yield curve.

             1. Yes, it’s the old Coyotee problem (from roadrunner): He always manage to stay in the air too long, to ensure the most painful fall.

                That’s what the stock market always manages, too – the central banks are increasing, stocks have all “priced in” and keep rising – and then everything crashes very fast.

                Hikes are “priced in”, Ukraine is “priced in”, sanctions and counter sanctions are “priced in”, global supply chain chaos is “priced in”, commodities chaos is “priced in” – until it isn’t, and money for plunge protection runs out.

                Then the central banks have to slash to zero and start a new, even bigger, QE. Or even first time intervention on stock market – the last time they only got until junk bonds.

                1. I don’t rule out another spike in oil prices depending on news coming out of Ukraine.

                   But central banks are playing with fire raising interest rates.

                   My guess is 4 rate hikes this year brings 10 year under 1% flipping entire curve.

                   At first the 10 year will steepen a bit before it rolls over.

             2. Hey, here is something maybe we agree on. The war and new geopolitics is going to cause more supply constraints. Demand is hot. Unemployment low. Inflation hot and interest rates very low at the bottom of the scale. Analysist calling for 4 to 7 rate increases by year end and the Fed behind the curve.

                The Fed in my opinion should go half a percent this week and make a statement inflation is not going to be ignored. I expect the Fed to only go a quarter percent.

                1. I don’t think we agree. FED is raising interest rates for all the wrong reasons. I’m mean really how do you cure supply side shocks with interest rate hikes?

                   You can’t bring more oil to the market by hiking rates. You can’t bring more natural gas to the market by hiking rates.

                   You can crash prices by inverting yield curve though. Going to be a lot of damage in credit markets though.

                2. HHH,

                   I tend to agree on this point, though politically high inflation is all that is mentioned on the news about domestic politics, the Fed will likely take some action, though probably only a quarter point at a time and see how the economy reacts. You are correct that there is a good chance the rate hikes will be overdone and probably will lead to a recession, but maybe Powell will be smart enough to avoid this pitfall and wait for supply disruptions to ease. Going slow is probably the best approach.

                3. HHH,

                   The Fed’s mandate is full employment and stable prices. It’s tools are interest rates and money supply. They can’t drill for oil, mine for gold or grow wheat. All resources are limited and none of them are free. Even the air you breath. Bringing more gas and oil to market is not their responsibility. That balance is for the free market to figure out and it will in time. Higher prices and lack of supply will bring more substitutes and production.

                   Cathie Woods believes long term rates are low because of new efficient technology. That has been driving costs down and will continue in the future. There is always financial pain out there for someone. Two years ago it was oil producers. If we are at peak oil or near, it’s time to face it and not paper over what it means. The credit markets don’t get a free pass.

                   The Fed manages the currency of the United States. By rising rates it will strengthen the dollar and make oil that is traded in dollars more expensive for other countries and currencies. Which then those users will use less of it. Which then in return makes more oil available at a lower cost in the states. Basic Macro Economics 102 for someone with an education on the subject.

                4. HB – But what does Bernie Madoff think? That’s what I want to know.

                5. Good chance dollar sinks after today rate hike. Sell the news. In short term traders view it as the FED not supporting USD asset prices.

                   Only later on when credit start to unwind as yield curve inverts does dollar really start to take off and strengthen.

                   Won’t be surprised to see oil bounce in meantime as a little dollar weakness shows up and things are relatively ok as credit markets haven’t yet taken a big tumble.

                6. Bernie Madoff died a year ago after spending years in jail

                7. Guys , the FED is pussy . Raising 0.25 % . My bet was nothing and they would give the Ukraine crisis as an excuse . Anyway sticking a finger in a hole of the dyke isn’t going to stop the collapse of the dyke with all the margin calls , liquidity problems etc . The FED blinked . Powell is no Volcker . Who said this ” After me , the deluge ” ?

                8. Hair on Fire, the delivery guy,
                   knows best.
                   So he thinks.
                   Nothing new on that.

                9. Hicks , nothing bad happens until it happens to you .

                10. HB – Madoff’s opinion would still be worth more than Cathie Woods.

                11. I figured that was your point

    2. Iran ready to supply required oil for the world market: Official

       Tehran: Mohsen Khojasteh Mehr, head of the National Iranian Oil Company (NIOC), ..

       Read more at:
       https://energy.economictimes.indiatimes.com/news/oil-and-gas/iran-ready-to-supply-required-oil-for-the-world-market-official/901836599

24. Help! Am I losing my mind or is it just mass ignorance?

    The USA is a net oil exporter! The USA exports more oil than it consumes! I keep hearing versions of this from folks who should know better.

    Does the USA not produce in the neighborhood of 11.3 millions barrels per day??
    Does the USA not consume somewhere in the neighborhood of 18 – 20 million barrels per day??

    I get that folks mix ‘energy independent’ with ‘oil independent’. They seldom mention ‘self-sufficient’. Has anyone added up the BTU’s from coal oil gas exports vs. coal oil gas BTU’s consumed? Are we net positive?

    I also get that we export some USA-produced oil, which simply means imports are larger than ‘net imports’, right?

    Is the USA the world’s 2nd largest importer of oil behind China?

    I have to ask because I have looked these numbers up through time. They confirm what I think, we use more than we produce. But energy experts and serious-sounding journalists keep saying the opposite. The discussion out there is non-sensical. After talking about how much we export, they mention we import Russian oil. Why?

    The discussion is all about opening the spigots, and ‘turning on’ production. Climate be damned.

    1. Got2surf, what’s wrong with you?

       Don’t you know 11.3 million is a larger number than 18 million?

    2. Gottosurf

       Here is a partial explanation. A number of reporters/analysts look at what is called all liquids and are ill informed. All liquids includes Crude plus Condensate plus NGLs and ethanol.

       In the accompanying table from today’s EIA’s inventory report, you can see that C plus C is 11,600 kb/d (1). In the NGL part there are 5,733 kb/d of NGLs (16), 1,221 kb/d ethanol (17) (which contains 66% of the energy in a gallon of gasoline) and 984 kb/d (20) of refinery gains due to the addition of hydrogen in the refining process.

       Adding it all up, US all liquids production last week was 19,538 kb/d. Product supplied to the market was 20,652 kb/d, close to 1,000 kb/d more than all liquids. Note that input to refineries was 15,601 kb/d. Gasoline is imported to make up part of that 5,000 kbd difference between refinery input and supplied to the market. Part of the 5,000 kb/d is the refinery gain.

       So as you indicate “opening the spigots, and ‘turning on’ production” is a lot of nonsense. A lot of the liquids are exported since they are not suitable for making gasoline or diesel.

       This just confirms your thinking and possibly explains some of the gobbledygook you are hearing.

       

       1. Thank you Ovi! I’m not insane!

          I appreciate your clear and thorough reply. I thought C C ethanol, etc. had something to do with it. I listened to 2 podcasts last week that brought in ‘energy experts’ to inform the hosts, and us all. We’re being so misinformed! Youtube is a cesspool of intentional misinformation, but these earnest-sounding folks with good acoustics are doing even greater damage to an informed electorate, IMO.

          Speaking of electorate, when we throw out our leaders, and the new leaders can’t ‘open the spigots’, what does the USA do after that? Scary thought for the day.

          1. “Speaking of electorate, when we throw out our leaders, and the new leaders can’t ‘open the spigots’”

             The government does not produce oil. They do control the strategic reserve if that is what you are referring to.

             1. No that’s not what I was referring to. I’ll work on my clarity. Among the popular myths are that the USA has huge amounts of waiting-to-be-developed oil, and we’re choosing not to produce it. The rulers-to-be are campaigning on ‘opening the spigots’ and unleashing domestic production. What happens when domestic production doesn’t rocket skywards, in a time of high energy prices, shortages of goods, general decline.

                1. Thanks for clarifying. I follow. Good question.
                   Everyone will know what post peak feels like.

25. Iraq also getting in on the “we can pump more” narrative. Ironically Russian Run.

    https://oilprice.com/Energy/Crude-Oil/Huge-Russian-Run-Iraqi-Oilfield-May-See-Near-1-Million-Bpd-Output-Boost.html

    1. Let’s see. The Iraq always told the last 10 years to increase production by fabulous numbers, overtaking even Saudi Arabia. It always ended in corruption.

       Now let’s see how fast this field is developed with all these sanctions and export stops to russia will be.

       Iraq can get lucky if they don’t get a bread unrest this year, with wheat export from Ukraine into the arabic world will be cut severly when this war continues a few weeks more.

26. An article from Mr Shellman’s blog . The engineer knows his/ her stuff for sure .
    https://jpt.spe.org/aging-us-shale-wells-years-of-remaining-opportunities-or-growing-asset-retirement-obligations

27. Must read . An exchange between Mike S and SS . Top pick . Both you guys are terrific .
    https://www.oilystuffblog.com/forumstuff/forum-stuff/what-the-hell-question-of-the-day

28. The oil will flow .
    https://indianexpress.com/article/world/india-russia-discounted-oil-offer-united-states-7821819/

29. Good article on Putin and Ukraine at link below

    https://www.newyorker.com/news/q-and-a/stephen-kotkin-putin-russia-ukraine-stalin?utm_source=pocket-newtab

    An excerpt:

    Q:Finally, you’ve given credit to the Biden Administration for reading out its intelligence about the coming invasion, for sanctions, and for a kind of mature response to what’s happening. What have they gotten wrong?

    A:They’ve done much better than we anticipated based upon what we saw in Afghanistan and the botched run-up on the deal to sell nuclear submarines to the Australians. They’ve learned from their mistakes. That’s the thing about the United States. We have corrective mechanisms. We can learn from our mistakes. We have a political system that punishes mistakes. We have strong institutions. We have a powerful society, a powerful and free media. Administrations that perform badly can learn and get better, which is not the case in Russia or in China. It’s an advantage that we can’t forget.

    The problem now is not that the Biden Administration made mistakes; it’s that it’s hard to figure out how to de-escalate, how to get out of the spiral of mutual maximalism. We keep raising the stakes with more and more sanctions and cancellations. There is pressure on our side to “do something” because the Ukrainians are dying every day while we are sitting on the sidelines, militarily, in some ways. (Although, as I said, we’re supplying them with arms, and we’re doing a lot in cyber.) The pressure is on to be maximalist on our side, but, the more you corner them, the more there’s nothing to lose for Putin, the more he can raise the stakes, unfortunately. He has many tools that he hasn’t used that can hurt us. We need a de-escalation from the maximalist spiral, and we need a little bit of luck and good fortune, perhaps in Moscow, perhaps in Helsinki or Jerusalem, perhaps in Beijing, but certainly in Kyiv.

    1. I disagree with the conclusion that putting pressure on Putin is unnecessary and risky. Since the start of the conflict, Russia’s demands have diminished over time. At first they demanded surrender, the complete demilitarization of Ukraine and the removal of the current government. Now, after the loss of at least 1404 vehicles of all types, 13 planes, 32 helicopters, some other equipments and something like 7000 men with the addition of the stagnation of their offensive (they even retreated west of Kherson, the Ukrainian army is now about 20 km from Kherson) and economic sanctions, they have forgotten the idea of ​​overthrowing the current government and they propose a status of neutrality like Sweden or Austria.

30. Some 15 years ago Matt Simmons helped organize a conference in Washington (if memory serves) and the Saudi representatives said that SA will not peak in production before about 2035, implying that the world oil peak would still be 30 years into the future. Is the world better off if they are right, as then world population would be about 9 billion? Well, we would fall down from a higher level and we would be better off by keeping the production level steady and not attempt to drill more.

    On the other hand if the peak oil was in 2018, then we ought to encourage production and thus decrease the rate at which we are falling to the pre-industrial conditions.

31. Seppo , with respects ” then we ought to encourage production ” . of what ? How can you increase production of that is not available or to avoid an argument which is financially unviable ? The problem is the world is still in phase 2-3 of the ” five stages of grief ” . Denial (technology will save us ) and bargaining ( we will switch to EV’s and renewables , just give us time ) . Better they go to stage 5 which is acceptance or else they are going to be headless chickens . Sorry , again repeating myself ” The music is playing but the party’s over “

    1. HIH that was a thought experiment.

       Here is the latest from IEA via oil_price dot com

       https://www.youtube.com/watch?v=_Us2GpDe3tw&t=3s

       1. HSBC pledges to “phase down” its financing of the fossil fuel industry, sending a warning to oil and gas clients as the bank works toward its target of net-zero emissions

          at Bloomberg behind paywall

32. So what’s going to happen now, with Russia shutting down the Westward flow of Oil? My take is India’s going to suck it all up on top of what they’d already been landing, and per Brown’s law (Export Land Model), the windfall effect of sudden cheap and available gas all across India will be that they’ll continue to suck it up and cough up many more rupees than anyone else will dollars – the Indian Golden Age might be nigh. The Chindia black hole is becoming reality.

    What has the effect of the sanctions been, but to satisfy the Green Agenda? Europe will have no choice but to bid for oil and pay through the nose. Ever hear the phrase, cutting off one’s nose to spite their face? The repercussions of this shut off will be far reaching. I can only hope their “science” will help them.

    1. I think this is a deserved wakeup call. The more countries do now to get rid of oil, the better. Being lulled by a discount oil import can be very bad on the long run.

       Europe can pay the expensive oil – others have problems. Perhaps they have to cut back a little bit on some favorite projects like taking millions of african refugees and lift them to European living standards.

       The US fracking oil will flow in optimistic sceanarios 15 years – then it’s gone, together with many OPEC giant fields.

       Then oil will get scare – scare and expensive if too many countries doesn’t do their homework. India has all geographic possibilities of solar energy (and already begun), and the near Nepal has gigantic hydro power possibilities, both generating and storing. Now it’s a question if the money get’s invested into new infrastructure or corruption.

       1. Eulen , how will Europe pay for the expensive oil if it is shutdown ? Copy of my post on an earlier post .
          I have an increasingly gut feel right now that we are heading towards a Synchronized System Failure . Too many black swans flying right now .
          HOLE IN HEAD
          IGNORED
          03/09/2022 at 3:34 am
          HHH , sometime ago you had forecast a collapse of Europe manufacturing industries . Just an update for those who may not be aware of what is happening here .
          1. Paper manufacturing . Full stop . Finland to Italy .
          2. Aluminium . 30 % full stop . The rest operating at minimum operating level
          3. Steel . 30 % full stop . The rest operating at minimum operating level . Besides energy chinks in the supply of chromium, vanadium , nickel etc without which special steels cannot be produced . Since the special steels are short the forging industry is in trouble .
          4. Fertiliser running at 60% capacity . Basically minimum operating level . Yara the biggest producer actually wanted to go ” full stop ” . That would have been a disaster for food . The govt stepped up to share the extra costs of electricity and gas .
          5. All 24/7 continuous process industries are teteering because of high electricity and heating bills .
          6 . Casting industry will function till there is inventory of pig iron , now stopped as it was coming from Ukraine and Russia . Other source is China and we know the bottlenecks there .
          7 . V/W , BMW cut down production , as a matter of fact 2-3 of their facilities are shutdown . Reason , both depended on a single supplier of wiring harnesses based in Ukraine . Second they were procuring some simple semi conducters from Russia . Banned .
          Medium and small scale factories are getting eye watering electricity and heating bills . Difficult situation .
          Tier 1 consequences . How long before the dam breaks ? Europe is now chewing on its inventory and reserves .

          1. HiH,

             Have you any references for your production numbers?

             Thank you.

             1. Jonathan , here are the links .
                1. Fertilizer
                https://www.echemi.com/cms/357764.html
                2. Aluminium
                https://www.intellinews.com/power-crisis-takes-its-toll-on-energy-hungry-aluminium-producers-233619/?source=montenegro
                3. Steel
                https://www.thelocal.com/20220310/spains-steel-plants-close-over-soaring-energy-prices/
                4. Paper
                https://www.breakinglatest.news/business/gas-costs-are-putting-more-and-more-paper-mills-in-crisis-progest-continues-with-the-closure-of-many-factories
                5. Auto industry
                https://www.cnbc.com/2022/03/16/russian-ukraine-war-to-lower-car-production-by-millions-of-units.html
                6. Casting industry : This is my conversastion with the works managers of two transnational corporations in the textile industry ( Picanol and Van De Weile) . They have their own foundries to cast the frames . They also do a lot of castings for railways and defence . This right from the horse’s mouth .
                7 . Eye watering electricity and heating bills .Result of my conversations with various small and medium companies .
                Now some additional information on UK .
                https://www.autoexpress.co.uk/opinion/357283/uk-car-production-has-been-brutally-cut-50-just-five-years
                On the whole the UK industry cut is by 20% because of shutdowns due to high energy costs .

    2. Matt- so you are saying that India has spare refinery capacity to take in more crude oil?
       From what i see they are operating at somewhere between 90-100% capacity as covid affects subsides.

       1. Hickory,

          It is possible India can import discounted oil from Russia and reduce its imports from elsewhere, this would occur as long term contracts expire or if India chooses to break some existing contracts that have not yet expired.

          1. https://i.ibb.co/ygM7bzS/7-D37-B4-A0-0-EC0-4363-B4-DB-D17-EB60-F55-E8.jpg
             Here’s a fun graph- see how india is a black hole for product production.

             1. Mark In , all countries the brown line is longer than the blue line except in the case USA . Any explanations ?

                1. Yes, america imports the highest quality fuels and exports the lowest.

       2. I had neatly overlooked the refinery step with my tongue in cheek post. I’m sure there’s ways to circumvent the embargo and ship their incoming non-russian oil someplace else …

       3. Hicks , they also have to top up their SPR . They released about 7-8 million barrels from the SPR in co ordination with Biden’s call . The army is pissed about this . Indian army stands eyeball to eyeball against the Chinese and Paki armies .

33. An oil article, in the Atlantic of all places, discussing sweet v sour, heavy v light…

    https://www.theatlantic.com/science/archive/2022/03/russian-oil-sanctions-gas-prices/627074/
    (subscription required?)

    >> The Gulf Coast had then [late 2000’s], and still has, the largest fleet of oil refineries in the world, and firms began preparing these refineries for decades of heavy, sludgy imports. Today, America’s 129 refineries excel at converting heavy, sulfur-ridden fuels into usable mid-grade fuels such as diesel.

    Which is kind of funny, because the forecast that justified their construction—that the U.S. would eventually depend on cheap crude oil from abroad—proved false. <<

34. https://www.theatlantic.com/science/archive/2022/03/russian-oil-sanctions-gas-prices/627074/
    (subscription required?)

    >>
    The Global Oil Market Is Based on a Fiction
    – What we call petroleum is more like a category of chemicals than a single thing.
    …
    The Gulf Coast had then, and still has, the largest fleet of oil refineries in the world, and firms began preparing these refineries for decades of heavy, sludgy imports. Today, America’s 129 refineries excel at converting heavy, sulfur-ridden fuels into usable mid-grade fuels such as diesel.

    Which is kind of funny, because the forecast that justified their construction—that the U.S. would eventually depend on cheap crude oil from abroad—proved false. <<

35. 10 tankers with Russian oil come to US Ports . The oil will flow .
    https://gcaptain.com/russian-oil-cargoes-rush-to-beat-united-states-ban/?subscriber=true&goal=0_f50174ef03-e1a80c88ce-169616737&mc_cid=e1a80c88ce&mc_eid=647eb6290c

36. American production is collapsing. The eia production plus net import plus stock loss is 300k bpd less than refinery input.

    EIA data does not mathematically reconcile and ignores the obvious collapse in consumption. The eia reports end user gasoline sales collapsing.

    https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=A103400001&f=M

    EIA data doesn’t mathematically reconcile with itself.

    1. Small plausibility check:
       The last 15 years gasoline sales fell from 60 million gallons to 20 million gallons?
       I don’t know what this curve says, but it has nothing to do with oil consumption.

    2. That is: U.S. Total Gasoline through Company Outlets. That means oil company outlets, or service stations owned by oil companies. That is Valero, Lukoil, and other such company owned stations. That volume has been dropping for years as oil companies have been getting out of the retail business. The vast amount of gasoline sold in the USA is sold through franchise owned or privately owned station that do not own any refineries or oil fields. Their sales volume has been going up while Oil Company owned stations have been going down.

       That data at the link you posted has no relation whatsoever to total US gasoline sales.

       1. The real value of the gasoline sold is also collapsing, down 5% over year.

          https://fred.stlouisfed.org/graph/?g=N4ac

37. US gasoline consumption from

    https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MGFNTUS2&f=M

    and

    https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MGFRPUS2&f=M

    I take finished motor gasoline refiner and blender production and add net imports of finished motor gasoline.

    The chart is the centered 12 month average in kb/d and ignores stock changes, which over the long term are roughly nil. This is an approximation of US motor gasoline consumption from 1960 to 2021 (12 month average).

    

    1. Dennis it’s strange that diesel production is almost flat over year.

       1. Mark,

          Not as big a dip in diesel because trucks still had to roll, but many cars remained parked as many people stayed home due to pandemic.

          1. Dennis, lets do some simple math. America has 1 million semis that go 50k miles a year at 5mpg. Thats 1 million barrels per day. The vast majority of diesel consumption goes to agriculture. Its mathematically impossible for the 5m BPD diesel to all go to trucks. Reality is that diesel is the higher quality fuel that’s harder to make and the growth of tar and condensate and other useless inputs is impairing the growth of middle distillates.

             1. Mark,

                If we look at statistics from

                https://www.bts.gov/topics/national-transportation-statistics

                For heavy duty combination and single axle (6 tire) trucks and assume all of those trucks were fueled with diesel (true for probably 95% of the fuel consumed) we get 2797 kb/d of diesel fuel consumed in 2019 by heavy duty trucks, when we add buses we get 3137 kb/d of diesel consumption in 2019, total domestic consumption of low sulfur diesel (<= 15 ppm sulfur) in 2019 was about 3951 kb/d ( the low sulfur diesel is now required for on road transport). so 79% of the ultra low sulfur diesel was used by heavy duty trucks and buses in the US.

                Diesel fuel is used in many places besides on road transport such as railroads, home and commercial heating, water transport, military, industrial, fracking, etc. For all diesel fuel (low and high sulfur content) about 67% is used on roads according to the EIA.

                https://www.eia.gov/dnav/pet/pet_cons_821dst_dcu_nus_a.htm

                1. Don’t forget on farm use of diesel.

                2. Hickory,

                   Yes farm use is similar to the level of distillate use for residential use according to the EIA statistics (roughly 5 to 6% of total distillate use for each).

38. Oil is so far as I can see a highly fungible commodity, except when long term contracts are involved….. or when sanctions are involved.

    But I daresay some countries, such as China, will grab any opportunity to buy Russian oil so long as it’s discounted enough to make it worthwhile doing so….. and that wouldn’t have to be a very big discount in my opinion.

    So…. the question becomes this….. If China buys MORE Russian oil, who will buy the oil China was previously buying from other exporters?

    Or will China just stock pile as much oil as possible?

    If Western countries cut way back or go cold turkey on Russian oil, which other countries will buy it, and hopefully buy less from other exporters….. meaning other exporters have more to sell to buyers.

    So.. How long will it take for buyers and suppliers to realign themselves?

    This is not the same question as asking if other exporters will make up any shortages if the Russians deliberately cut back on exports.

    It’s obvious that it would take months at least, and probably a year or more, for the rest of the exporters to up production to make up for substantially less oil leaving Russia…. IF they can……. and it’s not obvious to me that they have the capacity to do so even after a year.

    1. The buyers will be those who were going to buy the other guys’ oil who were going to buy the other guy’s oil, so the russian oil can remain in the market and keep us all burning it all up. The smartest thing to do, it seems, is to burn everyone else’s so mine’s what’s left and can wind down operations more gradually than everyone else will have done.

    2. I see this as more musical chairs than either a call to new production or to stockpile. Russia will lose some money, but that oil will make its way to customers. Those customers will leave oil on the spot market, and the west will buy it.

39. Seaborne crude

    

40. BP Energy Outlook 2022 edition – The carbon budget is finite, and it is running out

    https://desdemonadespair.net/2022/03/bp-energy-outlook-2022-edition-the-carbon-budget-is-finite-and-it-is-running-out.html

    1. Holy shit! BP has predicted peak oil. Now who is going to argue with them? Okay, peak carbon emmisioons means peak oil consumption, peak oil production. Everyone should be able to understand that concept.

       1. Ron , all except Mr Coyne are in lock step for the peak oil call . I sort of like to fine tune it . Peak Diesel is the real peak oil .

          1. Head, look at fujairah inventory.
             Platts.fujairah.com
             If you look up historical data you see the middle distillates have collapsed while everything else is fine. Diesel is the real fuel, the other fuels are filler and junk. Ghawar collapse has destroyed diesel production.
             See also this graph
             https://postimg.cc/1g3SHzLN
             Ghawar has not had any new projects since 2005 and there’s no way it can reverse the decline. Ghawar and a few other fields produce all the real oil and the rest is unconventional.

             1. Mark , thanks . A few months ago someone posted that the refineries are going to get into trouble when KSA will stop exporting its light oils for blending with the heavy crudes to make it refinable . This would make the WCS useless . Not only KSA but the Russian Urals is also needed for blending add Nigeria light , Libya oil all better grades API and in troubled areas . Diesel is already a problem in parts of Europe , I have posted links on that earlier . Africa also is having diesel problems but we ignore them as we have no skin in the game there . Some months ago during the cold period China had to do diesel rationing . Diesel is king .

                1. It’s not really about blends, it’s just not oil at all.

                   https://www.nature.com/articles/nature06484

                   There’s no other way to express it. It’s simply not chemically oil. It’s a bunch of disordered molecules.

                   Heavy oil is at shallow depths where biodegradation takes its toll. Condensate is protected but it can’t be turned into diesel.

                   Plus there’s outright fraud and counting water and sediment. Ghawar is a miraculous occurrence, nearly all of the material became oil, the other fields in the world are more or less fake. Some of the offshore oil is still good because it was delayed by bureaucracy. Without bureaucracy all the offshore oil would already be consumed and you would be dead.

                2. Thanks Orgfarm . Already read it . i visit her blog regularly. Always something we are unaware of are missing in the larger picture of things . Very good at connecting the dots . Respects .

                3. While I agree diesel is king. When you have trouble keeping the power on or you shutdown industry due to high cost power you’ll inevitably use less diesel. You inevitably buy less oil.

                   China and India are likely to buy less oil and use less diesel because of shortages of coal and or high priced coal and natural gas.

                4. Exactly HHH . Like i said nobody is watching Africa because no one has a skin in the game . S*** happens .
                   https://guardian.ng/news/amid-costly-diesel-grid-collapses-24hrs-after-gencos-warning/

                5. Chinas fertility and LE is down and population growth is positive. This is mathematically illogical. America is a similar situation.
                   Population in many countries is already in Malthusian collapse and it shows why the EIA is faking statistics. In reality billions will die over the next few years.

                6. Mark wrote:
                   Chinas fertility and LE is down and population growth is positive. This is mathematically illogical.
                   No it’s not: you are measuring the wrong factors.
                   Growth will remain positive as long as the birth rate is higher than the death rate. While the fertility rate and life expectancy influence the birth rate and the death rate, they cannot be used as substitutes when calculating population growth.

          2. Hole in head,

             Data from BP Statistical Review of World Energy 2021 for regional oil consumption tab for World diesel/gasoil consumption. Can you point out the peak?

             

       2. Ron,

          Carbon emissions come mostly from coal, oil, and natural gas. Coal has the highest carbon emissions per EJ and natural gas the lowest of the three major fossil fuels. So depending upon the path of coal and natural gas in the future would influence whether oil has or has not peaked.

          See page below

          https://www.bp.com/en/global/corporate/energy-economics/energy-outlook/oil-demand.html

          Using the data there and data from BP Statistical Review of World Energy(2021) from 2005 to 2018, I get the following for World Oil consumption (using oil consumption-barrels tab from BP Stats). The peak appears to be 2025 for the middle (accelerated) oil demand scenario in the BP Outlook.

          

          1. And here’s what our cleanest fossil fuel looks like from space, Dennis, a live view, releasing methane to degrade the atmosphere at 25X the rate of CO2:

             https://viirs.skytruth.org/apps/heatmap/flaringmap.html#lat=32.80848&lon=-103.37361&zoom=4&offset=15

             1. Got2surf,

                I did not say it was clean, I said:

                Coal has the highest carbon emissions per EJ and natural gas the lowest of the three major fossil fuels.

                I try not to include too much info because sometimes this is considered offensive, but to clarify, when methane is combusted (and typically the burning of natural gas has nearly complete combustion) for each unit of energy burned carbon dioxide emissions are about 75% of the emissions fro burning oil with the same energy content and about 57% relative to coal. You are correct that releasing methane directly into the atmosphere will have a larger impact on climate change, though eventually the methane oxidizes and becomes long lived CO2 in the atmosphere.

                David Archer thinks concern over methane tends to be overdone and the focus should be on CO2. See

                https://www.realclimate.org/index.php/archives/2012/01/much-ado-about-methane/

          2. Well, that chart is pretty pessimistic. And the demand crash of 2020 would change things a bit I believe. Any way you look at it, peak oil is within three years, either in the past or in the future. I would put my money on three years in the past.

             1. Hi Ron,

                I agree the chart is pessimistic on output because it is optimistic about the speed of the transition away from liquid petroleum fuel. I doubt the peak will be by 2025 because I am more pessimistic about how fast a transition will occur. I hope BP is right, but believe it or not I am less optimistic than they are. The peak will be no earlier than 2025, but my pessimism suggests that 2027 or 2028 is more likely (due to a slower transition away from liquid petroleum fuel than BP has forecast in their accelerated scenario.)

41. New posts will be up around noon EDT today.

42. China likely over counted the 20-30 year old population by 100 million people in latest census. Hard to get true assessment. But if true they lose 500 million people by 2050 instead of 2100.

    Population gets cut by a 3rd in a little less than 30 years. That’s without any famine that might happen soon.

    1. Good gravy! China’s population is currently increasing by .3% per year. That comes to 4,200,000 births over deaths every year. A decline by 500 million by 2050 would mean a total turnaround, going to 17,857,000 deaths over births. That would mean going from an increase of .3% per year to a decline of 1.28% per year. And they would have to start right now for that to happen.

       Far fewer people died in Mao Zedong’s Great Leap Forward. About 30,000,000 million people died in that famine, or about 6,000,000 people per year for five years. I recently read that many of the older people died from constipation, from eating mud to kill their hunger pains. You are talking of a famine far in excess of that.

       HHH, your scenario is totally divorced from anything that could possibly happen short of a famine that far exceeds the famine of Mao Zedong’s Great Leap Forward.

       1. No it’s baked into the cake Ron. Their demographic profile because of one child policy combined with their birth rate dictates future population.

          By the numbers taken a few years back population was to collapse by 1/3 by the year 2100. That is by China’s numbers. If they over counted the one child policy generation by about about 100 million people which from some stuff I’ve read suggests might be the case. That date in time moves from 2100 to about 2050.

          Also if the over counted is correct their population actually peaked back in 2004. And is already well into decline.

          Might explain the wage inflation that is off the charts in China. The endless labor is no longer endless.

          1. Also if the over counted is correct their population actually peaked back in 2004. And is already well into decline.

             HHH, if you believe that bullshit then you have lost your ability to reason. The population of China in 2004 was 1.296 billion people or 104 million less than today. Do you think they would make such a huge mistake and no one noticed?

43. New posts are up

    https://peakoilbarrel.com/opec-update-march-2022/

    and

    https://peakoilbarrel.com/collapse-a-decadal-scenario-3/

Comments are closed.