Ms. Iz has an oil post up at FT Alphaville on which I want to ruminate before commenting.
There was one thing that caught my eye, mainly because the EIA's STEO had come out a couple weeks ago.
A commenter said:
| March 27 12:32pm | PermalinkHere's a CERA chart that uses EIA data:
This article is also a mixture of the good and the bad.
The good: for sure gas substitution WILL have an effect (to be honest, you write it like it is already. Errmm. Not so much). Vehicle efficiency is improving. We're finally responding to high oil prices. Demand growth will be lower than in the past. It might even be negative.
The bad: "it’s interesting to consider to what degree high oil prices were actually a function of an industry clasping to its old relevance but clearly aware of its eventual upcoming demise, thus unwittingly self-imposing a market squeeze designed to extract as much money from the sector for as long as it still could"
Errrmmmm. No. Peak oil talk is hand in hand with rising oil prices. Talk did not lead to the companies squeezing the market, as you seem to suggest. Perhaps check out the capex trends of every single company in the industry in this timeframe. Aggregate spending more than doubled in a 4-year period (~20% CAGR). They didn't see it coming and they were desperate to pump as much as they could. They under-delivered. They rushed plans, they didn't have the resources to develop the fields. Developing a big field is HARD, shallow or deep, onshore or offshore, and it takes time. And OPEC were pumping as hard as they could by the middle of 08....
In the spring of 2008 supply/demand was moving quickly into balance and by the time U.S. WTI prices peaked at $147.27 on July 11 the world was in surplus and no longer drawing down stocks.
Here's another look, this time from the March 2013 STEO, at the supply/demand situation with implied storage and withdrawals:
Consumption began declining almost at the beginning of the recession (dated by ECRI to December 2007) and producers, after ramping by almost 2mm bbl/day were cutting production as fast as they could in an effort to support the price. The commenter is incorrect.
July 11 is now celebrated as Peak Oil Day.
Enough with that stuff, here's the fartmeister (veggie diet, ufff, see: "There's Pollution and There's: Führer Flatus") upon hearing about the 1500% move in Renewable Identification Number certificates:
Of course it is hard to top September 2008's "Hitler Gets a Margin Call".
