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fig_1d_2010_12 fig_1c_2010_12 fig7_2010_12 fig8_opec_2010_12

Oil Price

1st phase of peak oil caused demand destruction in OECD countries of around 5 mb/d

This is the monthly update of the crude oil graphs with EIA data released 17/2/2010 http://www.eia.doe.gov/ipm/

In its WEO 2004, the International Energy Agency assumed a growth rate of all liquids of 2 % pa starting in 2002. Four years later, the WEO 2008 reduced the growth rate for all liquids to 1.5 % pa and for crude oil to just 0.5% pa. Let’s plot these growth curves into the latest crude oil graph:

fig_1d_2009_11_growth_rates

We can see that it was mainly Saudi Arabia and Russia which contributed to a growth rate higher than 2% after the turbulent period between 9/11 and the Iraq war, but this growth phase ran out of steam by end 2006. A 1.5% growth curve starting in 2007 (the base year of the WEO 2008)  just scratched the production curve until the Oilympic peak in July 2008. But these were all-liquids growth assumptions including NGLs, not just crude oil.

The WEO 2008 did a detailed crude oil analysis and estimated a crude oil growth of just 0.5% pa until 2015 (page 251). This was exceeded by an extraordinary effort by Saudi Arabia in 2007/08, but only for 10 months after which both oil prices and production went down. What had happened? High oil prices since 2005, the credit squeeze (peak oil = peak credit) and the following recession have reduced oil demand in OECD countries, by a massive 5 mb/d so far.

eia_oecd_consumption_jan2005_sep2009

Most of the “saving” was done by the US (47%), followed by Japan (26%):

eia_oecd_reduction_shares2005_2009

Question: what must happen to save the next million barrels per day when serious oil production decline starts? What we have seen up to now is only in response to oil production NOT GROWING AS ASSUMED.

If you want to view previous posts on how crude oil production evolves month by month, click on the Category “Monthly crude oil graphs” to the left.

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