Monday, December 22, 2008
A Simple Explanation for Rising Oil Prices, to an Average Price of About $100 in 2008: Importers Bidding for Declining Net Oil Exports
By Jeffrey J. Brown
My frequent co-author, Sam Foucher, and I started warning, in January, 2006, about an imminent decline in world net oil exports. EIA data show that we are almost certainly going to see three years of world net oil exports below the 2005 rate, primarily because of collective declines by the top five net oil exporters—Saudi Arabia; Russia; Norway, Iran and the UAE—which account for about half of world net oil exports. Kenneth Deffeyes predicted that world crude oil production would peak in a range from 2004 to 2008, most likely in 2005. EIA show world crude oil production of about 74 mbpd (million barrels per day) in 2005, slightly less in 2006 and 2007, and 74 mbpd in 2008 (through September). Total liquids production is up slightly in 2008, which Matt Simmons attributes to increased natural gas liquids production, as the gas caps in many large oil fields are produced, in the last stages of depletion for these fields.