Total Petroleum supplies into the U.S. peaked in 2005 (not 2007, as I had previously reported) at 20,802,000 barrels per day ("BPD").
For the last 4 weeks, total petroleum supplies into the U.S. system were 18,320,000 BPD.
The official decline: -2,482 BPD.
Well, sort of.
Ethanol supplied into the system in 2005 was immaterial (not zero, but close enough for statistical analysis). Over the past 4 weeks ethanol supplied 731,000 BPD of U.S. total supply(under "other liquids new supply").
In order to make an "apples to apples" comparison we should remove that number as well. Ethanol is NOT petroleum.
20,802,000 - 2482 - 731 = 17,589,000, or a decline in supply of 3,213,000 BPD. That is a decline of 15.44% over 4 years, with most of the decline ( nearly 15%) coming over the past 2 years.
OK so far?
Petroleum supplies to the U.S. have declined from 20,802,000 BPD in 2005 to 17,589,000 BPD in 2009. Here is a table for total products supplied 1990 - 2009. Please notice that we are back to 1997 levels of supplies.
(BTW and just FYI
U.S. population on January 1, 1997: 266,490,000
U.S. population on Janurary 1, 2009: 305,529,237
40,000,000 more folks, no more petroleum, and this metric is going to get much, much worse.)
Will the U.S. total products supplied continue to fall by 7% per year, as it has over the past 2 years? I think that the rate of decline should accelerate for several years, with the period 2010-2015 having the steepest rate of decline. This is due to domestic production remaining nearly constant (perhaps a 2-3% decline) while declines in imports accelerate. As the proportion of domestic supplies increases as a percentage of total supplies, the rate of decline will by necessity decline (provided that the rate of domestic decline remains in the 2 - 3% range. The Mad Scientist thinks that the decline rate for domestic production this year will be at least 3.5% and 6% in 2010 because of collapsing rig counts for NG production).
For the sake of argument, and for our purpuses here, let us assume that I am correct. Let us move the discussion 3 years hence, 2012, and let us assume that total products supplied has continued to decline at 7 % per year and total supply into the U.S. system is somewhere in the 15,000,000 BPD area.
What are the ramifications and outcomes? And "what if" the market place recognizes that this trend is going to continue?
This is really happening. Right now.
For those of you that beleive that the NG people are correct in their claims... the data does not support them just yet. Yes, we are going to have NG storage full this October/November, and yes, that likely means a significant decline in NG prices for 2009. Which also means a significant decline in E & P for NG, which results in less Crude production...
This does not mean that either commodity will move in a straight line. I think it means wild swings which will be far more damaging to the economy than if we could project the E & P budgets better.
Now throw in $2 Trillion per year U.S. budget deficits for as far as the eye can see...
This just gets weirder and weirder.
Mentatt (at) yahoo (com)
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Ah, but remember, old people don't drive so much ... and if we agree on anything, it is that the U.S., while being swamped with (young and working) decendants of Mexicans, will still have more old people than young. It is happening in all the progressive countries --- Japan, Italy, most of Europe, etc. etc.
Other Liquids New Supply is a very important line on that report. It is the market's supply side response to diminishing oil supplies. Transport fuel can be derived from other sources.
Biomass to liquid (ethanol, biodiesel)
Coal to Liquid
Nat. Gas to Liquid
Solar, wind, nuclear> electricty > Ammonia or Hydrogen.
Electric Vehicles, etc
How rapidly the market responds and to what extent will determine the pain through this time. At $70 per barrel many alternatives could run at a profit.
Our fearless leaders refuse to even acknowledge peak oil and have both feet on the break for most of the solutions. Why does one want a solution when denying the problem?
On the ammonia front, the USDA reports that in 2008, the US imported 48% of its ammonia. That's up from 42% in 2006. Now that Natural Gas is cheap again, this trend appears to be reversing. Some of the production facilities are being brought out of mothballs.
Regards,
Coal Guy
Well how much does the recent oil contango (over the past 2 yrs) affect the import numbers. When front month oil was at 35, the forward curve was steep up to 50-55 for back months. Many energy dealers and a few hedge funds took delivery and shorted the back months to arb the fwd cost basis. So folks took delivery (back then), only to store oil till they had to deliver the oil on expiration of their short back month contracts. The delivery of said oil would then be coming from national sources. The curve is much less steep now. So when we have a pullback from 70, and start to see backwardation, you might see the opposite affect if the mispricing gets significant.
"Getting weirder and weirder?" Greg, you're too kind.
I'd say it/we are getting more F'ed up every moment.
As Dorothy said to her friends, Oh, my!
Stephen B.
Well, bureaucrat has a point.
Supply of oil might continue to decline, perhaps so.
For a fair comparison energy consumption and renewables (solar power etc.) should find their way into the equation.
Plus: how's the "float-your-tanker-filled-with-oil-at-see-bussiness" doing?
What about Peak Seafood? We’ve already surpassed that, and there is no alternative.
And one thing we won't run out of anytime soon is alternative energy theories
World oil trading totals roughly 84 MILLION barrels per day. The futures market is less than a few percent of that.
The tail does not wag the dog and has little to do with imports, IMHO.
The futures guys can only fart around with the price while the storage tanks are between empty and full. When they have to actually deliver or take delivery all heck breaks loose. They can make short term ups and downs, but the market (actual producers and consumers) rules.
Regards,
Coal Guy
Well open interest in the Nymex crude contract is approx 1mm contracts out through 2010. Each contract is of course 1000 barrels. That represents 1bb barrels of oil that is "spoken" for in terms of future consumption or storage. Today they have traded almost 300,000 contracts at 1000 barrels which is equal to 300mm barrels traded today in the form of the derivs. So futures actually far outtrade the cash market if that 84mm barrels is accurate. Also I am leaving out the IPE crude contracts which are equal in size only differing in crude quality. So what is the dog and what is the tail?
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