Tuesday, July 2, 2013
Get It While You Can
BP came out with their review of world energy paper today and as usual I was very interested in what they had to say.
BP Statistical Review of World Energy 2013
There are many interesting aspects of the report that could bear long discussion, although more than likely on an energy blog like the oildrum and not here but a few little tidbits did leap out at me.
World oil consumption actually rose again this time by 290K barrels a day while last time I checked US consumption is still going down although not as fast as it had been I think. This is not necessarily a good thing if overall energy consumption of all types for the US is going down as well. Yet this is not the part that really peaked (pun haha) my interest as much as the increase in global oil production which the report is showing as being 1.9 Million barrels per day.
The report goes on to hype the shale oil production as well as increased Mid East production as the reason for this overall increase and many will herald this as a good sign that globally we are not suffering from an energy crisis and peak oil is a farce. My only real problem with this is that with such high production that exceeds increases in demand why are oil and gasoline prices continuing to rise?
I believe the answer lies in the energy return of shale oil production and just like the easy oil we got back in the early years the returns on shale oil just "ain't gonna get any better". Another words we have officially averaged in the high dollar Shale oil into the mix and into the end user price tag.
We are sliding further down the hockey stick than anyone realizes as crude prices once again slip back up towards the $100.00 a barrel cost. Even with increased production over and above consumption levels the price refuses to drop because there are no profits for oil at those levels. This means even with a surplus at the first stage of production we are already feeling the effects of peak oil overall.
The next question is how long will they be able to squeeze $100.00 a barrel oil out of the rocks and how long will $100.00 actually be worth $100.00?
If Shale oil production drops as fast and as suddenly as some have predicted the slow slide of peak oil could have a dramatic bump for us in the near future.
You may want to plan accordingly.
Keep Prepping Everyone!!!