Monday, December 13, 2010
I pointed out on Friday that there provisionally appeared to be a new peak in global liquid fuel production, at least based on reports from OPEC and the IEA, and subject to confirmation by the third agency (the EIA) and the inevitable revisions to the series.
Predictably, this led to a chorus of comments that the full liquid fuel series includes various things that aren't really oil, such as biofuels, and natural gas liquids (things like butane and propane). A more conservative definition of oil would still show a peak in the past, some suggested. There are decent arguments on both sides of what exact definition of oil one should use. If we look at one more conservative but reasonable definition - crude plus lease condensate (C&C) - we see the picture above (according to the EIA). I have shown the full liquid fuel series in blue, and only the C&C component in red.
Now, the EIA is only up to September as of today, whereas OPEC and the IEA have just released November numbers. So the big leap up in October/November is not apparent in the graph above. However, if these two EIA series behave like the ones that have been released, they will jump up by over a million barrels/day between September and November. As of September, the EIA all liquids series is 0.5mbd below it's all time peak, so it will very likely exceed it as the next couple of month's numbers come out. However, the EIA C&C number is 1.1mbd below it's all time peak, so it will be a near thing when the November numbers are out.
Still, if demand stays strong and prices up, it seems likely that supply will increase further in the next six months. If so, then it's likely that the July 2008 crude+condensate peak will also be exceeded.
The bottom line is this: those people running around saying that the all-time peak in monthly oil production was definitely in 2005 or 2008 are running a considerable risk of having events make fools of them. Appropriate caveats should be used.