Monday, April 15, 2013

Monthly Oil Supply Update


Time for the monthly update on global oil supply in which I summarize the numbers for global oil production from the various oil agencies into a small set of convenient charts. This is for the benefit of those of us who like to do micro-tracking of peak-oil related issues.  This month, I have made one charting innovation.  The above graph shows global oil production since 2002 to give the full period of the "bumpy plateau" that started about the beginning of 2005.  I have now added to this a green line (C&C (EIA)), which shows just the "Crude & Condensate" numbers from the EIA.  This eliminates biofuels, natural gas liquids, and refinery gains from the picture, and is a more purist definition of oil.  Which is better to consider is a matter of debate, but now we don't have to choose - we can see both at a glance.

The big picture is that the bumpy plateau slopes upward in both sets of data (ie anyone claiming peak monthly oil production was in 2005 or 2008 is not paying attention to the data).  However, the "all liquids" line slopes up more than "C&C", because the natural gas liquids and biofuels have grown quite a bit.

This next graph shows the all-liquids data since just before the great recession, to give a tighter context for looking at the most recent months:


The micro-trend since the beginning of 2012 has been for oil supply to be pretty much flat, and this continued in March (the newest data point released in the last few days).  Next we can look at the price context:


This chart also allows better distinguishing between the different agencies (giving some idea of the uncertainty in global oil supply).  Brent oil prices have been in the $100-$120 range since the Arab Spring, but have been dropping slightly on average.  Given Saudi Arabia's recent production cuts, I would be surprised to see oil prices drop below $100 for any length of time.

Finally, we can look at price and production plotted against each other:


This shows how the pre-2005 world has gone (seemingly forever), in which oil prices were low and production could increase significantly without much price change.  Essentially, oil was a "buyer's market" back then, and since 2005 it's been a "seller's market".  In the short term (within each oval), small changes in production are associated with huge price changes - demand for oil is very inelastic.  However, supply has been slowly increasing over time (the ovals move up the chart with time).

7 comments:

Alan Post said...

The extra time you spent describing the context and features of each of these charts helped me better understand them--something clicked for me for the first time. Thank you.

Emil said...

I'd like to add my congratulations to a post well done. I think these monthly updates are very useful, especially from a timeline perspective.

That being said, the essential flatness for the last 1 & 1/2 years in the all liquids category, the more generous of the two, is worrying.

It looks very much like the one from 2005-2007. The main difference, I think, is Europe's permanent recession.
But how long can Europe have essentially zero growth?

That's a fundamentally political and social question. Europe's leaders are completely fanatical in their drive to ignore all economic evidence and push their continent to permanent depression. The UK is now having a worse record in terms of GDP per capita than it had in the 1930s. The main difference is unemployment. The UK has about 8-9%, which helps things calm down.

Nevertheless, if the only way for India/China to grow is for Europe to be mired in a depression that gets worse every year, that isn't sustainable. At some point the people will elect radicals. We're already seeing signs of this. And who can blame them?

North America isn't as energy-optimised as Europe, but there's limits to cutting oil there too.

Everyone is placing hope in the tight oil, but non-OPEC oil supply is essentially flat the last few years. All the tight oil has only merely been able to offset losses in other areas of non-OPEC production.

By 2015/16 the tight oil will at best stagnate or even start to decline. But even the optimists concede that at that point, it's over in terms of supply growth. And what then? China&India's hunger grows by each year.

It's like we're in a twilight zone. One thing is for sure: in a world where oil supply is flatlining or barely growing, it's a shrinking pie for a growing world. That cannot go on indefinitely.

yvesT said...

Hello Stuart, and thanks for these updates.

About "This eliminates biofuels, natural gas liquids, and refinery gains from the picture, and is a more purist definition of oil."

A bit picky maybe, but my understanding is(was) that condensates and natural gas liquids were more or less the same thing.

taking the definitions of the EIA :

"leased condensates : A mixture consisting primarily of pentanes and heavier hydrocarbons which is recovered as a liquid from natural gas in lease separation facilities. This category excludes natural gas plant liquids, such as butane and propane, which are recovered at downstream natural gas processing plants or facilities."

So what I make of this is that :
NGL = LC +NGPL
with
NGL = natural gas liquids
LC = lease condensate
NGPL = natural gas plant liquids

So that C+C does contain a (big?) part of NGL.
Note : couldn't find a way to have respective volumes for LC and NGPL on eia site, but maybe didn't look hard enough.

Greg T. Jeffers said...

Excellent. Thanks.

KAP said...

What I'd really like to see you do is take the data from the production/price graph and show us time-sliced slopes of the data. Obviously the pre-2005 data has a high slope (elastic supply-demand curves) while the slopes since then have been lower (inelastic s-d curves).

But I also think I detect (by eye) that the slopes during the most recent couple of years are even lower than they were in 2005-2008. If so, quantifying that could be a useful metric in determining the point of peak oil.

Benjamin said...

Good stuff--the important point is that production of liquid fuels is rising nicely, so the doom scenario is just not right...also there is assurance the price level can be sustained. It is only sustained now as so much of the globe's oil fields are in the hands of thug nations, i.e. Iraq, Iran, Nigeria ,Russia, Libya, Venezuela, Mexico, Saudi Arabia et al.

If, decades hence, these nations become civilized, we could see gluts again....

Meanwhile, there is a case to be made that at $100 a barrel, we have seen Peak Demand for crude oil....

yvesT said...

@Benjamin

lol, you clearly are a typical little barbarian Amewikan punk, nice ! :)