The Grand Delusion – Sept. 9th, 2014

The Grand Delusion – Sept. 9th, 2014

 

This is the best I could do showing trends in oil consumption over the last decade. It is fairly simple, I hope, to understand demand and where it comes from by looking at these numbers. I started with the spreadsheet of oil consumption from BP’s Statistical Review of World Energy 2014.

I sorted the list from the greatest increase in barrels per day from 2003 to 2013. So the countries at the bottom of the list in yellow are all using much less oil then they were 10 years ago. Uzbekistan is the only country in this group that is neither European nor industrialized. Or maybe it is. I know very little about Uzbekistan.

At the top of the list, I separated major oil producers/exporters from the field and color-coded them blue. These countries will not be drawing oil from the rest of the world anytime soon.

I compressed about 30 countries and regions in the middle of the list into “All Other Countries.”

This leaves us with only China and India as significant individual contributors to demand growth. Brazil is the only strange case. It basically is right on the cusp every year of being either a net exporter or importer. They apparently swap some of their heavy crude for sweet crude from West Africa because of their overall refinery setups. I arbitrarily left it in with China and India.

 

 

Consumption_Spread

 

 

So we have the most dynamic, westernized, industrialized countries reducing their demand through recession, technology and efficiciency. Their wages and disposable income have flat-lined so basically they can’t afford $100 oil and are coping with that. Growth has and will continue to suffer in these countries with $100+ oil, but they are adapting.

Next we have a bunch of basically overpopulated, Middle-Eastern, Gulf-States rolling with dollars and giving gas away free to their huge, young, unemployed populations. Saudi Arabia uses 1.5 million barrels per day just to desalinate water. Who knows how long this party will last.

But of the remaining countries, China and India have increased demand more than all the others combined. They have been building roads, buying cars, and clearly buying gas in a decade that coincided with the price of oil quadrupling. Their economies continue to grow at a record pace, and it is the rising incomes that allow them to outbid Americans for the juice. China also reported only uses 20 percent of its oil for transportation. It is mostly to fill in gaps in electricity production. Scary.

The key here, in my opinion, is that production doesn’t really matter as much as both exports and who is going to be buying those exports. Brazil is always looked to for future “deepwater, unconventional oil production” expansion, but if their domestic consumption is going to be rising just as fast, it is irrelevant to anyone’s geo-economic strategic outlook. Similarly, the reality is that North America could potentially be energy independent. I would have thought this far-fetched 3 years ago, but I have to admit I’ve become more optimistic about this for several reasons I’ll get into later.

Currently we only get 2 million barrels per day from the Persian Gulf (1.4 mbpd from Saudi) and another 2.5 mbpd or so from North and West Africa, Columbia, Venezuela, and Russia. Why are we so committed to the Middle East with not just the US Navy but our entire defense structure when 18 out of 20 million barrels per day of exports from the region go mainly to East Asia and partially to Europe? Think about it.

Why do we let Israel and Saudi Arabia call all the shots?

***

Obama Lays Out Broad Strategy for Years of War Against ISIS
White House Denies ‘Mission Creep’ as War Expands – Sept. 9th, 2014

Sleeping With the Devil (2004)

The Rise of China vs. The Logic of Strategy (2012)

Humanitarian Bombs – September 2014

cia1000-article-display-bHumanitarian Bombs – September 2014

Another war in the name of humanitarianism: we don’t fight men, we fight monsters
by Jeff Sparrow Sept. 2nd, 2014

These days, invasions are more like social work. Western nations today always fight in the name of humanitarianism, so that contemporary wars possess a distinctive vocabulary and grammar.

For instance, each new humanitarian intervention must first distance itself from the previous one. In 2013, when John Kerry argued for military strikes in Syria, he presented his plan as a contrast to previous actions: the Syrian intervention, he said, would not resemble the Libyan intervention. He didn’t mention that the Americans and their British allies had sold the Libya mission on an identical basis. For Libya, you see, was to be nothing like Iraq. But then, Iraq, too, was meant to be different. In 2003, George Bush, Tony Blair and John Howard all contrasted their war with the disasters of Vietnam.

Now here we are again.

Iraq in 2014 will be “nothing like” the 2003 intervention, says Tony Abbott. “They are two very different situations,” he explained. “What’s happening now is a humanitarian involvement.” Which, of course, was precisely what Blair argued – and look how that worked out.

The necessity of the “not like last time” trope stems from the almost universally disastrous record of recent humanitarian missions. Libya (remember that?) offers a particularly vivid example, since, back in 2011, the mission there was widely described, in David Owen’s words, as “the prototype for a new kind of intervention.”

So, after all that humanitarianism, how’s Libya travelling?

The Grand Delusion – Sept. 1st, 2014

Sept. 1st, 2014

The peak happened at the turn of the century between 1998 and 2003. It may have happened slightly earlier or later. The exact year may never be known, but it we will only see it more clearly the farther away from it we get. And it is irrelevant. It happened.

For the first decade of this century there was (and continues) a debate about the legitimacy of “The Peak Oil Theory.” The “theory” (its alarms, claim some, having been sounded no less then five times in the last hundred plus years since oil was discovered in Pennsylvania) is actually simply the curve on a graph. It is based on mathematics related to observable traits of the oil reservoirs as crude oil is produced from them.

The “peak” was the midway point on a bell curve which contained all the world’s “reserves.” The debate largely focused on the date of the peak, past which oil production was declining – this of course lead to debate about how many “reserves” there were.

The debate produced dozens of good books and information about the most important [fill in the word, I’m at a loss for one] of human existence: oil. But the peak had already happened. Everybody missed it because they were looking at the wrong numbers.

Around the turn of the century, the price began to rise. It at least quadrupled in about a decade from $20 to $80. And I’m not talking about the price of oil that the consumer is willing to buy oil at, at the pump, filling out the demand/supply equation. What rose and is really key to an understanding of oil economics is the price at which global producers are willing to pay to extract 90 million barrels per day(mbpd).

&nbsp

Price_Chart_1

&nbsp
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The blue line is a six-month average of the monthly Nymex price, inflation adjusted.
The red and green lines are the maximum and minimum price from the PRECEDING 3 years to the blue line.

Energy Independence

A New American Oil Bonanza

The reason for the improved economics of road travel can be found 10,000 feet below the ground here, where the South Texas Eagle Ford shale is providing more than a million new barrels of oil supplies to the world market every day. United States refinery production in recent weeks reached record highs and left supply depots flush, cushioning the impact of all the instability surrounding traditional global oil fields.

So oil prices — and those at the pump — are easing.With the Labor Day weekend approaching, the national average price for a gallon of regular gasoline was $3.43 on Thursday, according to the AAA motor club, nearly a dime lower than a month ago. Energy and travel analysts project the lowest gasoline prices this holiday weekend of any Labor Day since 2010, and the highest level of motor travel since 2008.

NA_Total

September 2014

syria iraq mapSeptember 2014

Historian Juan Cole’s latest book dissects the Arab Spring

Did Iran Just Knife Putin in the Back?

A New American Oil Bonanza

The reason for the improved economics of road travel can be found 10,000 feet below the ground here, where the South Texas Eagle Ford shale is providing more than a million new barrels of oil supplies to the world market every day. United States refinery production in recent weeks reached record highs and left supply depots flush, cushioning the impact of all the instability surrounding traditional global oil fields.

So oil prices — and those at the pump — are easing.With the Labor Day weekend approaching, the national average price for a gallon of regular gasoline was $3.43 on Thursday, according to the AAA motor club, nearly a dime lower than a month ago. Energy and travel analysts project the lowest gasoline prices this holiday weekend of any Labor Day since 2010, and the highest level of motor travel since 2008.

The Grand Delusion

Saudi

Almost a decade after the Hurricane Katrina price-spike, Saudi exports have only increased by a million barrels per day. The “swing-producer.” The only country with plenty of shut-in, emergency capacity to spare.

The price of oil is fairly stable around $100/barrel. A decade ago Daniel Yergin and CERA were only unsure if oil would remain at $40 (“or more”) or crash down to 1998 levels. Whoops.

The Oil Drum has apparently been driven to collapse. By whom or what I am not sure. Yergin has been railing in a highly emotional manner about the fraudulent nature of “peak-oil theory.”

He published a sequel to The Prize in 2011. The Quest. I just discovered this book. (I’ve been kinda out of the loop oil-wise for a few years).

I flipped right to the chapter ‘The Demand Shock’ on page 161 of this 700 page masterpiece of obfuscation. The narrative of this chapter conveniently starts in about 2004 and runs through 2010 and 2011. In ends with a conversation with Robert Schiller. The conclusion being that the price move to roughly $150 in the summer of 2008 could be seen as a bubble that had ended by 2011. I’ll point out here that only stayed above $120 very briefly from a historical perspective and that we are currently a long-term sustained highs in the price of oil.

The Quest is not end-noted very well, Daniel Yergin apparently perceives ownership of much of this information. But in a few instances it is interesting to see that the only end-notes are for IHS CERA and the work of Peter Jackson. More interestingly there is no mention of the 2005 CERA Private Report and its predictions gone horribly wrong. More on this soon.

CERA

The Present

Another Perfect Day

“Another Perfect Day”

Out to lunch, speak your piece
Good and drunk, back on the street
What you see is what you get
No matter what you say
No time for anything to take the pain away
You sure ain’t the chosen few
You sure turned trick or two
You pulled the deuce this time
Another perfect day

Golden boy, take a chance
You’re a clockwork toy, you’re a dime a dance
The truth is only black and white
No shade of grey
It’s easy answers babe
But it’s the hell to pay
You know it’s just the same for you
Ain’t nothin’ you can do
No chance to change it now
Another perfect day

Total war, blow your stack
Say no more, you know you can’t go back
You’re acting dumb babe, you don’t know
The places you can go
You know you tell the truth in a different way
No court of law would find for you
No matter what you do
Could be the perfect crime
Another perfect day

-MotorheadFerguson_1

August

http://freecharlesdavis.com/about/

BrazilianThe Brazilian Who’s Buying Up All the World’s Vinyl Records

The interns can collectively catalog about 500 records per day — a Sisyphean rate, as it happens, because Freitas has been burying them with new acquisitions. Between June and November of last year, more than a dozen 40-foot-long shipping containers arrived, each holding more than 100,000 newly purchased records. Though the warehouse was originally the home of his second business — a company that provides sound and lighting systems for rock concerts and other big events — these days the sound boards and light booms are far outnumbered by the vinyl.

***

***

Crime (Israel) and punishment (Russia)
By Pepe Escobar

Then there are the black boxes, which will not de decoded by the Malaysians or by the Dutch, but by the Brits – acting under Washington’s orders. As The Saker blogger summed up the view of top Russian specialists, “the Brits will now let the NSA falsify the data and that falsification will be coordinated with the SBU in Kiev which will eventually release the recordings who will fully ‘confirm’ the ‘authenticity’ of the NSA-doctored recordings from the UK.” To make it more palatable, and erase suspicions about Anglo-American foul play, the Dutch will announce it. Everyone should be forewarned.

Daash 2014

Oil SpillDaash 2014

Jets, explosions reported near Islamic State lines as Kurds beg for U.S. help
By Mitchell Prothero
McClatchy Foreign Staff
Aug. 7, 2014

But there were no specifics about military steps to counter the Islamists’ move toward Irbil. At the White House, spokesman Josh Earnest stuck closely to the administration’s months-old position that Iraq’s problems must be solved politically.

“There are no military solutions to the problems of Iraq,” he told reporters. He said the United States would move to protect American personnel but that American military action “would have to be closely tied to Iraqi political reforms.”

A sense of dread fell over the Kurdish capital as the magnitude of the threat became clear.

Western oil companies based in Irbil shut down operations and restricted their employees’ movements out of concerns for safety, while makeshift shelters popped up in public parks and churches in the Ain Kawa neighborhood to accommodate hundreds of people who’d fled the newly occupied towns. There was a noticeable increase in the presence of the Kurdish peshmerga militia in the city, and there were reports that hundreds of residents flooded the airport in hopes of buying tickets to elsewhere.

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