Oil Production Vital Statistics – January 2015

This is the first in a monthly series of posts chronicling the action in the global oil market in 12 key charts.

  • The oil price crash of 2014 / 15 is following the same pace of the 2008 crash. The 2008 crash was demand driven and began 2 months ahead of the broader market crash.
  • The US oil rig count peaked in October 2014, is down 127 rigs from peak and is falling fast.
  • Production in OPEC, Russia and FSU, China and SE Asia and in the North Sea are all stable to falling slowly. The bogey in the pack is the USA where a production rise of 4 Mbpd in 4 years has upset the global supply dynamic.
  • It is unreasonable for the OECD IEA to expect Saudi Arabia to cut production of cheap oil in order to create market capacity for expensive US oil [1].
  • There are likely both over supply and weak demand factors at play, weighted towards the latter.

Figure 1 Daily Brent and WTI prices from the EIA, updated to 29 December 2014. The plunge continues at a similar speed to the 2008 crash. The 2008 oil price crash began in early July. It was not until 16th September, about 10 weeks later, that the markets crashed. The recent highs in the oil price were in mid July but it was not until WTI broke through $80 at the end of October that the industry became alert to the impending price crisis. As I write, WTI is trading at $48 and Brent on $51.

Figure 2 Oil and gas rig count for the USA, data from Baker Hughes up to 2 January 2015. The recent top in operating oil rigs was 1609 rigs on 10 October 2014. On January second the count was down 127 to 1482 units. US oil drilling is clearly heading down and a crash of similar magnitude, if not worse, to that seen in 2008 is to be expected. Gas drilling has not yet been affected with about 340 units operational.

Figure 3 US oil production stood as 12.35 Mbpd in November, up 140,000 bpd from October. In September 2008, US production crashed over 1 million bpd to 6.28 Mbpd. That production crash was short lived as shale oil drilling got underway. US oil production has doubled since the September 2008 low. C+C+NGL = crude oil + condensate + natural gas liquids.

Figure 4 Only Saudi Arabia has significant spare production capacity that stood at 2.79 Mbpd in November 2014 representing 22.5% of total capacity that stands at 12.4 Mbpd. Total OPEC spare capacity was 3.86 Mbd in November, up 250,000 bpd on October. While OPEC spare capacity may be showing signs of turning up, Saudi Arabia is adamant that production will not be cut.

Figure 5 OPEC production plus spare capacity (Figure 4) in grey. The chart conveys what OPEC could produce if all countries pumped flat out and there are signs that OPEC production capacity is descending slowly which casts a different light on the current glut. OPEC countries have skilfully raised and lowered production to compensate for Libya that has come and gone in recent years, and for fluctuations in global supply and demand. But with OPEC production broadly flat for the last three years, all production growth to meet increased demand has come from elsewhere, namely N America. Total OPEC production was 30.32 Mbpd in November down 320,000 bpd from October.

Figure 6 Relatively small adjustments to Saudi production has maintained order in the oil markets for many years. It is important to understand that the rapid price recovery in 2009 (Figure 1) came about because Saudi Arabia and other OPEC countries made deep production cuts. Saudi production stood at 9.61 Mbpd in November and total production capacity stood at 12.4 Mbpd. I believe it is significant that US production stood at 12.35 Mbpd. In an excellent post on Monday, Steve Kopits made the point that it was no longer viable for the OECD IEA to call on OPEC to cut production and these numbers illustrate this point [1]. Saudi Arabia already has 2.79 Mbpd withheld. It is clearly no longer acceptable for them to cut production further in order that the USA can produce more. NZ = neutral zone which is neutral territory that lies between Saudi Arabia and Kuwait and shared equally between them.

Figure 7 Russia remains one of the World’s largest producers with 10.95 Mbpd in November 2014, more than Saudi Arabia. Together with the FSU, production in this block reached a plateau in 2010 and has since been stable and has not contributed to the turmoil in the oil markets.

Figure 8 In 2002, European production touched 7 Mbpd but it has since halved and the region is no longer a significant player on the global production stage. The cycles are caused by annual offshore maintenance schedules where production dips every summer. The decline of the North Sea was probably a significant factor in the oil price run since 2002 as Europe had to dip deeper into global markets. It is also evident that the long term decline has now been arrested on the back of several years with record high oil prices and investment. With several new major projects in the pipeline North Sea production was expected to rise in the years ahead. The current price rout is bound to have an adverse impact.

  • Norway Nov 2013 = 1.90 Mbpd; Nov 2014 = 1.85 Mbpd
  • UK Nov 2013 = 0.87 Mbpd; Nov 2014 = 0.95 Mbpd
  • Other Nov 2103 = 0.60 Mbpd; Nov 2014 = 0.58 Mbpd

Figure 9 China is a significant though not huge oil producer and has been producing on a plateau since 2010. Production was 4.13 Mbpd in November up 50,000 bpd from October. This group of S and E Asian producers have been declining slowly since 2010. This, combined with rising demand from this region will eventually lead to renewed upwards pressure on the oil price.

Figure 10 N American production is dominated by the USA (Figure 3). Canadian production has been flat for a year and Mexican production is in slow decline.

Figure 11 Total liquids = crude oil + condensate + natural gas liquids + refinery gains + biofuel. The chart reveals surprisingly little about the current low price crisis with a barely perceptible blip above the trend line. Most areas of the world have either stable or slowly falling production. The bogey in the pack is the USA that has seen production sky rocket by 4 Mbpd in 4 years.

Figure 12 To understand this important chart you need to read my earlier posts [2, 3]. The data are a time series and the pattern describes production capacity, demand and price. There are undoubtedly both supply and demand factors driving the current price rout. The last time this happened, OPEC cut production thereby preserving global production capacity. This time the Saudi plan is to see global production capacity reduced by low oil prices.


Getting up to date data on global oil production is frustratingly difficult. While this report is titled “January 2015”, only the rig count data are for this month, the production data is all from November 2014, the most recent available.

Owing to budget cuts, the EIA are months behind. Their most recent reports are for September 2014 when WTI was still over $90 / bbl. The EIA are however up to date with daily oil price information reported in Figure 1.

The JODI oil production data are more up to date but the global data set is still incomplete. Crude + condensate are reported separately to NGL and overall this source does not yet provide a coherent production time series.

The IEA OMR, used here, is I believe the best source. Published monthly, the mid-December report has data for November. However, the most recent months are always revised in subsequent reports. One snag, to get the full report mid-month you have to pay €2,200, and even then I doubt the IEA would be very pleased if I published their data before it became public domain. The data becomes available to all in two weeks, at the beginning of the following month. The other benefit from the IEA is they report OPEC spare capacity which I view as an important indicator (Figure 4).

The most up to date source of key data is the Baker Hughes rig count which is updated weekly providing a useful indicator for action in the US oil industry (Figure 2).


[1] Steve Kopits Scrap “The Call on OPEC”
[2] Energy Matters The 2014 Oil Price Crash Explained
[3] Energy Matters Oil Price Scenarios for 2015 and 2016

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49 Responses to Oil Production Vital Statistics – January 2015

  1. As of 7 Jan 2015, Brent is below $US50, per RT.

  2. Ed says:

    Faultless graphs. Proper graphs with the vertical axis starting at zero.

    Difficult to explain the plunge in oil prices though. Four possible reasons (that I can think of)
    a) Supply outstripping demand
    b) deliberate take down of Russia and Iran economies
    c) deliberate take down of US tight oil production
    d) markets acting irrationally/ chaotically

    I’m not in the conspiracy camp so the order of likelihood for me is a-d-b-c

    It would be interesting to see if some sort of financial crash protection plan for the US tight oil industry had been put in place before the price plunge or not. If so, option b would go up the rankings.

    • Euan Mearns says:

      There is nothing unusual about supply being ahead of demand, though in the period 2002 to 2008 that rarely happened. The norm is then for OPEC to trim supply to maintain order. On this occasion that has not happened. There is most likely an over supply and weak demand component, it depends how you weight them. My gut feel is that weak demand is more significant than many currently assume. But the fall in price itself has unintended consequences such as being strongly deflationary at a time the OECD is gagging for inflation, causing mass unemployment in the US and Canada oil patch and causing untold economic grief throughout most OPEC nations and Russia.

      I think these numbers are significant:

      US oil production 12.35 Mbpd
      Saudi oil production 9.61 Mbpd
      Saudi oil production capacity 12.4 Mbpd

      The US goal of energy independence, which you cannot deny them the right to pursue, undermines the global finance system which exists to fund the US defecit?

      • Ed says:

        I guess the question then becomes, why hasn’t OPEC trimmed supply like they usually do ?

      • Stoney says:

        If Saudi Arabia actually has all that spare capacity shouldn’t we see a sharp drop in drilling activity there about now? Is there any indication of that? What reason would they have to spend money on maintaining their supposed spare capacity that they have no intention of using in the foreseeable future at the same time they are dealing with a severe reduction in revenue.

      • Euan Mearns says:

        If you look at Figures 4, 5 and 6 you should appreciate that Saudi spare capacity is at least in part real.

        ME OPEC rig count appears to have peaked. But I believe they find themselves in the position of having to drill to maintain production – like everyone else. Chart updated to November which is last report from BH.

      • JerryC says:

        Energy independence is NOT a goal of the US government. Quite the opposite – see Obama’s promise to veto Keystone XL.

        The administration would like nothing better than to crush domestic fossil fuel production, they just haven’t figured out a way to do it. Yet.

        • Euan Mearns says:

          The administration would like nothing better than to crush domestic fossil fuel production, they just haven’t figured out a way to do it.

          Maybe they have?

          • JerryC says:

            Hmmm. Are you suggesting that the administration is encouraging the Saudis to maintain production and undercut the US fracking industry? That would be delightfully Machiavellian, but I have my doubts that the administration is that clever.

          • Ed says:

            You have lost me. Why would the administration want to crush domestic fossil fuel production ? Sorry, you’ll have to sell it out to me.

          • JerryC says:

            Because fossil fuels are killing the planet. American progressives despise the fossil fuel extraction industry and think that they can run society on windmills and solar panels if they’re allowed to throw enough taxpayer dosh at the renewables industry.

          • JerryC says:

            See, for example, Gov Andrew Cuomo’s ban on fracking in New York state. Where progressives have the power to hamper, impede or ban fossil fuel extraction, that is exactly what they do.

          • Bill P. says:

            Oil production in the USA has exploded under Obama. Stick to the facts and not to the fanboy tin foil hat idiocy. It degrades the fine work you do.

          • JerryC says:

            The increase in oil production occurred entirely on private land, so Obama had nothing to do with that and he gets no credit for it.

            When he can prevent a fossil fuel project, like Keystone XL, he does. But it’s not within the Federal Government’s power to regulate the fossil fuel industry out of existence. At least not right now.

    • Steve Bean says:

      Markets move cyclically, per the Elliott wave principle, not chaotically. It’s just the beginning of a high-degree downturn (bear market). It is irrational, of course, since it’s based on emotion (sentiment; social mood) rather than logic.

  3. Ed says:

    Here’s another debating point. Will the current world production of oil (by volume) mark the all time high point ? ie has the plunge in prices brought the peak forward in time ?

  4. Ed says:

    One other point. The plunge of oil prices could be inflationary or deflationary. If people use the fuel cost savings to reduce their debts or to save then it is deflationary (because it decreases money in circulation). If they use it to spend more money or feel they can increase their debt levels then it is inflationary (because of the corresponding increase in the money supply)

    • Steve Bean says:

      It’s already deflationary, Ed, not in the sense that it causes deflation but rather reflects (i.e., is a symptom of) it.

      • Ed says:

        Yep. We’re talking about cause and effect here. Lloyd Blankfein, CEO of Goldman Sachs was talking today on CNCB that maybe the oil price was responding to deflationary pressures within the system somehow. He was arguing for more QE of course to counteract this. He would wouldn’t he !! 🙂 I’m not so sure.

        Insufficient growth in GDPs is producing deflationary pressures at the moment as people fight for their jobs (depressing wages) and producers of discretionary goods fight for market share (depressing prices). Again it’s the insufficient growth of world GDPs relative to the increased output of US oil which is putting pressure in oil prices.

  5. Ed says:

    I get it JerryC. It’s all a conspiracy. The Greens are trying to bring down the fossil fuel industry !! Somehow they have engineered the fall in oil prices. You seem to forget that reduced oil prices also hurt renewable energy deployment. You guys crack me up. Is that your position too Euan ?

  6. Euan Mearns says:

    I am cooking family dinner right now and don’t have time to get involved in a debate that was heading off in multiple directions. So I just unapproved a pile of comments including one of my own. Sorry but this is part of the new hard line on comment moderation. Nothing wrong with the comments per say but they fall down on the standard of being informative.

    • Euan Mearns says:

      So I just re-approved them all. Polite, on topic and informative is the standard for comments. DONT LET THIS DISCUSSION GO OFF THE RAILS.

      • Ed says:

        You’ll be please to know that I’ll be mostly offline for the next couple of months while I go travelling round Europe using tons of FF. Enjoy.

  7. Jim Bethel says:

    Nice report, but I am confused about something. I have a graph from EIA titled “US Oil production …” from 1945 until 2005, sorry no link. In 2005 it appears to be about 5 MBPD. In the graph on this site the 2005 number for C+C+NGL is 6-7 MBPD. That is a huge difference. Is the earlier EIA figure just C+C? In other words is it just a matter of being consistent about the definiton of “oil”?

    • Euan Mearns says:

      Jim, the reporting standards of the different agencies is a mine field. The EIA report C+C separately to NGL while the IEA report C+C+NGL together, like BP do. And so my best guess is that the discrepancy is down to the EIA numbers being just C+C.

      But it gets a bit more complicated than that. OPEC does not count NGL in “quotas” which are currently a joke. And so the IEA numbers for OPEC are C+C with aggregate OPEC NGL being accounted else where.

  8. Euan: You say “The oil price crash of 2014 / 15 is following the same pace of the 2008 crash. The 2008 crash was demand driven and began 2 months ahead of the broader market crash.” One significant difference is that the 2008 crash was preceded by a price spike that would have at least contributed to the demand response. The crash was also followed by a rapid price recovery that I don’t think anyone thinks is going to happen under current market conditions. But we experts have all been wrong before….

    Talking of demand responses I thought it might be interesting to show IEA’s take on the current and near-future supply/demand balance:

    • Euan Mearns says:

      Roger, I think oil market recovery will be more delayed in current circumstance for so long as OPEC does not cut. But when the recovery comes as a result of rampant demand meeting falling production it will be spectacular. That is assuming there are no purple swans (which is code for known unknowns but we don’t know what they are) 😉

  9. Euan Mearns says:

    And so back to the out of control thread…. I should start by saying no commenter did or said anything “against the rules” but it was heading off in an off topic direction. I will admit here that it is very hard to keep a fertile debate on track. I appreciate that all concerned simply stopped commenting! I deleted about 15 comments and then re-instated them all mainly because of JerryC’s last comment that made me realise I just maybe learned something.

    Bill P – I think your comment is both true, wise but also a bit harsh at the same time.

    Ed – I think that you, like me, should pause to think sometimes before hitting that submit button.

    Jerry C – not everyone understands satire or sarcasm, sometimes guaranteed to inflame

    So why don’t you all take the opportunity to say here what your interpretation of events are in detailed response. I will permit reasoned responses.

    My view is, most likely, that Saudi Arabia, acting alone or in concert with other gulf states, has decided to protect ME OPEC market share. To ensure that they sell their remaining reserves at highest possible price. This has perhaps predictable and not entirely unintended consequences such as sending the Russian economy into a tail spin (with consequences yet to be reaped), perhaps badly wounding the US shale industry that may spend 5 or more years in recovery, and maybe thrusting a bio mass stake through the heart of renewables.

    As for Obama and US policy I simply don’t know. So much chaos there I don’t know where to begin. A good starting point would be to understand that Russian oil and gas is to Europe as is Canadian oil and gas to the US.

    • Paul says:

      I’ve seen the market share argument elsewhere but I don’t see why the Saudis should care about their share if they can sell all of their production? They could regain market share in an instant by undercutting high cost producers, as their stuff costs so little to extract.

      But I know nothing about the oil market. Do the Saudis (or other producers) sell all of their oil by the tanker load on a day to day basis on the open market and based upon prevailing prices? Or do they have long term contracts at fixed prices? Or again long term contracts but at market prices? Or some combination? And what about piped stuff, how are contracts arranged there? Maybe you have covered all of that in earlier posts, but to a neophyte (me) it is not obvious how it all works or what effect such contract arrangements have.

      As for killing renewables, I thought that very little oil is used for electricity generation. So unless countries are going to start building oil-fired plant in response to this fall in the price, why should renewables be affected. It might make marginal demand (diesel backup generators) more affordable, but core generation?

      • Euan Mearns says:

        They could regain market share in an instant by undercutting high cost producers, as their stuff costs so little to extract.

        That is exactly what they are doing now, though it has more to do with maintaining market share.

        Your second point, I don’t know the answer. In the OECD, producers will often transport their crude to their refineries. The crude is never sold, just the refined products. I suspect that trade between OPEC and OECD is between refiners and national oil cos. But I have no idea about the nature of the contracts.

        As for renewables, the gas price is also down making FF generation even more competitive. Renewables are high cost and need a high price environment to survive in a free market which of course we do not have.

    • JerryC says:

      Euan – I really wasn’t trying to be sarcastic, just attempting to understand your rather cryptic remark “Maybe they have”. Perhaps my interpretation was completely off base…if so, please expand upon it if you would.

      Ed/BillP – If you really believe that the Obama administration in particular and the American progressive movement in general are pro-fossil fuel development, how do you explain Keystone XL, the New York state fracking ban, etc.? I don’t think I am stating anything controversial when I say that progressives view fossil fuel consumption as a problem that needs to be solved rather than an opportunity to be exploited.

    • JerryC says:

      Anyway, I just wanted to note that in my opinion, the US government is not pursuing energy independence as a national goal. Yes, the frackers are pushing us in that direction (at least for now), but that is the result of their independent, profit-seeking decisions and not due to any kind of concerted national policy to achieve energy independence.

      Sorry for derailing the thread and delving into domestic politics, that wasn’t my intention.

      • Euan Mearns says:

        Jerry, I have absolutely no problem with your comments 🙂 Its as much my fault for making an off guard reply. Your views on the US political situation are interesting – whether they are correct or not. So as I see what you are saying, the energy independence, drill baby drill mantra was “policy” of the last administration. This administration is ambivalent towards FF, leaning towards opposing them. I think they will learn a hard lesson at the ballot box.

        I also quite enjoy a little levity, which is not always easy.

  10. Ed says:

    Basically, no one wants to cut production. Historically, OPEC have cut production to regulate prices (and been criticised for doing so by the free marketers, mainly in the US). Maybe just for once, it is being left to the market to shake out the weak players, which ironically affects the US tight oil produces (being the most expensive) the most. Once the weak players have gone bust, production and consumption will come back into equilibrium (after the obligatory overshoot). It’s what free markets do.

    Sometimes, but not very often I admit, things happen without there being an ulterior motive.

    ps I reserve the right to change my mind (as I often do) as new evidence immerged.

    definitely my last post for a bit !!!

  11. Ed says:

    I’ll modify my last comment. Historically, Opec have cut production to increase prices because it was to their advantage. Now that it is not to their advantage they are leaving it market forces.

    definitely, definitely my last post

  12. manicbeancounter says:

    Thanks for a detailed breakdown of the current oil market.
    I believe that the price will continue to be around $50 a barrel for quite a while. I do not think it will rebound quickly.
    The reasons are in looking at the key players.
    Saudi Arabia does not seem inclined to restrict demand when they are already pumping well below capacity. I believe it is following a similar policy to 1986 and 1996 when oil prices hit lows that were maintained for some time. They are not so dominant as 20 or 30 years ago, and are prepared to wait for the recovery. It fully realizes as well that OPEC is no longer the dominant force it was in the 1970s. Indeed, it was the actions of the OPEC cartel that incentivised exploration in other areas of the world.
    Russia is still a big player, but cannot afford to sit and wait. It desperately needs the hard currency from oil. If it were to cut production by an amount sufficient to affect world prices, the Rouble would collapse.
    The USA is a highly competitive market. The fall in oil prices will cut new production being opened up, but existing wells will keep on pumping so long are marginal revenue per barrel is greater than marginal costs. For short periods, production will continue even if marginal revenue especially if there is an expectation of short-term recovery. Also, in shale gas, investment in new production has continued despite continually falling prices to well below the “accepted” break-even levels of a few years ago. I would expect a similar pattern of cost-cutting to emerge in “tight oil” production.
    Finally, there are political factors. In the last five years there has been unrest in many oil-producing nations. But in the last few months the threat of ISIS in Iraq has subsided a bit (and not affected production too much), Libya & Egypt are a bit quieter and Iran may be quietly trying to get sanctions lifted. Isolation has been hurting the Iranian economy for years now and output may be falling due to the inability to get spare parts and technical know how.

    Kevin Marshall

  13. Jim says:

    Hi Euan,
    Good as ever. I want to record my deep suspicion of “spare capacity” and even the reported production numbers. As to production, you know that wellhead testing is slow and random. So, there are fiscal meters in main oil lines. But that metering is fraught unless it is single phase, which is unlikey, so it is dipping tanks or counting tankers….
    As to spare capacity, how do they know? Safaniyah mothballed:does it count…etc.

    • Euan Mearns says:

      Jim, I know there is a lot of suspicion surrounding spare capacity. I think the truth is that some does exist, but not as much as claimed / reported. Apart from Saudi, other countries are reporting minuscule spare capacity which added together amounts to about 1 Mbpd which I think is largely imaginary. But if you look at Figures 4 and 6 you see that Saudi production and spare capacity fluctuate in concert and so this is real. But I suspect their actual spare capacity is closer to 2 than 3. And they were building / have built refineries to deal with their heavy sour crude.

  14. Javier says:

    Euan, I don’t know if I can be informative but I’ll keep focused.

    An important factor that is being neglected in oil prices is USD action. It looks like a reversal of carry trade is taking place since the FED was believed on its promise to stop QE. Money is leaving the emerging markets [EM] (and Euro area) and flowing towards USD. EM are in a sore spot as carry trade moving out puts them in a crash course. We can see the process unfold since all the commodities are falling in concert, not just oil and not just the ones depending on a growing economy (even precious metals are falling). Chile, Brazil, South-Africa, Australia, etc are going to find themselves in a lot of trouble in just a few months. One cannot underestimate the power of the carry trade.

    So yes, oil overproduction must be a factor, and yes, falling demand must be an even bigger factor, but we have to add the USD. The last two speak of economic upheaval coming this way in 2015 and together with deflation (also a consequence of both) constitute the perfect storm to hit over-indebtment.

    It doesn’t really matter the reasons of the Saudis, but we have to consider that Ghawar is a very mature very overworked field and given the enhanced oil recovery and increase in drilling taking place, when it starts to decline we may have another Cantarell with decline rates above 20%. The Saudis may be using their last bullet to make sure that when that happens they continue being a dominant player and so a round of beating everybody else could be useful, and when Ghawar starts declining it can be sold as production cut from the alpha producer.

    At the end of the day what matters is that oil price is not at equilibrium and at a price point that hurts most producers. As always equilibrium will be sought. If demand does not rise at this prices or keeps falling pushing even lower prices, production will inevitably fall, orderly or disorderly. These prices are unsustainable and therefore will not be sustained for very long without inducing a carnage in oil producers.

    Once production falls ¿Will it ever be restarted to these levels? If a lot of people get burned because they assumed that oil prices were going to stay at $100, they might not be quick at getting back. And a reeling economy might not be able to pay the prices it once paid.

    • Ed says:

      Very insightful Javier. Your last paragraph ties in nicely with one of my previous comments; namely, has this fall in price brought forward the peak production of oil forward in time?

    • Euan Mearns says:

      Javier, very informative and relevant! I’m sure you are right – that currency movements are also important, but the global currency structure is not something I’ve understood very well and will leave it to others to comment.

      I sense that this ends in a train wreck. The question then will be has the train wreck already happened and we are merely witnessing the results.

  15. Graeme No.3 says:

    a good point as Europe has moved into deflation, a disastrous situation for repayment of debt. If prolonged then Europe generally faces default, and the breakup of the EU. Nor can the UK be smug, they’ve spent the last 5 years going deeper into debt.

    But many of the oil producers are also in financial trouble and are unlikely to cut production, as they need any revenue to suppress unrest at home. Look at Russia, despite their reserves they’re already in economic trouble, and will be looking for foreign exchange even at the current prices. The Saudis are unlikely to cut production as a low oil price causes trouble for Iran and Russia, hence Assad and ISIL in Syria, and puts pressure on the US frackers. (and they’ll risk Nigeria collapsing and unable to grab Saudi markets in the East).

    Interesting times.

  16. BAU says:

    Euan, nice. Looking at your all liquids graph I don’t really see a hugh “surpluss” either. Honestly, under this seemingly trend-following graph lies a world of upstream hurt resulting in a BTU-to-society graph significantly lower and maybe hardly growing or declining. Can’t run BAU on different fundamentals..Through finance the system will thermodynamically push us back into the vegatable gardens. 🙂

    • Euan Mearns says:

      To put what you are saying another way, the global economy could not grow strongly on $100+ oil but will not be able to grow either on a lesser amount of $50 oil?

      • BAU says:

        Hmm it might for a while? But I guess sub $50 oil is it’s own worst enemy in the end? And economic growth is dependent on functioning credit structures, which have had their fair share of problems on their own. Plus, for instance in the States, what is interesting is that when more and more of an economy becomes based around oil and investment in it, the more low prices work both ways. Consumers say “Hell Yeah!” while producers and their investors stay in bed. Thus I can totally imagine low oil prices not helping GDP a lot in such countries, or at least with diminishing returns.

        Here in my Northern European country most people are like: “OMG low prices at the pump lets DRIIIIIVEEEEE YEHAAAA.” Guess fuel must burn.. In the News it’s the same, with hardly a mention of potential upstream problems.

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