Wall Street Journal: Oil exporters cannot keep up with demand

The original article is buried behind the paywall… but here’s a link to the story.

Fresh data from the U.S. Department of Energy show the amount of petroleum products shipped by the world’s top oil exporters fell 2.5% last year, despite a 57% increase in prices, a trend that appears to be holding true this year as well.

There are several reasons behind the net-export decline. Soaring profits from high-price crude have fueled a boom in oil demand in Saudi Arabia and across the Middle East, leaving less oil for export. At the same time, aging fields and sluggish investments have caused exports to drop significantly in Mexico, Norway and, most recently, Russia. The Organization of Petroleum Exporting Countries also cut production early last year and didn’t move to boost supplies again until last fall.

The WSJ isn’t quite coming out and stating that we’ve hit the ceiling for how much oil we can produce at any given moment, but this is probably about as close as they will come to doing so until it’s blatantly obvious to all.

I believe we are close to reaching a tipping point here, folks.   How close is hard to say, and I won’t embarrass myself by making a wild-ass prediction as to the date of when we start downhill.  There are too many variables in play, and in the end it doesn’t make that much of a difference if we start to decline now or in five years’ time.  The important lesson here is that demand is at an all-time high and oil exports are dropping.   No one else is stepping up to profit by putting more oil on the market, and if prices get too high it will hurt the global economy and slash world demand accordingly.

The time to sell your SUV or your exurban McMansion was several years ago.   We have friends who live in the outer twin cities that are upside down on their mortgage now.  I don’t know that they will ever get out from underneath it except through hyperinflation or foreclosure/bankruptcy.   They will not be alone, as more & more Americans figure out they built too much, too far from work, and borrowed too much to do it.   Those that made better choices can laugh at them if they like, but they should do so knowing that those over-extended Americans could easily bring down the house of cards known as the US economy.  Their pain will eventually affect us all.

HT: The Oil Drum

8 Responses to Wall Street Journal: Oil exporters cannot keep up with demand

  1. Brian Cesarotti says:

    Good example of the export land model. We may not be at “peak oil” technically but we are definitely past “peak exports.” Now, the bidding war begins.

  2. Bart says:

    Exactly. We’ll see how long high prices & flat production can be chalked up to the old excuses about there being no buyers for excess oil or how OPEC thinks current production numbers are fine.

    The main problem we Yankees face is that we’ve watered down our currency pretty good compared to some of our main competitors for oil like China.

  3. Brian Cesarotti says:

    True, true, except, isn’t China practically pegged to the dollar (allowing for minor devaluation), making their currency just as watered down? I’d say our demand and wealth would outbid a whole lot of countries, regardless of currency.

  4. Jim says:

    Here’s an interesting little bit of PR from Saudi Aramco’s World magazine. I’ve been getting this since 2001 for cultural info. Notice the end of the graph… draw your own conclusions.

  5. Bart says:

    @Brian: China’s currency floats against a basket of international currencies, but it’s still kept depressed by Beijing to promote their export economy. The problem is that the US doesn’t have much wealth anymore… just a lot of paper. We have financed our overseas wars and other things with debt in the form of Treasury Bonds that we have sold to overseas investors… China currently has around $1.1 trillion in US Treasuries in their holdings. They are trying to spend a lot of that cash via their sovereign wealth fund and other vehicles to buy as many tangible assets as possible. We will have plenty of demand for a long time coming… it’s just that other countries may not be so eager to take our debt as payment.

    @Jim: Thanks for the link and the graph. I agree that the graph speaks for itself.

  6. Bruce Oksol says:

    We are awash in oil. Supply currently far outstripping demand and we are in a mild recession, not a depression. Gasoline is down to $1.65 — what it was in 2004.

    And if you follow the news, you will see more and more reserves are being found. Yes, we may run out of oil some day but it won’t be in my lifetime, my children’s lifetime, or even in the lifeime of my grandchildren. And by that time we will have moved on to other energy sources.

    No doubt this will be censored, so I will also post it elsewhere (Peak Oil Theory.Blogspot).

  7. Bart says:

    Thanks for your comment.

    Long story short, I disagree with your assessment of the long-term outlook for oil. I’ll post a detailed reply in a new posting.

  8. […] So… How About Peak Oil Now? One of the interesting things about blogging is that it’s a public record of your thinking over a period of time.  Ever so often people find old posts while searching and then comment on them.   That happened to me again today, as someone posted a comment about a peak oil-related post from last summer. […]

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