Demand is outpacing supply as demand increases drastically causing supply shortfall
By Michael Smith (Veshengro)
Reports show that global oil consumption was up in 2010, bucking the trend for the two previous years under the grips of the Great Recession, increasing 2.7 million barrels per day (mbd )to a new record high of 87.4 mbd. Increases in global oil production, however, fell short of that by 900,000 barrels per day.
In other words, rising supply in not at all keeping pace with rising demand and consumption, something which everyone from the US military, to the IEA, to oil industry execs, and plenty of doom and gloom peak oil researchers (who likely will be more accurate than the technology optimists out there) have been saying for some time.
Exemplifying that growing supply and demand gap, and the dwindling supply of easy to get oil accompanied by the rise of tar sands and other so-called unconventional sources of fossil fuels, is Norway.
Once in the top 10 oil producing nations of the world, and one of the few nations which managed to escape the resource curse of oil while also having solid green credentials, in 2010 Norway's oil output dropped more than any other nation, by 9.4% to roughly 2.1 million barrels per day. It now occupies the 13th position.
Something which obviously doesn't sit well with Statoil, which has just released a statement saying that it expects to raise production “to above 2.5 million barrels of oil equivalents per day by 2020” and is positioned for long term growth.
Britain's North Sea oil (and gas) fields are also coming to an end of their productive lives and new sources do not seem to be forthcoming, not in the North Sea nor elsewhere. The trip to the Islas Malvinas, the Falkland Islands, and the surrounding waters, also drew a blank.
The rejiggered oil production rankings now have Russia leading the world (10.27 mbd) and Saudi Arabia in second (10 mbd). The US produces 7.5 mpd (and consumes a bit under three times that). China is now in fifth place, seeing the largest increase in production, with a bit over 4 million barrels per day.
Saudi Arabia, according, to sources, is, however, on the brink of running dry as well and that does not bode well for a lot of things.
The entire problem is not being helped one bit now by the crisis in Libya meaning that things will get worse in time to come. Then again oil is the very reason that we, that is to to say the USA, the EU and NATO are involved in supporting the Libyan rebels.
The action in Libya has about as much to do with human rights as the war against Saddam Hussein had anything to do with weapons of mass destructions. If it was human rights we were concerned about why are we not intervening in the former Rhodesia, now referred to as Zimbabwe, or Syria or Bahrain. In two out of the tree mentioned there is no oil and Bahrain is needed as a base for the US and British war ships thus we could not possibly upset the ruling family there. But I digressed. It was oil we were talking about and the disparity between demand and consumption and supply.
In order to level things out, it would appear, the US has, at the end of June 2011, released stocks from their strategic reserves. This was also a move in order to bring down gas prices at home and quieten unrest amongst motorist.
The fact that such reserves had to be released also seems to point to the fact that – unless the oil producing countries are sitting on their stuff (aside from no oil coming out of Libya) – the demand cannot be met anymore by current level of production.
Is the “end of oil” upon us sooner rather than we had assumed? It might just be.
© 2011
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