Friday 10 February 2017

OPEC's Oil Price Fix - Is That All You've Got?

So - OPEC finally came up with its production-cutting deal last November, and sure enough, up went the price of crude.  Members' discipline has been OK (Iraq and Venezuela excepted) but, needless to say, it's been heavy going for the Saudis, who have needed to hold back rather more than agreed to achieve even this ...




Pretty feeble for a price-hike, huh?  And US oil stocks are high right now: and the hedge funds are holding record long positions in oil (nearly 900 million barrels) - whatever you think that means.  But $55 is quite enough to get the great shale-oil venture back on the road, and the US 'rig count' has been climbing since its low of May last year.  A bit of a cyclical upswing, to be followed by a cyclical production response ...

In case anyone doesn't know, as this new(ish) development in fracking technology really gets into its stride the Middle East is living on borrowed time because (a) the USA now knows it has all the oil it will probably ever need; and (b) should there be the slightest error in that calculation, it now transpires that the world's largest reserves belong to ... Venezuela.  As for gas, if Russia can ever get to grips with the fracking technology (shouldn't be beyond them), they have so much more gas than everyone used to think, it's quite off the scale.  Enough of all these hydrocarbons to make a Green weep.

Venezuela, eh?  The politics of the western hemisphere may get quite interesting down the road.  A good job for them President Trump doesn't need to go looking abroad for US supplies.

What price that slice of Aramco then?  The 'risks' section of the prospectus should make interesting reading.  Remember, anyone caught lying in a prospectus for a Wall Street flotation goes straight to gaol, do not pass Go.  It's taken very seriously there.

ND 

19 comments:

Blue Eyes said...

And on the demand side....

CityUnslicker said...

I can't see oil demand will really decrease whilst the world population continues to grow so strongly and the 2nd tier mega countries of China and India generate GDP growth of 5%+ per annum.

So we have a long time left of growing demand, but far longer of stocks of hydrocarbons.

I just hope Trump is right after all and this global warming thing is all a bigly scam....

Anonymous said...

Trump is wrong. The logic and the evidence both show clearly that man made global warming, and acidification of the oceans, are real.

But the more obvious effect will not be felt in this century, so why should he (or any of us) worry ?

Don Cox




Charlie said...

Ah yes Don, the old "the science is settled" argument. I don't really see how you can disagree that we still don't have a bloody clue what's going on with the climate - nobody has built an accurate model, which is a problem when all the doom scenarios are predicated on accurate models.

Ocean acidification isn't even a thing, and I speak as a PADI conservationist. Just an informed one.

Anonymous said...

The physics is unavoidable. If the concentration of greenhouse gases in the atmosphere increases, temperatures will rise. You can argue about where the extra CO2 comes from, but it is hard to think of another source than fossil fuels.

I don't think most of the people who say there is no warming know much, if anything, about physics. It is possible to emerge from a college with a degree and be almost totally ignorant of science.

Acidification worries me more than temperature rise.

Don cox

Thud said...

I don't believe in AGW and even if I'm wrong I don't care.I see a V8 or even a V12 in my future....more petrol please.

Charlie said...

Nobody is sure that we should even give a damn about CO2 though Don. Water vapour and methane play a huge role. Certainly on a local level, it is far more worthwhile to combat particulates and NOx.

The "scientists" and politicians who have pushed CO2 and only CO2 as the world's great evil have done other scientists and indeed the public at large. Politicians just jumped on another source of taxation, as you'd expect.

Ocean acidification de facto does not exist. *Some* oceans have become less alkaline, but they are still alkaline. Their eco systems are able to cope with this. Dynamite fishing does far more damage to ecosystems than absorbed CO2. Combating dynamite fishing doesn't raise taxation though.

Luckily for me, as a cycling, scuba diving, ocean conservationist who is into motorsport and owns 2x V8 supercars and a diesel Golf (bloody tax system), I don't listen to anyone's agenda, because I get it from all sides ;-)

auralay said...

Don, The Physics may be unavoidable but the conclusions are not. There is an important caveat to your next statement: If the concentration of greenhouse gases in the atmosphere increases, *all other factors staying constant*, temperatures will rise.
There are so many feed-backs and emergent phenomena that no-one has a clue how to go from theoretical thermodynamics to actual weather, let alone climate prediction. For one example search Whats Up With That for Willis on thunderstorms or for more general treatment see Judith Curry at Climate Etc on wicked problems. (I won't bother with links - if you don't already have them bookmarked you're not even worthy to be a troll!)
Remember again - IF ALL OTHER FACTORS REMAIN CONSTANT.

Blue Eyes said...

Thud, I have half an eye on the new Mustang. Probably a fairly lean V8, but still...

Sebastian Weetabix said...

Anybody talking about ocean acidification clearly fails to understand the pH scale is logarithmic.

Charlie said...

BE, save your money - I've driven the new V8 Mustang and was unimpressed. It can't deal with a poor surface, which is pretty much everywhere in the UK. I also thought it was just a bit too heavy and slow-witted for a good B-road blast. My yardstick is a 20 year old F355.

Obviously it's bloody cheap for a V8. A used C63 or SL55 AMG would be my choice at that price point though.

Anonymous said...

" If the concentration of greenhouse gases in the atmosphere increases, *all other factors staying constant*, temperatures will rise."

As indeed they are. Only about one degree so far, but I see no sign of the increase slowing down. (I am talking about the running ten-year average.)

The factor that could change would be the replacement of fossil fuel by nuclear fission as the universal source of power. But that will take generations.

As for pH being a log scale, we were taught that in school, so I do know it.

Don Cox

Anonymous said...

"Nobody is sure that we should even give a damn about CO2 though Don. Water vapour and methane play a huge role. "

Water vapour is by far the major greenhouse gas. Without it, temperatures would be too low for life on Earth. But the concentration of water in the atmosphere is limited: at 100% humidity, it precipitates out.

CO2 is a minor component at present, but unlike water it does not precipitate out, so it can go on increasing in concentration indefinitely so long as we keep on burning fossil fuels. And it is stable in the atmosphere for a long time.

Even in the worst case, CO2 will only raise temperatures by less than ten degrees C. But that would make a noticeable difference to the sales of air conditioners.

I am pretty sure we should give a damn about CO2, except that I will be dead long before the temperature rise is really obvious.

Methane is a powerful greenhouse gas, but it has a short life in the atmosphere.

Charlie said...

"Even in the worst case, CO2 will only raise temperatures by less than ten degrees C."

Unfortunately for the AGW lobby, this outcome is based on models that have collectively failed to predict what's going to happen to the climate even 5 years ahead. Models that need large tweaks every year in order to make the model fit the most recent data.

There are far too many variables to model the climate with any degree of accuracy.

James Higham said...

Bye bye sustainables.

Sebastian Weetabix said...

I suppose knowing what a log scale is and understanding the implications for chemical concentrations are two different things.

Jan said...

Plastics which don't biodegrade are more of a problem than anyone realises so far. When little pieces become commonplace in fish etc what will that do to our food chain? What are the "plastic islands" in the middle of oceans doing to our planet?

I worry less about global warming whenever I see one of those travel/nature programmes which show vast tracts of the planet still uninhabited.

DJK said...

It seems every man and his dog is now an expert on climate physics.

Wildgoose said...

@DJK

I'm a professional computer programmer. Climate "models" are just computer programs written by amateurs. Programs written by professionals backed up by QA Departments still manage to contain bugs. And yet these amateur-written "sim-climate" programs are supposed to be perfect, bug-free and accurate models of our Climate. (Remember that the input to each predicted year is the previous year's output - even a small deviation will have an enormous compounded effect).

So it is my PROFESSIONAL opinion that their models can be summed up in a single word. Bollocks.