Another factor behind tightening oil supplies
It's good to see the New York Times latching on to another reason we've entered a new era of energy scarcity: The countries that export the most oil are using more and more oil domestically:
Experts say the sharp growth, if it continues, means that several of the world's most important suppliers may need to start importing oil within a decade to power all the new cars, houses and businesses they are buying and creating with their oil wealth.
Indonesia has already made this flip. By some projections, the same could happen within five years to Mexico, the No. 2 source of foreign oil for the United States, and soon after that to Iran, the world's fourth-largest exporter.
None of this is new to those of us who follow Peak Oil with any degree of interest. But a lot of other people must've gone bug-eyed reading this over the weekend. The Times's tone was measured, but serious:
The trend, though increasingly important, does not necessarily mean there will be oil shortages. More likely, experts say, it will mean big market shifts, with the number of exporting countries shrinking and unconventional sources like Canadian tar sands becoming more important, especially for the United States. And there is likely to be more pressure to open areas now closed to oil production.
Ah, but no article in the establishment press about energy supply and demand is complete without input from the sunny folks at Cambridge Energy Research Associates. And in this article, I detect a shift in emphasis:
Greater political stability and increased drilling in some important oil countries, notably Iraq, Iran and Venezuela, could help offset the rising demand from other oil exporters.
"Ten years from now, world capacity to produce oil could be 20 percent higher than today," said Daniel Yergin, chairman of Cambridge Energy Research Associates in Massachusetts. "But a lot will depend on how the geopolitics work out."
Bottom line: CERA still sees a more or less bottomless well, but if its projections turn out to be mistaken, they'll be sure to blame it on the ever-present "geopolitical tension." Tightening supplies will have nothing, repeat, nothing to do with it. Have another glass of KoolAid.
CERA isn't the only bunch of polyannas, though. Get this:
Rising internal demand may offset 40 percent of the increase in Saudi oil production between now and 2010, while more than half the projected decline in Iranian exports will be caused by internal consumption, said a recent report by CIBC World Markets.
The report said "soaring internal rates of oil consumption" in Russia, in Mexico and in member states of the Organization of Petroleum Exporting Countries would reduce crude exports as much as 2.5 million barrels a day by the end of the decade.
That is about 3 percent of global oil demand. It may not sound high, but experts say that demand for oil is so inflexible, and the world has so little spare production capacity, that even small shortfalls can raise prices. In 2002, when a strike in Venezuela took 3 percent of global production off line, oil prices spiked 26 percent within weeks.
So let's see… We're in deep doo-doo with next to no spare production capacity, and that's assuming Saudi Arabian production actually grows as projected between now and 2010. I keep hearing about how Saudi is going to open the spigots any day now, but I still don't see it happening.
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