Ken Deffeyes On The Vanishingly Small Possibility That The NYT May Finally Be "Getting" It

[hatrack]

EDIT

The printed copy New York Times that appeared in my driveway Tuesday morning had a subtle but important difference. The last sentence was separated and moved to a location three paragraphs earlier. It lost the connection: "Why is this oil crisis different from all other oil crises?"

Further, the Times story stated, "Global oil consumption is still expected to increase by 1.4 million barrels a day this year, driven by demand in China and the Middle East." According to the Energy Information Agency, world oil production is now down a million barrels per day from the 2005 peak www.eia.doe.gov/ipm/t11d.xls (MS Excel spreadsheet). Where does Mouawad think he's going to find an additional 1.4 million daily barrels?

Storage in those big oil tanks that you see near oil refineries amounts to a world capacity of about one billion barrels. It seems like a lot, but world production is roughly 75 million barrels per day. Storage amounts to a two-week supply. Day traders in oil watch closely the ups and downs of storage. For those of us who try to qualify for the capital gains tax, production and consumption are identical. Exactly identical. Should I retract my offer to appoint Mouawad a member of the Hubbert Society? Does the Hubbert Society encourage closet membership? The Hubbert Society doesn't actually exist, but we know who's wearing the white hats.

The "hook" for Mouawad's story was the momentary price of oil ($103.95) which is above the inflation-corrected peak price of May 1980. As I have complained before, correcting oil prices for inflation is a highly circular exercise. Energy prices are a major cause of inflation. (At a Shell station in San Diego this evening, regular gasoline was $3.79 per gallon.)

The OPEC meeting today, March 5, left their production quotas unchanged. My guess was that they would have announced a small reduction. It wouldn't have been to support oil prices, it would have been a coverup for the gradual reduction in OPEC production capacity. However, OPEC is walking a thin line in between maximizing their income and being blamed for initiating the Second Great Depression. While the OPEC delegates meet without changing anything, I imagine them telling stories about the Good Old Days when Sheik Yamani could make the world tremble.

EDIT

http://www.princeton.edu/hubbert/current-events.html