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Peak Oil Review – 28 March 2016
By Tom Whipple
Quote of the Week
The theory prevalent in recent weeks that the so-called “missing 800,000 b/d” of world oil production was behind the recent price rise was discounted by the IEA and a second major bank last week as wishful thinking. There has always been a gap in following the world’s oil flows as many countries do not accurately report their production, consumption, and storage numbers. The IEA says that missing barrels is nothing unusual and has been present in the Agency’s accounting since it was formed.
There clearly are bad times ahead for the future of the oil industry as it becomes apparent just how much capital spending has been cut on projects that were supposed to come into production later this decade. Last week saw a spate of stories outlining the woes of the industry. Consulting firm Wood Mackenzie says that some $500 billion worth oil and gas projects have been deferred due to low oil revenues -- up from $400 billion in the firm’s previous estimate. OPEC supply is expected to grow by some 300,000 b/d this year, mostly from Iran and Iraq. However, global demand for oil is expected to grow by a million b/d this year, gradually clearing away the excess supply and inventories so that by 2017 prices will be rising again.
The US oil industry is expressing concern that recent actions by the Obama administration, such as the air quality regulations, blocking the XL pipeline, and stopping the sale of oil leases off the Atlantic coast signifies that the government is more concerned about the environment than the economic well-being of the industry. The industry sees several technical regulations that are well below the radar of most observers as pointing to an effort to slow oil production. As is normal, there is little concern about the ever-increasing environmental problems the world is facing.