I love what passes for “objective” journalism these days. Find someone who says all is well and then shine the light on them. B’berg Businessweek did that in their January 31-feb 6 issue.
Read the headline below: oil will get cheaper, and North Dakota will supply our oil needs. (!!!!!!!!!!!!!!!!)
This is fantasy masquerading as serious thoughts.
Tom Keene’s Econo Chat: A Sell-Off Ahead for Oil?
Credit Suisse commodities research chief Edward Morse says oil prices will soften, and expects plenty of new supplies from North Dakota, Iraq, and elsewhere
By Tom Keene
Are we going to go to $100 a barrel? It seems to be a certitude out there.
There might be a surge above $100, but I suspect we’ve seen the highs, if not for the season, then for the year. The market is going to sell off and get softer. (Uh….if oil gets softer that will mean that demand has dropped – which ain’t good for the economy – OR that new supplies are going to come on line to match the increases in demand. That isn’t happening right now – London Brent Futures are over $101 for December 2011….if the price goes down over the year, lots of people will have bet wrong – I think that’s unlikely)
What are you most focused on right now?
What gets my attention are the one-off factors that led to the rally in the last half of the year, like the French refinery strike. We’ve seen those factors dissipating. The winter was clearly a strong winter of demand because of weather, but that, too, is coming to an end. (So it was the French strike that caused the price of oil to shoot up at the end of 2010 huh? And we get the wonderful syntax explaining that winter has caused the price to shoot up but that winter ends, you know. And I guess his unspoken assumption is that demand will go down in the spring – which it never has.)
Is peak oil discredited as a theory?
The peak oil guys are like the guys who didn’t like the Cold War ending in the late 1980s. They keep looking for more evidence, but they are finding it harder and harder to define that peak oil is here. We’re about to see North Dakota become a bigger producer of oil than Alaska. There is oil wherever people are putting holes in the ground. (Ah ha! We who understand reality can be dismissed as cranks who just want bad things to keep on happening. But really, North Dakota will produce more oil than Alaska? That is SO disingenuous. The only reason any place would pump more than Alaska is that the supply in Alaska is dropping like a stone – 6% in 2010 alone. But for now, ND aint close: in 2010 ND pumped 341,000 BPD – Alaska 645,000 BPD. North Dakota supplied 1.7% of US daily demand last year. How much more can they provide? Whatever it is, it won’t be but a drop in the barrel.
Yeah, one day Alaska will be dry and then North Dakota may indeed pump more than them – but then so may Kentucky.
What is the outlook for supply as we move into the new decade?
There is an incredible amount of offshore deepwater finds in the world. One that has been in the news lately is the Leviathan natural gas find off of Israel. Iraq is the other big factor. It looks already this year as if they’re going to be adding 300,000 to 500,000 barrels a day, and the market hasn’t quite adapted to that yet. (Hurray! Expensive and environmentally destructive deepwater drilling will save us! And don’t forget Iraq: they are going to provide an additional 0.5% per day to global supply – THAT will help. So see people, all can go on and on and on. There’s is nothing to worry about.)