To Produce Or Not To Produce, That Is The Question
Dennis Knox
Offshore Energy Construction & Installation Professional: Creative & Innovative Solutions to Offshore Project Challenges
The leading paragraph from an November 2015 article in Forbes Magazine was;
“The International Energy Agency (IEA) November report offers no hope for an oil-price recovery any time soon. Over-supply and weak demand for oil will dominate through 2016. The world has a 1.6 million barrel per day oil production surplus (supply minus demand) as the oil glut enters its 8th consecutive quarter.”
Now in its latest roundup the International Energy Agency (IEA) states in its latest Oil Market Report;
“OPEC's decision to scrap its official production ceiling and keep the taps open is a de facto acknowledgment of current oil market reality. The exporter group has effectively been pumping at will since Saudi Arabia convinced fellow members a year ago to refrain from supply cuts and defend market share against a relentless rise in non-OPEC supply.”,
And now in early 2016 we see yet more increases in production and an even lower price in Brent Crude. Today, 15th January, it passed the $30 per barrel mark and still heading down. On that back of that we see more project deferments, staff cuts, drilling programmes cancelled and shipping laid up. But, we also see announcements of increased production from Non-OPEC oil producers into a market that is already overloaded with surpluses.
Increasing surpluses can only push the price lower, but reducing production means the risk of losing market share. It seems to me that the oil producers in the world are playing Texas Hold’em Poker. This is a game with four players, OPEC, the USA, Russia and all the rest, each trying to see who can bluff it out and force the other to go bankrupt.
Meanwhile the collateral damage is severely affecting small business and individuals in many countries. Perhaps 2016 will see the final hand being played and out of all this a new economy will emerge. If so I hope it will be a globally more equitable and sustainable than the boom and bust that has characterised oil and gas to date.
Director; Naval Architect (Retired) at Sedlmayer Associates Pty Ltd
9 年Spot on Dennis. What you are describing is the lead-up to one of the major impending economic catastrophes of our time. I wrote about this in my 1012 book 'FutureQuest'. Quote: "Energy Systems Planning "Over the history of mankind our human population has grown exponentially and our energy demands have matched this growth curve closely (305). In recent times our main source of energy has been fossil fuel. Its ownership, extraction and processing involve phenomenal money concentrations and phenomenal power, resulting in unsavoury influences on industry, politics and world events (306; 307). Unfortunately the associated profiteering has been steering industry away from developing alternative energy systems so that oil profits remain maxed out. "To become sustainable it is necessary to graft new, emerging-energy sources and systems onto diminishing old ones with sufficiently-long overlaps to ensure strong, smooth transitions. However, the insatiable, sociopathic oil and gas industry chain – all of it – is currently engaged in a holding-on-as-long-as-we-possibly-can-until-it-breaks approach. Each member of this chain is dancing on the precipice of corruption, ignoring the devastation into which they are driving the world. Their token support of alternative energy systems development is far too little, far too late (308)." End quote. Of course you are excluded in the above quote :-) Even though the oil price has been dropping dramatically we are still being gouged on petrol prices here in Australia. Our government watchdog organisation ACCC is incompetent to do anything about this blatant collusion apart from merely stating the fact.