Oil news

From: Glenn Morton <glennmorton@entouch.net>
Date: Thu Jan 22 2004 - 21:12:47 EST

I ran into a couple of very interesting things over the past few weeks
regarding oil supplies.

First, Shell has made some big news by de-booking 4 billion barrels of
reserves. What this means is that Shell had said that this was oil which
where was little doubt could be produced. Now it is not sure. Basically it
means that that oil won't likely come to market. Shell's stock took a dive
but the important thing is that 4 billion barrels represents 8 weeks of
global usage.

Then there is the UK North Sea which last year produced 116 million tonnes.
It looks like it will produce no more than 106 million tonnes this year. UK
North Sea is producing 23% less oil than it was merely 4 years ago.

But demand continues to climb. The Financial Times (London) reports that
China has now become the 2nd largest consumer of oil behind the US. This
demand will continue to grow as China's economy grows.

And as the demand grows, OPEC's president was asked why OPEC didn't raise
production in order to lower the price of oil back to the target range of
$22-$28. He said that OPEC was producing all they could. Shawn Donnan,
"Oil output close to capacity, says head of Opec," Financial Times; Jan 21,
2004. Now, one can't always believe OPEC pronouncements, but if this
statement is true, then the price of oil will stay very high because demand
is set to outstrip supply. With declines of production in the UK, Norway,
US, Oman, Venezuela, Indonesia and many many other countries, Kenneth
Duffeyes, the author of Hubbert's Peak, may very well be correct when he
wrote in a recent article that he believes that 2004 will be the year we
peak oil production. I still think it is a couple of years away but I may
be optimistic.
Received on Thu Jan 22 21:13:02 2004

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