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US Will Never Gain Oil Market Crown, IEA Chief Says
Submitted by Andy Tully via OilPrice.com,
No matter how much oil the United States produces over the next few years, it will never become the next Saudi Arabia in the global oil market, according to Fatih Birol, the new executive director of the International Energy Agency (IEA).
What's especially interesting about this forecast is that it directly contradicts what Birol said only three months ago, and he gave no explanation for his change of mind.
On Feb. 26, Birol told The Telegraph’s Middle East Congress in London that OPEC, particularly the Persian Gulf members, will prevail over all other producers for the foreseeable future, even though the revolution in extracting shale oil has been “excellent news” for American producers.
“The United States will never be a major oil exporter. Their import needs are getting less but the US is not becoming Saudi Arabia,” Birol told the conference. “Their production growth is good to diversify the market but it will not solve the world’s oil problems.”
Certainly, Birol acknowledged, 2014 crude production by countries that are not among OPEC’s 12 members was greater than it had been in three decades, helping create an oversupply of oil that caused prices to erode and robbed OPEC producers of some of their market share.
But at least for the next 10 years, the cartel’s two top producers, Saudi Arabia and Iraq, will be the countries best equipped to meet the world’s demand for energy, especially if non-OPEC producers such as Brazil, Canada and the United States see production falter, Birol said.
Birol’s comments don’t jibe with what he said on Nov. 12, 2014, when he was still the IEA’s chief economist, when introducing the agency’s annual World Energy Outlook. He was appointed to the agency’s top position two weeks ago.
In that report, the IEA said US oil production is likely to exceed Saudi Arabia’s in the next 10 years, making the country nearly self-sufficient in energy and poising it to become a net exporter of oil.
“Around 2017, the U.S. will be the largest oil producer of the world, overtaking Saudi Arabia,” Birol said at a news conference in London the day the report was released. “This is of course a major development and definitely will have significant implications.”
Specifically, the IEA report said, Americans will be pumping 500,000 barrels more than Saudi Arabia in 2020 and 100,000 more than the Saudis in 2025. Riyadh will not reclaim its position as the biggest producer until 2030, when it is expected to extract 1.2 million more barrels per day than US producers.
Whether Birol’s forecast is correct now or was correct in November, he was not alone among noted economists and institutions in expecting a major surge in US oil production. The American financial services company Citigroup Inc. issued a report on March 20, 2014, predicting that the United States will overcome Saudi Arabia and Russia as the world’s largest oil producer by 2020.
And more recently, on Jan. 3, former U.S. Treasury Secretary Lawrence Summers said the growth of US oil production could perhaps displace Saudi Arabia as the world’s largest net exporter. “The United States has the chance to be to the energy economy of the next decade what Saudi Arabia has been for the last two to three decades,” he told the American Economics Association conference in Boston.
No one but Summers and the people at Citigroup know whether they’ve changed their minds since they spoke so glowingly about US oil production. And as for Birol, only he knows why he’s changed his mind. But for people whose livelihoods depend on understanding the arc of the oil market, such contradictions are confusing at best.
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Bulish for US stocks
Yes, but what isn't these days...
CORRECTION: It's IEA Chief, not EIA.
Regardless, U.S. Oil production will more than likely peak 2015/2016, and by 2030.. we will be lucky to be producing 2-3 million barrels per day.
How will this impact that FIAT DOLLAR and the $18+ Trilion in U.S. Debt.
GOT GOLD... SILVER?
"How will this impact that FIAT DOLLAR and the $18+ Trilion in U.S. Debt?"
In such a way as to make you laugh maniacally.
Even if we had excess to sell we shouldn't do it since it is a strategic resource and the less reliance we have on the middle east, the better it will be though I think we ought offer Venezuela 4 cent an acre for their country like we paid for Alaska.....
lol firstly usa can never export oil to satisfy anyone's demands . Secondly maduro is pissed already with his remark on attempts made by usa for coup change in carcas .
WHY CANT THE USA SIMPLY TAX SAUDI OIL IMPORTS AND THEN GIVE A TAX CREDIT TO DOMESTIC OIL PRODUCERS ???
Another "captain obvious" article I see. Yes, not all oil is creted equally.... ...some is a lot harder (requiring more energy) to extract.
same as it ever was...
Exactly, The future projections are even more comical. Thats a long span of time for big missles not to fly.
Yes, another guy telling us the sun rises in east. We pretty much knew that already. When the USA has to Frack South Dakota to get oil, expending tens of billions in investment capital, while Saudi, Iraq, and Russia need only turn the pump speeds up, how do the Frackers compete with that? Just drive through SOuth Dakota and watch a drill rig in action, with fleets of trucks running to the rigs with water, sand chemical, pipe, etc.etc. And these wells are proven to be short lived, needing a re-frack for any extended life.
We all know that the world is still awash in oil deposits. All that matters is the direct cost to drill, pump and get to a market. If that exceeds the market price, then why drill it? Because losing money is now okay?
Wasting money? But money is cheap! There is plenty to waste! Just ask the Fed.
Jack,
I thought they were Fracking in North Dakota?
Hey SRSrocco, Nice article on EROI about Gold etc.
http://srsroccoreport.com/major-factor-for-owning-gold-the-collapse-of-golds-eroi/major-factor-for-owning-gold-the-collapse-of-golds-eroi/
See comment the bottom...
I down-voted you because the "mistake" of typing "South Dakota" twice entirely invalidated everything you had to say. Given that you know nothing about driving through the oil patch, I find it difficult to believe that you know anything about KSA, Russia, or Iraq simply turning the pump speeds up to produce more oil. I'm not saying that there aren't differences in costs to find and produce oil between different places. I am saying that you do not have that knowledge.
The second part I'd agree with more if we didn't live in perpetual bubble times. In a world where Amazon and Netflix continue to exist, you have to step back and wonder. They might not make money on their face, but you sure as hell can believe that a lot of money is being made because of them. To my mind, these places are a front for debt creation and the transactional fees that go along with that. The oil industry may be the logical extension of that scheme. A lot more goes into the profitability on a barrel of oil than the cost to find, produce, refine, and sell it.
A lot more goes into the profitability on a barrel of oil than the cost to find, produce, refine, and sell it.
BOY does that statement say alot about where we are.
"There's alot more to my profitability of my product besides what it costs me to make it...."
We've met the enemy and he is us.
btw, Your avatar is PERFECT. Don't change it.
"these places are a front for debt creation and the transactional fees..."
nice digging. But what exactly do you mean ?
Fair enough. Large brokerage firms/investment funds need to place their clients' money. If the clients have a lot of money then they need investment vehicles large enough to accept the cash. If I had a billion dollars to invest, as an example, I wouldn't invest in my local hot dog vendor's stand because I could only stuff $10k of my clients' money into that thing. So, I'd get a small transaction fee for doing that. However, Amazon is big enough that I could buy lots of that company in one shot and get huge transaction fees. What is important is that Amazon's business plan is a) large enough and b) shows plans for getting bigger. Once Amazon gets those big investments, they now have the capital against which to borrow (create debt) more money.
It is no longer about the product or the service, in my opinion. It is about giving people, governments, and businesses a place to stuff their "money". Sure, there has to be some marginal level of utility to offer to potential consumers, but it doesn't have to be directly profitable to the company providing the product or service.
Maybe a good analogy would be a doctor (broker) intentionally keeping a brain-dead car crash victim (Amazon) alive on life support just so he could continue charging money for his services while also keeping the weeping bride (investor) hopeful for a recovery.
ok thanks for explaining. Not sure why any company would agree to such a scenario though.
Yes they will because the U.S. works with everyone!
U.S. Companies Like Baker Hughes Still Work On Russian Oil Projects
ExxonMobil Joint Venture With Russia’s Rosneft Begins Production Offshore Russia
The only way the US is going to become a net exporter is if it's consumption is drastically reduced.
Correct, Senor!
One of the Tylers totally distorted the story here.
Lately, this economist said that the USA will never become the largest net exporter of oil...unless consumption falls off a cliff.
3 months ago the same economist said the USA will become the largest producer.
Apples and oranges. Producer does not equal exporter.
Maybe we earn some other type of energy crown. Why would we want it to be oil, a dying industry.
I'm pretty sure Pennsylvania is king of the Horse & Buggy industry, but...
My neighbor has a horse and buggy. I've got a couple of neighbors with wagons, in fact. I hear the hardest part of building them is being a wheelwright.
Dying industry? Hardly...
A typical 42- gallon barrel of crude oil yields about 20 gallons of gasoline and 4 gallons of jet fuel. What products come from the other 18 gallons?
•Plastics
•Fertilizers
•Synthetic Fibers
•Pharmaceuticals
•Ink
•Paint
•Shoe Polish
•Nylons
•Roof shingles
•Novelty Candy
•Cosmetics
•Candles
•Vaseline
•Bug Killer
•Ammonia
•Tires
•Asphalt
•Crayons
•Paper cups
•Wax paper
With a gang of zionists controlling US immigration policy, America will never be allowed to be a net food or oil exporter, (that would crimp their looting).
The inverse of trade debt is trade wealth, those people would rather eat their children than give up wealth.
IEA = International Excremental Asslickers
With the amount of crap that eternally flows from the mouth of obama, we certainly wear the globe's manure market crown by a long shi .... errrr ... shot.
As LOP and Jack said, Duh.
Peak Oil babe.
“You talk about greal role of solar – show me one steel procesing plant running on solar energy and I’ll believe you”.
It was a stoopid ploy anyhow. Why use your resources when you can exchange paper for the real deal? Hmmm...
The Saudi Airforce is mostly composed of US and Israeli pilots?
WTF?
This article oozes shit.
"Their production growth is good to diversify the market but it will not solve the world’s oil problems.”
Economically literate individuals do not talk in terms of "solutions".
Birol depends on the OECD...and that has deep Oligarchy and geo-political links since INCEPTION.
(OECD was Dear Henry's own baby to counter OPEC monopoly plays via possible media hype over the oil cartel partnership that spawned "our money your problem petrodollar"...OECD built up the statistical base to monitor the Petrodollar empire and its social consequences; also to control OPEC eventual statistical shenanigans in step with chosen Oil coroporations (think Exxon or Shell at the expense of the consumer. OECD allowed a control of Oil oligarchy plays by the first world governments).
today Birol as top man has to watch his credibility. Then in 2014 he was just spokeman for others. He probably played more the oligarchy card.
We can all see that the shale revolution also has a technical and economic asymptote.
Yet another article filled prefaced along a meaningless false dichotomy.
So Saudi Crude is junk.
That's a fact.
Why it costs 25% more on the open market is beyond me but no doubt this is great news for US refiners.
We also have infinity natural gas and infinity coal.
That says to me industry is what matters not energy.
If you combine Canada and Mexico Saudi Arabia isn't even in the picture.
Nooooooooooooo!!!!!!!!!!!
He reversed his position when promoted in the IEA????????????????
Say it ain't so!
Of course...this must surely be designed to destabilize Russia.
Because there CAN'T BE a price-war going on...
/SARC OFF.
US has enough oil for 200 years but dont have total price control yet, as we're hoarding are own and using up others...
1) how curious to see another big budget attempt to capture fusion. See: http://www.iter.org/proj/itermission
2) the USA is also hip deep into fusion projects, mostly I think on the West coast.
3) I still think that the US Navy is within a few years of perfecting a hydrocarbon fuel directly from sea water. If this turns out to be correct and so far I see no reason to disbelieve the reports......then S.A. will be irrelvant. So will fracking and the Tar Sands.
4) plans have already surfaced that shows that you can hook up the battery pack on a Tesla automobile and power your house with it. This means that within 10 years you can do the same without the automobile holding the batteries.
"perfecting a hydrocarbon fuel directly from sea water" --- LMFAO!!! How much carbon is in sea water? Sure, lots of carbonate, but that is an oxidized form. So, let me get this straight, they will use a lot of energy to reduce that carbon to the hydrocarbon (i.e. reduced form) in order to turn around and burn it for energy?
you are a moron.
LOP, Science wasn't good to him.
Must have been a Marketing or Humanities major....
http://www.nrl.navy.mil/media/news-releases/2014/scale-model-wwii-craft-...
You forgot the sarc tag.
3) I still think that the US Navy is within a few years of perfecting a hydrocarbon fuel directly from sea water.
Help us out here... Explain how the following works?
H2O -> C8H18 Exactly how?
"... so far I see no reason to disbelieve the reports"
Other than the lunacy of the statment itself you mean?
http://www.bbc.com/future/story/20121019-turning-the-oceans-into-jetfuel
"But don’t expect that fleet to be accompanied by refueling ships, sucking in seawater. That research is far behind the biofuel work. It will take six to eight years for the NRL to fully develop the seawater idea, depending on funding. And then it will take many more years to build working systems. By then, the Great Green Fleet may have already sailed."
That was written in Oct 2012. The Navy is still pushing ahead with this research. What appears to be laughable and sounding impossilble today might become true in the very near future. The US Navy and Air Force is not beholden to big oil. They need to lower their costs and become less dependant on petroleum. Maybe they will.
Here's a possible reason to disbelieve the US Navy reports: Two bio-scientist freinds ofmine say it's totally untrue and will never happen.
http://www.nrl.navy.mil/media/news-releases/2014/scale-model-wwii-craft-...
Not even an EMP will deter the ECB, they're betting with other people's chips literally, and loss is their intention, they have an ethno-religious agenda which overrides national or state solvency.
The ECB is OK killing off lots of white Christian males with military training, they're in the way of the Muslim ECB bank agenda, Muslims have a faster growth rate and lower police & incarceration expenses.
The EU needs a coup followed by criminal prosecutions with lots of legally sanctioned exections.
......or they can go the gamma ray route
No substitutions at Club Putin, and FYI ECB the next Russian club owner is much much worse, not such a charitable guy as Putin.
Russians are pragmatic, they'd much rather make the problem go away permanently.
The popes hat is also funny and bears do (usually) defecate in wooded areas. Debt based money is fraudulent, wtc 7 was a fraud, taking three years to come up with your birth certificate is too long to reasonably believe it's not fraud. Sigh
"The United States will never be a major oil exporter. This is because the Energy Policy and Conservation Act won't be repealed due to successful lobbying efforts of the major US refiners. Thank you."
there, that covers that... any other "news" y'all wish to regale us with?
If America wanted we could extract more oil than all other nations combined.
We could drill to the fucking core of the planet and vent thermal energy if we wanted.
Really its as simple as just "digging a fucking really deep hole".
You want an energy solution that would drive electrical costs for the entire USA down to 0.01 cents per Kw? Build a Geo-thermal plant on Yellowstone.... problem solved . . . but o . . . wait the Epa is trying to "protect" a volcano that could erupt at any moment . . .you know . . . to keep the environment from getting "ruined". . . because you know . . . in 100 years when that shit pops . . . it wont ruin itself.
Yellowstone has the potential to power the entire planet, never-mind just the USA its pretty much venting more heat into the atmosphere than all the nuclear reactors on the planet combined x 10 on a daily basis.