Editor’s Note: Thought that there might be interest in commentary from readers, after reading the article
“Samuel Foucher, logi Energy: Peak Demand or Peak Consumption? A Look at the OECD Demand”
Let us know what you think!
Gail the Actuary on November 11, 2009 – 10:17am
Thanks, Sam! This is really a nice post. Explains a piece of the puzzle that all of us have been wondering about.
ROCKMAN on November 11, 2009 – 10:37am
Sam — I’m sure all appreciate your effort. Took some time no doubt. A question that perhaps you can only answer qualitatively: China has been acquiring rights (via contracts and direct ownership) of oil production around the globe for some time. The volume is difficult to estimate but the amount would seem to represent a reduction in the supply side of your model at least for the rest of the consumers out there. Of course, it also represents a volume that China wouldn’t have to acquire on the open market. Can you offer any hint to the potential magnitude of this situation with respect to your model?
Sam Foucher on November 11, 2009 – 11:27am
I was supposed to look at it in this post but that was way too long for a single post, part 2 will be posted tomorrow and will look at the Non-OECD demand. I think the Non-OECD is effectively outbidding oil through various mechanisms (not open market mechanisms).
Will Stewart on November 11, 2009 – 2:09pm
Great article, keep up the good work. Could I also request in the future that parameters in formulas have a little one liner explanation?
greenJamie on November 11, 2009 – 10:31am
Great post – it has clarified a few points I was wondering about.
“Some suggest that we are willing to and capable of moving away from oil” – I can see that those who are into wishful-thinking would like to interpret the recession induced reduction in demand as a signal we are safe from our dependence on oil. It is just that: wishful thinking.
westexas on November 11, 2009 – 10:44am
(Now everyone can see why Sam does the mathematical heavy lifting on our joint papers.)
It probably helps to show some specific examples, especially in regard to the export market. Saudi Arabia, at least based on annual data through 2008, is world’s largest net oil exporter; the US is the largest OECD net oil importer and China is the largest non-OECD net oil importer.
I think that the Saudis tried–as best they could–to restrain the price of oil from 2002-2008, and they significantly increased net exports from 2002-2005, but then from 2006-2008 their net exports fell below the 2005 rate, with 2008 (when oil prices averaged $100) actually falling below their 2004 net export rate (when oil prices averaged $42).
As one would expect, US consumption and net imports fell, in response to higher oil prices, but then we have China (their most recent data show monthly net imports of about 4.5 mbpd).
Saudi Net Oil Exports (EIA):
US Net Oil Imports:
Chinese Net Oil Imports:
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