1 / 73

Oil and the American Way of Life: Don ’ t Ask, Don ’ t Tell

Oil and the American Way of Life: Don ’ t Ask, Don ’ t Tell. Robert K. Kaufmann Boston University August 4, 2011. http://www.bu.edu/cees/people/faculty/kaufmann/index.html. 10 Billion Barrrels. Basic Facts of the Oil Market 2008. World oil demand 85.5 million barrels per day

howard-stanley
Download Presentation

Oil and the American Way of Life: Don ’ t Ask, Don ’ t Tell

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Oil and the American Way of Life:Don’t Ask, Don’t Tell Robert K. Kaufmann Boston University August 4, 2011 http://www.bu.edu/cees/people/faculty/kaufmann/index.html

  2. 10 Billion Barrrels Basic Facts of the Oil Market 2008 World oil demand 85.5 million barrels per day OPEC produced 44 percent of the world market US consumed 20.6 million barrels per day US imported 57 percent of its consumption

  3. One Big World Oil Market?

  4. Reducing US Dependence on Imported Oil is a “Good Thing”

  5. The Costs of Increasing US Production 0.08 0.07 0.06 0.05 Fraction 0.04 0.03 0.02 0.01 0 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 Kaufmann, R.K. and C.J. Cleveland. 1991. Policies to increase US oil production: Likely to fail, damage the economy, and damage the environment. Annual Review of Energy and the Environment16:379-400.

  6. A Competitive Market Prices Oil Efficiently

  7. Annual Change in Real Oil Prices 80 Competitive Market OPEC 60 Texas Railroad Commission 40 20 0 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 -20 -40 -60 Kaufmann, R.K. 1995. A model of the world oil market for Project LINK Economic Modelling 12:165-178

  8. OPEC Control 1 0.9 0.8 0.7 0.6 0.5 Fraction 0.4 0.3 0.2 0.1 0 1938 1943 1948 1953 1958 1963 1968 1973 1978 1983 1988 1993 1998 2003

  9. The Impact of Higher Oil Prices

  10. We Spend More Money on Energy… 10 9 8 Percentage 7 6 5 4 1959-I 1964-I 1969-I 1974-I 1979-I 1984-I 1989-I 1994-I 1999-I 2004-I

  11. And Less on Other Goods and Services

  12. Household Energy Expenditures & Mortgage Delinquency

  13. Prices: Speculation or Fundamentals?

  14. Market Fundamentals

  15. OPEC Capacity Utilization

  16. The Determinants of World Oil Prices OPEC Capacity Utilization OPEC production divided by OPEC Capacity OECD Stocks Days of forward consumption Refinery Utilization Percentage Futures Market Contango vs Backwardation Temporary Disruptions: Hurricane Season Kaufmann et al. 2008 Oil prices: The role of refinery utilization, futures markets, and non-linearities Energy Economics 30(4):2609-2622.

  17. Changes in Market Fundamentals? Kaufmann et al. 2008 Oil prices: The role of refinery utilization, futures markets, and non-linearities Energy Economics 30(4):2609-2622.

  18. US Oil Inventories

  19. Price Discovery WTI_Far_MonthBrent_Far_Month WTI_Near_Month Brent_Near_Month Dubai_Near_Month WTI_Spot Brent_Spot Bonny_Spot Maya_MonthDubai_Spot Kaufmann, RK. And B. Ullman, 2009, Oil prices, speculation, and fundamentals, interpreting causal relations among spot and futures prices, Energy Economics. 31:550-558.

  20. The Dubai-WTI Far Month Spread

  21. The Role of Traders

  22. Speculative Effects?

  23. Speculative Bubble?

  24. Is the World Running Out of Oil?

  25. 2.5 trillion barrels This Will Never Happen….But 180 160 140 120 Million barrels per Day 100 80 1 trillion barrels 60 40 20 0 1900 1920 1940 1960 1980 2000 2020 2040

  26. Hubbert’s Forecast for a Global Peak 120 100 80 Million barrels per Day 60 40 20 0 1899 1919 1939 1959 1979 1999 2019 2039 2059 2079 2099

  27. 2032 2.9 trillion 2026 2 trillion 2021 1.5 trillion 2014 0.8 trillion When Will Global Production Peak? 180 160 140 120 100 80 60 40 20 0 1900 1920 1940 1960 1980 2000 2020 2040 2060 2080 2100 Kaufmann, RK and LD. Shiers, 2008, The effect of resource uncertainty on the peak in global oil production and the production of alternatives, Ecological Economics.67:405-411.

  28. Growth and Decline Rates 160 2023 140 120 2017 2036 100 Million Barrels per Day 2025 80 60 40 20 0 1900 1925 1950 1975 2000 2025 2050 2075 2100 Kaufmann, RK and LD. Shiers, 2008, The effect of resource uncertainty on the peak in global oil production and the production of alternatives, Ecological Economics.67:405-411.

  29. The Need for Alternatives 50 45 0.8 trillion 40 35 30 Millions of Barrels of Oil Per Day 25 2.9 trillion 20 15 Current Production by Saudi Arabia 10 5 0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Years after the Peak Kaufmann, RK and LD. Shiers, 2008, The effect of resource uncertainty on the peak in global oil production and the production of alternatives, Ecological Economics.67:405-411.

  30. Do Gasoline Prices Rise Faster Than They Fall?

  31. Do Gasoline Prices Rise Faster Than They Fall?

  32. Rising Crude Oil & Motor Gasoline Prices 55 50 45 40 35 30 25 20 15 10 1 6 11 16 21 26 31

  33. Falling Crude Oil & Motor Gasoline Prices 60 50 40 30 20 10 0 1 6 11 16 21 26 31

  34. Yes…But Gasoline price rise faster than they fall in: Texas, Michigan, Pennsylvania, Florida, Illinois, Minnesota, Ohio, Louisiana, Idaho Effect caused by stocks and refinery utilization As demand declines, producers slow refining and sell from stocks, which slows the price drop As demand rises, refinery capacity limits supply response Kaufmann, R.K and C Laskowski, 2004, Causes for an asymmetric relation between the price of crude oil and refined petroleum products, Energy Policy

  35. Demand is Forecast to Rise 140 120 100 80 Global 60 OECD 40 20 Non-OECD 0 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030

  36. Changes in OECD Demand 0.5 1985 - 1978 0 Industry Transport Refineries Electricity Residential Agriculture Non-energy Commercial -0.5 -1 90 Million barrels per day 80 -1.5 70 60 Million Barrels per Day -2 50 40 -2.5 30 20 -3 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

  37. Squeeze Blood From a Stone? 1973 2004

  38. Hubbert’s Prediction 10 9 8 7 6 Million Barrels per Day 5 4 3 2 1 0 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000

  39. Hybrid Model Million Barrels per Day After: Kaufmann (1991)

  40. Geological Maturity Outside OPEC 12 Lower 48 States 10 8 Million barrels per day 6 4 North Sea 2 0 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

  41. Will Opening ANWR Or Large Discoveries Solve US Supply Constraints?

  42. USGS Projections For ANWR United States Geological Survey, 1999. The oil and gas resource potential of the Arctic National Wildlife Refuge 1002 Area, Alaska, Open File Report 98-34.

  43. The Story Behind the Headlines

  44. Remaining Supplies of Oil Figure From The End of Cheap Oil National Geographic 2004

  45. Will OPEC Increase Production to Facilitate Demand? 60 55 50 45 40 Million barrels per day 35 30 25 20 15 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030

  46. Should OPEC Increase Capacity? 3.5 70 3.0 60 2.5 50 Change in OPEC Production 2.0 40 1.5 30 Percentage Percentage 1.0 20 0.5 10 0.0 0 Change in price -0.5 -10 -1.0 -20 0 1 2 3 4 5 6 7 8 9 10 11 12 Source: Dees, S, P. Karadeloglou,. R.K. Kaufmann, and M. Sanchez, 2007, Modeling the world oil market: assessment of a quarterly econometric model, Energy Policy

  47. Before and After the Peak

  48. Being On-Time Matters!

  49. Environmental Regulations, Demand, and US Refinery Capacity 20000 17000 14000 Thousand Barrels per Day 11000 8000 5000 1949 1954 1959 1964 1969 1974 1979 1984 1989 1994 1999 2004

  50. Non-US Refinery Capacity & Demand 70 Refinery Capacity 60 50 Demand 40 30 20 10 0 1970 1975 1980 1985 1990 1995 2000

More Related