1 / 32

Two oil imponderables: markets and politics

Two oil imponderables: markets and politics. Bob Tippee, Editor, Oil & Gas Journal PVF Roundtable Aug. 19, 2008. Background: US energy politics. Era of regulation: ’70s (’30s for natural gas) through mid-’80s Era of deregulation: mid-’80s through 2005 Reregulation now.

lynnea
Download Presentation

Two oil imponderables: markets and politics

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. Two oil imponderables:markets and politics Bob Tippee, Editor, Oil & Gas Journal PVF Roundtable Aug. 19, 2008

  2. Background: US energy politics • Era of regulation: ’70s (’30s for natural gas) through mid-’80s • Era of deregulation: mid-’80s through 2005 • Reregulation now

  3. Characteristics of the eras • Era of regulation • Price and consumption controls • Shortage • Category cheating • Era of deregulation • Adequate supply • Low prices most of the time • Inattention to energy • Policy tilt

  4. The policy tilt • Prices decontrolled • Consumption decontrolled • Domestic supply limits on… • Federal leasing, permitting restrictions • Refinery construction

  5. The global context • Demand growing worldwide, too • Supply expansion reaching limits • Supply jolts of 2002, 2003, 2005

  6. The reckoning

  7. US gasoline and politics

  8. New attention to energy • Energy Policy Act of 2005 -- reregulation • Bush in 2006: US “addicted to oil” • Energy Independence and Security Act of 2007 -- reregulation • Continuing pressure on candidates, lawmakers to do something about high gasoline prices

  9. Proposition The market is beating politicians to the punch with price relief.

  10. OGJ annual forecasts Forecast & Review Jan. 21, 2008 Midyear Forecast July 14, 2008 Marilyn Radler, Senior Editor – Economics Laura Bell, Statistics Editor

  11. High crude prices: the reasons • Fundamentals • Demand rising faster than supply can expand • Market’s “cushions” thin • Extraordinary forces • Weak dollar • Rush of scared money into commodities

  12. World oil demand (MMb/d) 2009: 87.7 (IEA July) 86.8 +0.9% January: +1.8% FSU +2.4% China +6.7% ME +4.6% LA +5.4% Source: IEA except OGJ forecast for ’08.

  13. World demand: observations • OECD demand down 1% • Non-OECD demand up 3.3% • GDP growth in Non-OECD oil exporters • Subsidies in Asia, Latin America, Middle East • Lifting in much of Asia • Staying in much of L. America, Middle East

  14. World oil supply (MMb/d) 87.4 +2.2% Stocks +0.6 *Plus other biofuels. Source: IEA

  15. Non-OPEC supply (MMb/d) 2009: 50.6 (IEA July) 50 N.C. Source: IEA; Note: Angola (1.7 MMb/d), Ecuador (0.5 MMb/d) joined OPEC in ’07.

  16. Yearly change: demand, non-OPEC supply (MMb/d) Expected demand up 1.5 MMb/d in January 2009 (IEA July): Demand +.800 Non-OPEC +.600 Expected non-OPEC up 1.1 MMb/d in January Source: IEA. Note: Angola, Ecuador joined OPEC in 2007.

  17. Pressure on OPEC (MMb/d) Needed from OPEC in ’08 = 32.3 May OPEC crude (IEA) = 32.3 Group quota = 29.67 May OPEC capacity (IEA) = 34.97 Effective spare capacity (less Indonesia, Iraq, Nigeria, Venezuela) = 1.95 (1.7 in July IEA) Stocks low

  18. OPEC’s spare capacity (EIA)

  19. OPEC production capacity in ’08 • Saudi Arabia • +.200-.300 to 10.95* • Nigeria • +.200-.300 to 2.16 • Angola • +.170 to 2.05 • Algeria • +.050 to 1.45 via EOR Change net of decline in MM b/d Total OPEC: +600 Mb/d to 35.6 MMb/d (End-’07 f’cast: 35.8 MMb/d) *Plan: to 12.5 MMb/d by end ’09; Source: IEA

  20. Summary: Global oil market • Extraordinary forces waning • Demand growth slowing • Supply growth in prospect • “Cushions” thickening

  21. US product demand (MMb/d) 20.7 N.C. 20.25 -2.2% January: -0.6% All product categories down Note: Before exports (1.55 MMb/d in ’08). Source: EIA for 2004-07

  22. Gasoline, distillate demand (MMb/d) 9.2 -1% Red line = ULSD 4.18 -1% ’08 ULSD forecast assumes 80% of distillate Source: EIA for 2004-07

  23. Gasoline, ethanol use (MMb/d) 9.2 -1% ’08 is mandate (587 Mb/d) Source: EIA

  24. ULSD, biodiesel use (MMb/d) 3.34 +13% Applied 80% factor to dist. demand Source: EIA

  25. Industry oil imports (MMb/d) Top numbers: % of total US demand: 63.1 65.9 66.3 64.9 64.0 12.95 -3.6% Imports down .48; demand down .45; liquids output up .06 Source: EIA for 2004-07

  26. US total liquids production (MMb/d) 6.97 +1.2% Source: EIA for 2004-07

  27. US gas consumption (tcf) 23.86 +3.5% Source: EIA for 2004-07

  28. Marketed gas production (tcf) 21.2 +5% Source: EIA for 2004-07

  29. US gas imports (bcf) 4.2 -9.1% LNG 0.4 -51% Source: EIA for 2004-07

  30. Summary: US oil market • Oil demand down • Gasoline demand down • Diesel use rising; supply a question • Ethanol use growing (mandate) • Oil production, refining capacity rising • Gas production zooming

  31. Energy proposals now • OCS leasing off East Coast • More subsidies for politically favored energy sources • Heavy spending on alternative fuels • All in framework of “doing something” about high gasoline prices

  32. For more on Midyear Forecast… Midyear Forecast & Review Webcast Go to www.ogj.com Click “More Webcasts” in the Webcasts area Select from list

More Related