Insight and inspiration in turbulent times.
Three and a half years ago, the International Energy Agency (IEA) triggered headlines around the world by predicting that the United States would overtake Saudi Arabia to become the world’s leading oil producer by 2020 and, together with Canada, would become a net exporter of oil around 2030.
My favorite Texas oilman Jeffrey Brown is pointing out to everyone who will listen that the supposed oversupply of crude oil isn’t quite what it seems. Yes, there is a large overhang of excess oil in the market. But how much of that oversupply is honest-to-god oil and how much is so-called lease condensate which gets carelessly lumped in with crude oil? And, why is this important to understanding the true state of world oil supplies?
The chief intellectual challenge of our age is that we live in complex systems, but we do not understand complexity. How can cheap oil be a harbinger of future supply problems in the oil market? Here’s where complexity, history and subtle thinking all have to combine at just the right intellectual temperature to reveal the answer.
A midweek update. Oil futures in NY rebounded smartly this week retracing about half of the losses sustained during last week’s selloff. London’s Brent crude has been slower to rebound permitting the WTI-Brent spread to close still further to $11.15, the smallest since last June. Much of the impetus for the price rebound came from surging equity markets which saw the S&P setting a new high on Wednesday.
“Like dreams, statistics are a form of wish fulfillment,” French philosopher Jean Baudrillard once said. Substitute “forecasts” for the word “statistics,” and you’ll have a good understanding of the public reaction to the recently released BP Energy Outlook 2030.
