Where Will Future Oil Production Come From and How Can Investors Profit Today?
May 22nd, 2008 | By Dan Denning | Category: Oil Investment & Alternative EnergyThat leaves the last two options. Prices send production signals. Either OPEC and non-OPEC producer are ignoring those signals—or they can’t respond to them in order to boost supply and take advantage of the high prices. And if OPEC is unable to increase supply now, how will it be able do so twenty years from now, when demand is much higher?
This presents global oil users (and producers) with a big problem, a problem that can be seen in the form of a chart which falls into seldom-used research category of “science fiction fantasy.” The chart shows that the IEA expects global production of liquid fuels to reach 117 million barrels of oil and oil equivalent by 2017. That “oil equivalent” includes ‘unconventional hydrocarbons’ like biofuels, oil shale, and tar sands.
If you do the maths, that means global oil production will have to increase by 37%, from 86mbpd today to 117.7mbpd by 2017. If you wish to express it in numbers, that means the world needs another 32mbpd of production—in addition to maintaining current production—to meet the IEA’s projected demand in 2017.
Or simpler still, the world needs another OPEC!
If only world oil production could increase with a simple act of mitosis. But OPEC is not a biological creature, programmed to replicate itself automatically. It is a political creature facing the physical realities of finding and producing more oil.
That doesn’t seem to bother the IEA. In last year’s World Energy Outlook, the Agency said OPEC could account for the entire needed increase in global oil production if starts spending the money now. The IEA forecast’s OPEC oil production of over 61mbpd by 2030.
Also predicted are the discovery of the lost city of El Dorado, the return of the gold standard to the global economy, and a Chicago Cubs victory in the World Series of baseball. [ed. Note : the Cubs have not won baseball’s top price since 1908]
Dan Denning
The Daily Reckoning Australia
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Source: Where Will Future Oil Production Come From and How Can Investors Profit Today?
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Dan Denning is a contributing editor to Diggers & Drillers and a regular columnist for Money Weekly, a Taiwanese financial publication. From 2000 to 2006, Dan was the editor of Strategic Investment of Agora Publishing. His reporting and analysis for The Daily Reckoning is read by more than 500,000 people regularly.
