The Record Falls – Jan ’08 is the new world record for crude oil (plus condensate) production

Nate Hagens over at The Oil Drum says:

The EIA’s newest International Petroleum Monthly shows World C+C production for January was 74,466,000 barrels per day, eclipsing the heretofore peak of May 2005 by 168,000 barrels per day. (thanks to Ron Patterson for the heads up and to Khebab for the quick graphics).

Jan08 crude production

Fig 1.- World production (EIA data). Blue lines and pentagrams are indicating monthly maximum. Monthly data for CO from the EIA. Annual data for NGPL and Other Liquids from 1980 to 2001 have been upsampled to get monthly estimates.

So, the bumpy plateau of oil production since may 2005 has finally been broken, but is it really the end of the plateau or just a slightly higher bump? Needless to say the peak oil blogsites are buzzing. Pundits I have followed think that we will have one or two good spikes in production during 2008, followed by more plateau and then eventual decline. So far so good.

Whether this is the global peak oil plateau or just a pause in the oil party isn’t as important as the fact that a serious oil supply crunch is coming on, as predicted by both Shell and the IEA. The current US recession has led to predictions of oil demand destruction, but China’s burgeoning demand doesn’t look like it is going to wane at all, but keep growing. To my layman’s mind that means that the production plateau will continue and that prices will continue their slow but inexorable climb.

10 Comments Posted

  1. PDATE (Apr 15). Dave Cohen of ASPO-USA writes:
    Regarding the Carioca field offshore Brazil —

    It is completely irresponsible for anyone to whisper to the world that there are 33 billion barrels of — what? oil-in-place? barrels of oil equivalent? technically recoverable oil? economically recoverable oil? — in the Carioca offshore block BM-S-9.

    Brazil has drilled a single test well at BM-S-9, which achieved a good flow as discussed in Rigzone’s BG Participates in New Oil Discovery Offshore Brazil (September, 2007)

    This very deep “pre-salt” field will yield its bounty reluctantly, no matter what the estimated recoverable oil turns out to be. (And remember, you always need to know how an estimate was calculated.)

    There is no basis at this time for the “33 billion” barrels. Why not 43? Why not 53? The one thing we know for sure at this point is that the leaked number has been very good for BG, Repsol and Petrabras share prices.

  2. john-ston – Yes, the crack spread is negative, but more worrying for the long term is the rush of new refineries being built in the Middle East. This is a huge threat to the western powers, where most of the refining capacity is currently. It is old, running near capacity and not getting replaced – until now. Now both the source and the value added will be in the hands of the oil giants. This will make for a very different geopolitical landscape in the very near future as the new refineries out-compete the old and more power shifts to the east. Very interesting times…

  3. It wouldn’t surprise me if petrol prices rose some more over the short term. At the moment, the “crack spread” (essentially the profit that refineries make) is negative, so the oil refiners are making a loss. Of course, no firm can afford to make a loss over the long term, so it is likely that prices will move sharply over the short term.

  4. JH

    This would also mean that workers going for higher wages but without an attendant increase in productivity would see that labelled “unearned income”.

    i.e. getting something for nothing with market changes.

    Perhaps for the great unwashed you can desribe and alternative system that would stop unearned income while inflation automatically increases any capital assets such as housing.

    What your friendly spin doctors are saying in that paragraph is a load of hogwash.

    Takes no account of market forces beyond the control of the capital holders control.

    Such as BB hummer. While he might have bought it for $xxx and not expected any capital gain,but market forces, because of the hummers rarety value, could lift his capital value way higher. All beyond his control.

    Do you want to tax that potential income? Good luck but not many people will vote for that idea.

    Or are you suggesting that he will be taxed when it is sold?

    In which case he may never and thus you would not be able to budget any taxable income to distribute back to the needy.

    Another one of those “good ideas in theory” statements, which when exposed to the cold light of day is just a useless notion.

    A University acadamic’s idea of wealth taxation?

  5. BB says:

    Can anybody explain what the co leader means by “unearned income??


    “or generations of economists, it used to be a truism that “wealth creation” implies capital formation in terms of generating income-creating tangible assets. The emphasis was on capital formation and the associated income creation. To indiscriminately put this label of “wealth creation” on rising asset prices in the absence of any income creation is plainly a novel usurpation of this concept. It is in essence wealth creation through a stroke of the pen.”

    And here 🙂

  6. Off topic

    “Part of this package, and resulting from these new measures, would be shifts in the tax system to reduce tax on the things we want to encourage like honest work, innovative and sustainable entrepreneurial activity; and to increase it on those things we wish to discourage like waste, pollution, scarce and overused resources and unearned income.”

    Can anybody explain what the co leader means by “unearned income”?
    Is this a wealth tax or inheritance tax that will ultimately mean that we all end up earning the same amount…..sounds like communism to me.

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