A Change in the World Energy Market?

Bouillabaisse

LE
Book Reviewer
#5
The really signifcant change will be in the USA's strategic focus. For the last 30 years they've been concentrating around the Gulf and it's oil. Indeed we've fought 2 wars with them to preserve oil supply from the region. As they move into oil independence they will start to lose interest - not totally, but no longer to the level they are. They will start to withdraw military assets, both on land and at sea as their military gaze moves eastward (or even further westward depending where you're standing) to the Pacific rim. Unfortunately for Britain and Europe we aren't going to be oil or energy independent any time soon. Stability in the Gulf region and our oil supply is ensured by the US military. When they remove their carrier battlegroup and draw down their troops from the region who's going to step up with the capability?
 
#6
Yet in the UK we have a moratorium on fracking whilst at the same time closing our coal fired power stations to comply with EU directives. 'Madness' doesn't really do it justice.
 
#7
The significance of the US shale oil reserves is somewhat exaggerated in the news story. To put it in perspective, the increase in reserves is roughly equivalent to six months of American oil consumption. On a global scale, this isn't significant over the long term. The BBC story and the IEA analysis are written entirely from an American domestic perspective, with reference to short to medium term trends in oil prices in the US.

The story is also mixes up oil imports from Canada (mainly tar sands) with American domestic production. Those tar sands reserves are significant on a global scale. However, this isn't "new", as it has been a development that has taken decades.

At the moment, the export pipelines from the tar sands go to the US. However, there are multiple projects planned to open new export markets and seeing those projects through is a very high priority for the Canadian government. The end result will be the Americans will end up paying wold price for Canadian oil (they currently take advantage of the current situation to pay well below world price).

If you follow the links from the BBC to the IEA to this document: http://iea.org/media/news/MTOMR_2013_OVERVIEW.pdf you can see where the BBC got their story.

The following refers to the pipeline situation. Both the tar sands and the shale oil are currently competing for pipeline capacity to reach markets. This is depressing oil prices for producers in those areas.

Future growth could be constrained by logistical and marketing challenges, however. Those stem both from the inland and relatively remote locations of many of the new plays and from current US law restricting most crude exports
The following refers to new pipelines to reach the west coast of Canada, and thence to China, Korea, and Japan. Increased pipeline capacity to the east could allow exports to Europe, but see below for some complications on that front. Once pipelines are built which can reach world markets, the price of Canadian oil in the US will increase drastically, to the tune of tens of billions of dollars per year.

On the logistics front, new infrastructure designed to transport LTO to coastal markets may cause significant changes in crude and benchmark pricing.
The following refers to potential Canadian tar sands oils exports to Europe. Senior Canadian officials were recently in Europe to discuss selling oil to EU countries, and were told that Europe wasn't interested in oil from Canada due to European concerns over greenhouse gas emissions.

as well as from proposed European legislation that could effectively ban some or all European oil imports from North America.

The BBC story is rather confused and poorly written with respect to oil. What is really happening is two things. One is that there are local market conditions in the US which are temporarily depressing local oil prices. This is primarily due to a mismatch between new supplies and existing pipeline capacity.

The other thing that is happening is that global demand is depressed due to economic crisis, and oil production in Libya and Iraq has been recovering from the losses caused by war. A global economic recovery should begin increasing oil demand again, and so raise prices.

The situation with natural gas is different, but the BBC story doesn't really cover that.
 
#8
If this is true, it could be a tipping point for Scottish independence. Oil prices crash and the nationalist cause collapses!

I shouldn't try and link oil prices with a minority viewpoint. Salmond will just send sturgeon out to tell some bullshit about how its England's/westminsters fault.
 

Grumblegrunt

LE
Book Reviewer
#9
the assumption is based on the extraction of the oil which is how the companies account for the reserves even those beyond technical or economic means
 
#10
So no Hydrogen powered car for me then.
 
#11
The really signifcant change will be in the USA's strategic focus. For the last 30 years they've been concentrating around the Gulf and it's oil. Indeed we've fought 2 wars with them to preserve oil supply from the region. As they move into oil independence they will start to lose interest - not totally, but no longer to the level they are. They will start to withdraw military assets, both on land and at sea as their military gaze moves eastward (or even further westward depending where you're standing) to the Pacific rim. Unfortunately for Britain and Europe we aren't going to be oil or energy independent any time soon. Stability in the Gulf region and our oil supply is ensured by the US military. When they remove their carrier battlegroup and draw down their troops from the region who's going to step up with the capability?
If you look at the history of international relations powers often cling to objectives long after their utilitarian purpose has disappeared. The British obsession with the Dardanelles or the US attitude to Israel are two examples that come to mind.

The latter shows no sign of fading, in fact popular support for Israel has been on the rise as any real politik considerations of balancing Soviet influence has faded. What remains is posturing for domestic political reasons which was always a big factor on this issue and institutional habit.
 
#12
The significance of the US shale oil reserves is somewhat exaggerated in the news story. To put it in perspective, the increase in reserves is roughly equivalent to six months of American oil consumption. On a global scale, this isn't significant over the long term. The BBC story and the IEA analysis are written entirely from an American domestic perspective, with reference to short to medium term trends in oil prices in the US.

The story is also mixes up oil imports from Canada (mainly tar sands) with American domestic production. Those tar sands reserves are significant on a global scale. However, this isn't "new", as it has been a development that has taken decades.

At the moment, the export pipelines from the tar sands go to the US. However, there are multiple projects planned to open new export markets and seeing those projects through is a very high priority for the Canadian government. The end result will be the Americans will end up paying wold price for Canadian oil (they currently take advantage of the current situation to pay well below world price).

If you follow the links from the BBC to the IEA to this document: http://iea.org/media/news/MTOMR_2013_OVERVIEW.pdf you can see where the BBC got their story.

The following refers to the pipeline situation. Both the tar sands and the shale oil are currently competing for pipeline capacity to reach markets. This is depressing oil prices for producers in those areas.



The following refers to new pipelines to reach the west coast of Canada, and thence to China, Korea, and Japan. Increased pipeline capacity to the east could allow exports to Europe, but see below for some complications on that front. Once pipelines are built which can reach world markets, the price of Canadian oil in the US will increase drastically, to the tune of tens of billions of dollars per year.



The following refers to potential Canadian tar sands oils exports to Europe. Senior Canadian officials were recently in Europe to discuss selling oil to EU countries, and were told that Europe wasn't interested in oil from Canada due to European concerns over greenhouse gas emissions.




The BBC story is rather confused and poorly written with respect to oil. What is really happening is two things. One is that there are local market conditions in the US which are temporarily depressing local oil prices. This is primarily due to a mismatch between new supplies and existing pipeline capacity.

The other thing that is happening is that global demand is depressed due to economic crisis, and oil production in Libya and Iraq has been recovering from the losses caused by war. A global economic recovery should begin increasing oil demand again, and so raise prices.

The situation with natural gas is different, but the BBC story doesn't really cover that.
Taking the US' attitude and actions during any percieved threat to their source of oil or even a change in price it seems that an invasion of Canada should be on the cards for about 2021 then?
 

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