The Oil Drum (TOD) published an excellent and chilling analysis of Australia’s coming oil crisis.  I recommend anyone interested in oil read the entire piece, which is not that long.  The essence is that 

   - Australian oil production peaked in 2000 and seems to have fallen off a cliff since then.  

   - Australia imports its oil from a variety of countries, the most important of which is Vietnam.  If you lump all the countries that export oil to Australia together into one “Export Nation”, you find that their total oil exports are dropping rapidly for two reasons.  First, Export Nation’s oil production is also peaking.  But even more important, Export Nation’s economies are all growing rapidly.  Thus their domestic demand for oil is also growing rapidly.  Both factors applied to a single country multiply a country’s decline in export capacity, which is what is happening to Australia’s Export Nation.  

   - It appears to the author that in five years Australia will face a 35% - 45% decline in oil exports available from Export Nation.  At the same time, Australia’s need for oil will grow somewhat over the next five years, exacerbating their problem.

The author senses that an economic calamity is waiting for Australia within the next five years.  Please note the similarity of this bottom line with the recent warnings from Charlie Maxwell.

The Australian picture is an interesting perspective on the “Export Land Model” that has been much discussed on TOD.  It turns the concept around from the view of the exporting country to the view of the importers who are dependent on the exporting country. 

The U.S. faces a similar problem in respect to Mexico, about which I have written extensively.  We import about 1.3 mb/d from Mexico, and that amount is declining along with their export capacity for the same two reasons as Australia’s Export Nation. Mexico has said their current oil supplies can last only another 7 years.  They would run out of export capacity long before that. 

The only hope for U.S. import supplies is that Mexico can increase its production sufficiently to offset declines in their major oil field, Cantarell.  They are just now letting contracts to international companies to explore for oil in the Gulf but even an offset of production declines would not solve the problem of growing domestic use. We shall see. 

Tags: energy investments

This entry was posted on Sunday, February 24th, 2008 at 4:51 pm and is filed under China, India and the Pacific Rim, Peak Oil, oil supply. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.