Churchill’s assessment applies to the current oil situation: this is the beginning of the end of OPEC.  That much is obvious; the more interesting question is “why?”

OPEC was founded in 1960 to protect the interest of its members, major oil exporting nations.  That interest is to stabilize world oil prices at levels that balance their competing objectives to maximize both long term oil demand and the short term oil price.   The idea was to keep enough oil off the market during glut periods to elevate the price and insert enough …

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There is much information about megaprojects at Wikipedia including a summary of their own volunteers’ compilation of megaprojects by year out to 2015.  It is interesting that the peak of megaproject oil production is scheduled for 2008, a year they think will feature a long list of non-OPEC projects in a wide variety of countries.  Maybe many of these projects have encountered delays or perhaps they are scheduled for later in the year.  Whatever, there seems to be a disconnect between the vast amount of oil scheduled to come on stream this …

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The game plan was that the Fed was done and the economy seemed suddenly not so weak so the dollar would continue to strengthen.  Plus the Saudi’s are bringing on their last big new fields this year and next.  Plus oil demand growth is slowing all over except among the oil exporting countries.  Plus oil tried to bust $120 for a while and failed after a long and strong rise.  So clearly the fundamentals and the technicals are aligned to say that oil is headed for a correction.  Right?  …

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  Crunch Time     Time for Natural Gas         Current Oil Outlook             It IS the dollar! First the April numbers. The EIS portfolio was up 11% for the month, about the same amount as the oil and services indexes, a bit better than the S&P. Year to date being up 8% is good relative performance. About 3% of it was due to the options on futures strategy. I added an option on some late 2011 natural gas futures contracts. I also disposed of most …

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One beauty of British mystery writers like Conan Doyle and early Le Carre is their use of deductive reasoning to relate odd facts and explain reality.  Matt Simmons used the same powers to help us understand why major oil companies deny Peak Oil and why they finance groups like Cambridge Energy Research Associates that go around sowing doubt in the public’s mind about Peak Oil (although, as recently reported, their scheme has failed). 

The reason, as Matt told us in Twilight in the Desert, is that the production sharing agreements …

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A report in The Financial Times today casts doubt on the ability of Mexico to develop new oil supplies to offset the declining Cantarell field that is scheduled to result in substantially lower Mexican oil production starting in 2010.  The left wing opposition party brought Congress to a standstill by physically occupying the building and not allowing business to proceed while there was consideration of a modest proposal by the Calderon government to provide incentives for foreign companies to help find and develop Mexican oil.  “Denise Dresser, a political …

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According to this report by China View, China consumed a record quantity of oil products in Q1.  It is not surprising that the amount would be a record, but the percentage increase is immense.  Diesel imports were up 600%, incidentally. Some analysts believe Chinese oil use will slow down after the Olympics.  That may happen, but I suspect any slowdown would not be substantial in percentage terms.  After all, in a country of 1.3 billion people with thousands of huge construction projects under way at any given time, …

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A remarkable poll shows that citizens are way ahead of politicians in understanding peak oil.  A huge majority in the U.S. and everywhere else (except Nigeria) say government action is needed to guide us toward a different source of energy because we are running short of oil.  If the U.S. presidential campaigns’ own polls find the same results, it may give the candidates courage to actually discuss energy policy realisticly.  It is clear that the public debate must become honest and realistic before there can be any likelihood of Congress …

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  The following report from Reuters suggests Iraqi reserves could be larger than Saudi reserves and three times as large as currently estimated.  I continue to believe that if there is any chance to mitigate the onset of Peak Oil it is the possibility that Iraq will resolve its politics and pass an oil law this year, issue deals to IOC’s next year and begin substantial increases in production by 2011.  Developing land sites can be accomplished with far greater speed than exploiting the off shore fields of …

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ND Study: 167 Billion Barrels of Oil in Bakken From Rigzone.comAFX News Limited      Monday, April 28, 2008 The Bakken shale formation in North Dakota holds up to 167 billion barrels of oil but only about 1 percent of it can be recovered using current technology, a new study says. The …

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Canadian Oil Sand Trust (COS.WF) report of Q1 results demonstrates the power of higher oil prices to leverage its cash flow.  Based on an average WTI price of $97.82, up from $58.23 in 1Q07 (+68%), operating cash flow rocketed ahead 119%, to C$0.98 vs. C$0.42 per share despite plant outages that caused unit sales to fall by 9%.  

The company’s decision to boost its quarterly dividend by 33% to C$1.00 per share demonstrates its confidence in the continuation of strong cash flow.  Since the company cannot control the price of …

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They threw the kitchen sink at oil today.  Nearly everything that could push up oil prices happened.  There were three - count ‘em three - significant oil crises.
1. the Bournemouth strike that could take 700 kbpd of North Sea oil off the market for a week or longer is set to start Sunday,

2. Nigerian rebels destroyed pipelines causing Exxon to take 200 kbpd off the market for an indefinite time, and

3. There was some sort of armed conflict rumored to have occurred between an Iranian vessel and a U.S. military …

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Lehman warns that oil boom will deflate
By Ambrose Evans-Pritchard
Last Updated: 12:33am BST 24/04/2008

The roaring oil boom of the last few months may be on its last legs as economic growth slows hard across the world and a clutch new refineries come into operation, Lehman Brothers has warned in a hard-hitting report.

The build-up in supply is taking place at a time of cooling demand

“Supply is outpacing demand growth,” said Michael Waldron, the US bank’s oil strategist.

“Inventories have been …

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Iraq is looking like the world’s brightest near term hope for stemming high oil prices. It is seems to have raised production about 100 kbpd in March to about 2.4 mbpd, looks to increase it to 3 mbpd by the end of 2008 and hopes to hit 4.5 mbpd by 2013.  Here is a report from Newsweek.
Iraq boosts oil exports — and pressure to pay for rebuilding
By SINAN SALAHEDDIN

BAGHDAD

Iraq boosted its crude oil exports by 3.3 million barrels in March over the previous month, bringing in nearly $15.5 billion, …

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Here’s a happy thought about higher oil prices: maybe if the price goes high enough the military forces of the world will not be able to afford to go out and fight each other.  Of course this won’t happen at $120 a barrel or even $200.  But in five years the price could be $500 - and that could be enough to give some generals second thoughts about going to war.  Conventional thinking is that oil shortages will cause military conflicts.  But I wonder if just the opposite might …

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