CL:
This is my response to Farwest on the miner's board. I will restate the facts here. My response to you is at the bottom.
"Average world oil consumption has increased about 1MM bpd, year in, year out for nearly two decades and accelerated in recent years to about 2MM bpd as BRIC countries grew strongly."
That is completely inaccurate. Here are the official WORLD DEMAND numbers for the past.
http://www.eia.doe.gov/ipm/demand.html
The average gain in demand the past three years is +1.1M bpd, not 2.0M bpd. More importantly, the first 5 months of 2008 has shown a DROP in demand from the same 5 months of 2007!! Expect much more of the same as the world slows. This is the contention I'm making anyway. I couldn't care less what happened BEFORE the recession. My point is what happens WHEN a recession hits.
3) "On the supply side, it has remained stagnant for nearly 3 years despite hugely rising prices. Your claim that supply has increased strongly with the price of oil is totally in error."
This is even more incorrect than your demand argument.
A) "Hugely rising prices" is only really relevant in the past 15 months - not 3 years.
B) "The world production numbers have a 3 month lag. So, the best we can do is to compare the 12 months from July, 2007 through June 2008. Shown are bbls per day in millions.
Most From previous
2007 recent same month
July 72,905 -1.113
August 72,262 -1.439
September 73,068 - .349
October 73,726 - .033
November 73,434 + .040
December 73,914 + .739
2008
January 73,980 +1.147
February 74,161 +1.095
March 74,269 +1.262
April 73,857 + .608
May 74,412 +1.642
June 74,176 +1.805
http://www.eia.doe.gov/ipm/supply.html
It doesn't exactly take a genius to see what is going on here - RAPIDLY increasing production!!!
CONCLUSION:
The facts (not unsupported opinion) are that production is increasing at an alarming rate while demand is slowing such that it is actually negative so far in 2008 - and we haven't even entered an official recession yet in the US and the world has only begun to slow.... and the numbers are 3 months behind! Oil prices WILL continue to drop barring something completely unforeseen. We have way more than enough oil - just as we did when it was $40 bbl.
CL: Stop the pipe dream of oil staying over $100. Oil may not stay low for long (ie $60 or less), but it will get there (FACTORING IN THE VALUE OF THE DOLLAR) - which without adjusting for would be a meaningless argument.
Len
