[Sketh]

From the WSJ again. The editorial staff there seem to have a better handle on the situation than many other mainstream newspapers.

Oil Exporters Are Unable To Keep Up With Demand (most likely behind paywall - trying to find free link)

The world's top oil producers are proving unable to put more barrels on thirsty world markets despite sky-high prices, a shift that defies traditional market logic and looks set to continue.

Fresh data from the U.S. Department of Energy show the amount of petroleum products shipped by the world's top oil exporters fell 2.5% last year, despite a 57% increase in prices, a trend that appears to be holding true this year as well.

There are several reasons behind the net-export decline. Soaring profits from high-price crude have fueled a boom in oil demand in Saudi Arabia and across the Middle East, leaving less oil for export. At the same time, aging fields and sluggish investments have caused exports to drop significantly in Mexico, Norway and, most recently, Russia. The Organization of Petroleum Exporting Countries also cut production early last year and didn't move to boost supplies again until last fall.

In all, according to the Energy Department figures, net exports by the world's top 15 suppliers, which account for 45% of all production, fell by nearly a million barrels to 38.7 million barrels a day last year. The drop would have been steeper if not for heightened output in less-developed countries such as Angola and Libya, whose economies have yet to become big energy consumers.

Jeffrey Brown (Westexas on The Oil Drum) is quoted too.

[DantesPeak]

Very good article.

There finally is some awareness as to what is driving oil prices higher.

The export problem is a vicious manifestation of the effects of the downslope of PO.

However the reason is that oil has soared very fast this year is due to diesel demand. Diesel use has increased rapidly lately to keep electricity generation up in countries where infrastructure is insufficient or damaged.

Since oil can be refined into only about 50% diesel, demand for oil has grown twice as fast as would be expected just looking at diesel demand growth only.

[Troyboy1208]

I have been impressed with the WSJ. They are one of the few mainstream media that seems to have a decent grasp on the energy situation as this article demonstrates.
Many articles that I see Dante posting come from the WSJ. One of the few good newspapers I have read.

[DantesPeak]

I have been impressed with the WSJ. They are one of the few mainstream media that seems to have a decent grasp on the energy situation as this article demonstrates.
Many articles that I see Dante posting come from the WSJ. One of the few good newspapers I have read.

Actually the WSJ did also have a good article on diesel a month or so ago.

The only thing really missing from the WSJ is one comprehensive analysis of the PO situation - which I admit may be too complex for one article and beyond the scope of a newspaper.

[misterno]

The link you provided is asking for subscription

Is there a way to read WSJ articles without subscription? I think there was something called www.digg.com but can not find there either.

[yull]

http://royaldutchshellplc.com/2008/05/2 ... th-demand/

Here is a free link to the whole article.

Decling net exports are definitely the most scary and underlooked part of PO. They are in pretty steady decline already - a 2.5% decline just last year. Just imagine what the decline rate will be when oil production finally goes into proper decline. All hell will surely break loose?

[Denny]

That drop from Saudi Arabia really jumps out when you lokk at the map graphic.

Isn't this the same place that committed to INCREASE exports just a couple of weeks ago? If the high, and increasing, prices we have seen for the past five years solid did not convince them to bump up producton, its hard to believe some warm and fuzzy words from George Bush would have any effect.

If the Saudis cannot pick up the market slack left by the other declining oil producers, the whole world better find some functional rationing plan, or else prices will double yet agin in the next two to three years. But, when oil is is already over $100, a doubling will be the death blow to many countries economically.

Even rich countries, like the USA and Japan will feel the pains.

[Cashmere]

A very sobering and clear reminder that it's not only about production, it's about how much oil can be delivered.

It's the second step in the realization process . . .

1. It doesn't matter how much oil is in the ground, it matters only what can be produced.
2. It doesn't matter how much can be produced, it matters only what is available on the open market.

More frightening yet is that these countries have the opportunity to curtail domestic use and sell on the open market for 130, but yet are not doing that nearly as much as they could be.

Stupid humans.

[misterno]

Somehow I believe Saudis can increase production but not enough to offset the decline in other parts of the world.

They have the technology and money and they will increase the production. At least this will give us a little relief.

[Cashmere]

Anybody have any idea how trustworthy KSA is on their internal consumption?

Seems to me that it would be very easy for them to hide falling production by writing it off as "domestic consumption".

[Uniquack]

Here's a way to read WSJ online for free:
http://www.boingboing.net/2008/03/21/sa ... -to-r.html

[Niagara]

"It's not the size of the tank, it's the size of the tap..."

A nice succinct way of putting it.

My apologies, I cannot remember and give credit to the person who coined that phrase.

[burtonridr]

The world's top oil producers are proving unable to put more barrels on thirsty world markets despite sky-high prices, a shift that defies traditional market logic and looks set to continue.

LOL that is priceless, defies traditional market logic.

The prices became sky high because of the limited supply and rising demand, doesnt sound that far from traditional market logic

[DantesPeak]

A good example popped up just today. Iran annouced it's facing a shortage of electricity, due to dry conditions at hydro-plants. Guess what? Who's more important, domestic consumers or oil importers? Domestic needs appear to win out almost all the time.

Oil sustains above $130, awaits inventory report
29 May 2008 12:55:25


Meanwhile Iran, the world's fourth biggest oil exporter, had cut its crude oil exports by 200,000 barrels a day due to a seasonal fall in demand.

Commodity online