Forbes says OPEC is out of oil
6-16-2011
http://blogs.forbes.com/christopher...-summer-oil-shortage-this-economist-says-yes/
Could We See A Summer Oil Shortage? This Economist Says Yes.
China and Iraq, where because of electric power shortages governments and private citizens are turning to diesel. China has
banned exports of diesel in efforts to secure enough to combat outages and has reduced production of chemicals to conserve fuel. Iraq in March
bought 50 diesel generators to ease outages, with the nations electricity minister promising 16 hours of power a day by 2012.
This is a real power shortage. Whether the shortage is the result of insufficient oil, gas, coal, nuclear, hydro, is almost beside the pointthere is not enough energy available (especially diesel) to meet demand. This is why Alhajji doubts that any efforts by the Saudis or like-minded OPEC nations will be able to forestall a shortage of oil this summer.
Christopher Helman
Fuel
Could We See A Summer Oil Shortage? This Economist Says Yes.
Jun. 16 2011 - 12:16 pm | 715 views | 0 recommendations | 1
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OPEC headquarters. Running on empty?
Oil prices might be high, but theres no shortages around the world, right? Think again, says Anas Alhajji, chief economist at NGP Energy Capital Management in Dallas. The U.S. might be getting all the oil it demands, but the story is different in places like China and Iraq, where because of electric power shortages governments and private citizens are turning to diesel. China has
banned exports of diesel in efforts to secure enough to combat outages and has reduced production of chemicals to conserve fuel. Iraq in March
bought 50 diesel generators to ease outages, with the nations electricity minister promising 16 hours of power a day by 2012.
This is a real power shortage. Whether the shortage is the result of insufficient oil, gas, coal, nuclear, hydro, is almost beside the pointthere is not enough energy available (especially diesel) to meet demand. This is why Alhajji doubts that any efforts by the Saudis or like-minded OPEC nations will be able to forestall a shortage of oil this summer.
We have a major problem right now, especially in July and August, he says. The Saudis and Gulf allies may say that they intend to ramp up oil production, but not much of any increase will make it through to export markets. Most of the increase in crude oil production will be burned in utilties power plants and in private generators in the oil producing countries to mitigate power shortages, he says. Anything left will be burned up in China.
In the United States, Alhajji sees the Federal Reserves moves to keep interest rates low and to debase the dollar through quantitative easing as also contributing to high prices. As the dollar sheds value it will naturally lead to high dollar-denominated oil prices. As the U.S. pays ever more for foreign oil, the trade balance will worsen, further eroding the value of the dollar and further propping up oil prices.
Fueling cars with compressed gas, powering electric cars with electrons made from burning gas, will help reduce oil demand both here and in the rest of the world. We need some sort of solution, he says, becauase, at least for the short-term, OPEC cannot deliver.
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