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01/27/2006

Energy Review

When it comes to energy, there is no shortage of material. I have
a large folder of articles and charts that I clip out, daily, and the
only way to make a dent in it is to start writing. I’ll do my best
to place this in some semblance of order and from time to time
over the coming months I’ll update the statistics.

---

World Oil Demand, 4th Quarter 2005, millions of barrels a day

United States ..20.79 mmbd
North America other 4.74
Europe 16.59
Japan 5.53
South Korea .2.24
Pacific other .1.09
Former Soviet ..3.86
China ....6.90
India .2.63
Asia other .6.19
Brazil ....2.20
Latin America other .2.79
Middle East ..5.94
Africa ...2.93

World ..84.43

[International Energy Agency]

Remaining Reserves

[Number of years that remaining reserves would last were
production to continue at the current level.]

Iraq more than 100
Kuwait .......more than 100
UAE ..more than 100
Iran 88.7
Kazakhstan 83.6
Venezuela .....70.8
Saudi Arabia.....67.8
Libya .....66.5
Nigeria ..38.4
Russia 21.3
U.S. ..11.1

Global proved oil reserves 2004 share

Saudi Arabia .22.1%
Iran ....11.1
Iraq ..9.7
Kuwait .....8.3
UAE ....8.2
Venezuela ...6.5
Russia .6.1
Other .28.0 [including U.S., Canada, Mexico, Libya,
Nigeria]

Major importers of Russian natural gas, 2004 Russia’s share of
imports ranked by volume

[As Russia increasingly plays the energy card]

Germany .....41%
Italy .34
Turkey .....80
France .........31
Hungary ..85
Poland .........87
Slovakia ........100
Czech Republic ..73
Austria 77
Finland ..100

[BP Statistical Review of World Energy]

--OPEC members: [Ranked in terms of production .though in
the case of Iraq it is anywhere from 3rd to 6th most months. Iraq
is also normally excluded from official OPEC production targets
as stated by the cartel.]

Saudi Arabia, Iran, Iraq, UAE, Kuwait, Nigeria, Venezuela,
Libya, Algeria, Indonesia, Qatar

--Daniel Twining / The Weekly Standard:

“The CIA forecasts that ‘growing demands for energy’ will have
‘substantial impacts on geopolitical relations’ in coming years.
The need for energy increasingly will be ‘a major factor’ shaping
the foreign policies of key states. Total energy consumed
globally will rise by 50 percent over the coming two decades,
most of it in the form of oil and natural gas. To maintain growth,
rising powers like China and India will need to double or triple
their energy consumption. The European Commission estimates
that Europe’s requirements for imported energy will rise from 50
percent of total demand in 2000 to nearly 70 percent in 2020,
with gas imports increasing most rapidly.

“Russia today is the world’s largest exporter of natural gas and
second-largest exporter of oil, after Saudi Arabia. Russia also
possesses vast, untapped oil and gas reserves, which dwarf
sources of supply in the Americas, Europe, and Asia outside the
Middle East. The CIA predicts that ‘Russia will be well
positioned to marshal its oil and gas reserves to support domestic
and foreign policy objectives.’”

--Russia’s Gazprom holds 16% of the world’s proven gas
resources and accounted for a fifth of global gas output last year.
It supplies a quarter of Europe’s gas.

[Gazprom, Reuters, UFG, Wall Street Journal]

--This may be stating the obvious, but anyway:

“Even if Middle Eastern states do develop their oil resources, the
IEA said it is uncomfortable with growing dependence on the
region’s energy. ‘This is not a sustainable energy future,’ Fatih
Birol, the IEA’s chief economist and principal author of the
study, said in an interview. In the group’s so-called reference
scenario, in which countries invest as recommended by the IEA,
‘we are ending up with 95% of the world relying for its
economic well-being on decisions made by five or six countries
in the Middle East.’ [I’d add Venezuela]

“In the past 30 years, Mr. Birol said, there have been 20 oil-
supply cutoffs of more than 500,000 barrels a day – 17 of them
in the volatile Middle East

“The IEA also expressed anxiety about the effects on the climate
of the growing use of hydrocarbons. Carbon emissions, which
are thought to contribute to global warming, are expected to rise
by 50% in the next 25 years.”

[Selina Williams and Bhushan Bahree / Wall Street Journal]

--Venezuela: President Hugo Chavez vows to stay in power until
2021. “Critics say his shakeup (of the economy) may
redistribute income from the rich and middle classes to the
poorest, but the spending won’t be sustainable if oil prices
tumble. ‘With oil prices this high, Chavez doesn’t need
investment,’ [says one expert] ‘but if they drop by $15 or $20 [a
barrel], there will be problems.’ Annual foreign direct
investment has fallen from $5 billion in 1998 to $1.5 billion last
year [2004] according to Central Bank figures.”

[Stephen Ixer / Business Week]

--Iran’s production, currently 4 mmbd (exports 2.7 mmbd),
peaked at 6 mmbd prior to its war with Iraq.

--Japan: “Most of Japan’s oil is shipped through two sea lanes:
one directly south of Taiwan and another farther south, which
increases the shipping length by a costly two days.

“ ‘If you assume conditions are balanced now,’ said Adm. Koichi
Furusho, the former chief of staff of Japan’s Maritime Self-
Defense Forces, ‘they would collapse as soon as Taiwan unifies
with China. The sea lanes would turn all red.’”

[Howard French and Norimitsu Onishi / New York Times]

--China imports 14 percent of its oil from Iran.

--In 1994, there were 9.4 million vehicles on the road in China.
In 2004, there were 28.6 million vehicles. In 2020, the Chinese
government predicts there will be 140 million.

--Canada’s oil sands produce about one million barrels a day, a
figure which is supposed to triple to 2.7 mmbd by 2015. [The
average cost of production here is $22 to $25. Labor costs are a
big factor given Alberta’s tight job market.]

[Tamsin Carlisle / Wall Street Journal]

--“The full extent of the Gulf of Mexico energy infrastructure is
hard to grasp. Altogether, about 800 manned platforms, plus
several thousand smaller unmanned platforms, feed their oil and
gas into 33,000 miles of underwater pipelines, a good part of
which eventually reaches shore at Port Fourchon at the mouth of
the Mississippi. That adds up to 35% of domestic oil production
(including oil from state as well as federal waters) and over 20%
of our natural gas coming from off-shore. Add to that the 10%
of U.S. oil imports that flow in through the same corridor, plus
the string of refineries and pipeline networks that sprawl along
the Gulf Coast, and you have a complex that constitutes our
single most important energy asset.”

[Daniel Yergin]

--The Arctic National Wildlife Refuge would by most
conservative estimates supply the U.S. with one million barrels
of oil per day, or 5% of our current usage.

--The Strategic Petroleum Reserve in the U.S. currently holds
about 690 million barrels of oil, near its peak.

--The 5 Greatest Risks to U.S. oil supply, according to Daniel
Yergin of Cambridge Energy Research Associates:

1) The collapse of Saudi Arabia, through a coup against the royal
family or destruction of oil fields.

2) Political instability in Venezuela or other major oil-producing
nations – or another U.S. war.

3) Natural disaster, such as a hurricane or an earthquake.

4) Terrorism or accidents that destroy a refinery or major oil
pipeline.

5) Increased competition from China and India.

[Parade magazine]

--OPEC supplies the United States with about 33% of our
imports. [Roughly 5 million barrels a day.]

---

Note: Last week I did a piece on advertising in the 1940s and
said I couldn’t believe the gas mileage figures in those days for
the Studebaker generally mid- to upper-20s per gallon. So this
elicited a response from a good friend of the family, Fred S.

“I do recall a trip with the folks in a 1950 Mercury from Iowa to
Michigan. I believe we got 21-22 mpg. The 1950 Mercury was
a much heavier car than the 1941 Studebaker but it also had
overdrive. Dad drove 60-65 mph so it might be possible with a
lightly loaded Studebaker at 50 mph to get numbers like those
quoted in the ad. By today’s standards, the car was
underpowered and had no comfort options (AC, PS, PB, etc.) but
it had an ‘economy’ orientation. Maybe the ad isn’t that far-
fetched!”

Fred adds that gasoline in those days was around 19 cents a
gallon.

Wall Street History will return next week. More on energy; the
past, present and future.

Brian Trumbore



AddThis Feed Button

 

-01/27/2006-      
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Wall Street History

01/27/2006

Energy Review

When it comes to energy, there is no shortage of material. I have
a large folder of articles and charts that I clip out, daily, and the
only way to make a dent in it is to start writing. I’ll do my best
to place this in some semblance of order and from time to time
over the coming months I’ll update the statistics.

---

World Oil Demand, 4th Quarter 2005, millions of barrels a day

United States ..20.79 mmbd
North America other 4.74
Europe 16.59
Japan 5.53
South Korea .2.24
Pacific other .1.09
Former Soviet ..3.86
China ....6.90
India .2.63
Asia other .6.19
Brazil ....2.20
Latin America other .2.79
Middle East ..5.94
Africa ...2.93

World ..84.43

[International Energy Agency]

Remaining Reserves

[Number of years that remaining reserves would last were
production to continue at the current level.]

Iraq more than 100
Kuwait .......more than 100
UAE ..more than 100
Iran 88.7
Kazakhstan 83.6
Venezuela .....70.8
Saudi Arabia.....67.8
Libya .....66.5
Nigeria ..38.4
Russia 21.3
U.S. ..11.1

Global proved oil reserves 2004 share

Saudi Arabia .22.1%
Iran ....11.1
Iraq ..9.7
Kuwait .....8.3
UAE ....8.2
Venezuela ...6.5
Russia .6.1
Other .28.0 [including U.S., Canada, Mexico, Libya,
Nigeria]

Major importers of Russian natural gas, 2004 Russia’s share of
imports ranked by volume

[As Russia increasingly plays the energy card]

Germany .....41%
Italy .34
Turkey .....80
France .........31
Hungary ..85
Poland .........87
Slovakia ........100
Czech Republic ..73
Austria 77
Finland ..100

[BP Statistical Review of World Energy]

--OPEC members: [Ranked in terms of production .though in
the case of Iraq it is anywhere from 3rd to 6th most months. Iraq
is also normally excluded from official OPEC production targets
as stated by the cartel.]

Saudi Arabia, Iran, Iraq, UAE, Kuwait, Nigeria, Venezuela,
Libya, Algeria, Indonesia, Qatar

--Daniel Twining / The Weekly Standard:

“The CIA forecasts that ‘growing demands for energy’ will have
‘substantial impacts on geopolitical relations’ in coming years.
The need for energy increasingly will be ‘a major factor’ shaping
the foreign policies of key states. Total energy consumed
globally will rise by 50 percent over the coming two decades,
most of it in the form of oil and natural gas. To maintain growth,
rising powers like China and India will need to double or triple
their energy consumption. The European Commission estimates
that Europe’s requirements for imported energy will rise from 50
percent of total demand in 2000 to nearly 70 percent in 2020,
with gas imports increasing most rapidly.

“Russia today is the world’s largest exporter of natural gas and
second-largest exporter of oil, after Saudi Arabia. Russia also
possesses vast, untapped oil and gas reserves, which dwarf
sources of supply in the Americas, Europe, and Asia outside the
Middle East. The CIA predicts that ‘Russia will be well
positioned to marshal its oil and gas reserves to support domestic
and foreign policy objectives.’”

--Russia’s Gazprom holds 16% of the world’s proven gas
resources and accounted for a fifth of global gas output last year.
It supplies a quarter of Europe’s gas.

[Gazprom, Reuters, UFG, Wall Street Journal]

--This may be stating the obvious, but anyway:

“Even if Middle Eastern states do develop their oil resources, the
IEA said it is uncomfortable with growing dependence on the
region’s energy. ‘This is not a sustainable energy future,’ Fatih
Birol, the IEA’s chief economist and principal author of the
study, said in an interview. In the group’s so-called reference
scenario, in which countries invest as recommended by the IEA,
‘we are ending up with 95% of the world relying for its
economic well-being on decisions made by five or six countries
in the Middle East.’ [I’d add Venezuela]

“In the past 30 years, Mr. Birol said, there have been 20 oil-
supply cutoffs of more than 500,000 barrels a day – 17 of them
in the volatile Middle East

“The IEA also expressed anxiety about the effects on the climate
of the growing use of hydrocarbons. Carbon emissions, which
are thought to contribute to global warming, are expected to rise
by 50% in the next 25 years.”

[Selina Williams and Bhushan Bahree / Wall Street Journal]

--Venezuela: President Hugo Chavez vows to stay in power until
2021. “Critics say his shakeup (of the economy) may
redistribute income from the rich and middle classes to the
poorest, but the spending won’t be sustainable if oil prices
tumble. ‘With oil prices this high, Chavez doesn’t need
investment,’ [says one expert] ‘but if they drop by $15 or $20 [a
barrel], there will be problems.’ Annual foreign direct
investment has fallen from $5 billion in 1998 to $1.5 billion last
year [2004] according to Central Bank figures.”

[Stephen Ixer / Business Week]

--Iran’s production, currently 4 mmbd (exports 2.7 mmbd),
peaked at 6 mmbd prior to its war with Iraq.

--Japan: “Most of Japan’s oil is shipped through two sea lanes:
one directly south of Taiwan and another farther south, which
increases the shipping length by a costly two days.

“ ‘If you assume conditions are balanced now,’ said Adm. Koichi
Furusho, the former chief of staff of Japan’s Maritime Self-
Defense Forces, ‘they would collapse as soon as Taiwan unifies
with China. The sea lanes would turn all red.’”

[Howard French and Norimitsu Onishi / New York Times]

--China imports 14 percent of its oil from Iran.

--In 1994, there were 9.4 million vehicles on the road in China.
In 2004, there were 28.6 million vehicles. In 2020, the Chinese
government predicts there will be 140 million.

--Canada’s oil sands produce about one million barrels a day, a
figure which is supposed to triple to 2.7 mmbd by 2015. [The
average cost of production here is $22 to $25. Labor costs are a
big factor given Alberta’s tight job market.]

[Tamsin Carlisle / Wall Street Journal]

--“The full extent of the Gulf of Mexico energy infrastructure is
hard to grasp. Altogether, about 800 manned platforms, plus
several thousand smaller unmanned platforms, feed their oil and
gas into 33,000 miles of underwater pipelines, a good part of
which eventually reaches shore at Port Fourchon at the mouth of
the Mississippi. That adds up to 35% of domestic oil production
(including oil from state as well as federal waters) and over 20%
of our natural gas coming from off-shore. Add to that the 10%
of U.S. oil imports that flow in through the same corridor, plus
the string of refineries and pipeline networks that sprawl along
the Gulf Coast, and you have a complex that constitutes our
single most important energy asset.”

[Daniel Yergin]

--The Arctic National Wildlife Refuge would by most
conservative estimates supply the U.S. with one million barrels
of oil per day, or 5% of our current usage.

--The Strategic Petroleum Reserve in the U.S. currently holds
about 690 million barrels of oil, near its peak.

--The 5 Greatest Risks to U.S. oil supply, according to Daniel
Yergin of Cambridge Energy Research Associates:

1) The collapse of Saudi Arabia, through a coup against the royal
family or destruction of oil fields.

2) Political instability in Venezuela or other major oil-producing
nations – or another U.S. war.

3) Natural disaster, such as a hurricane or an earthquake.

4) Terrorism or accidents that destroy a refinery or major oil
pipeline.

5) Increased competition from China and India.

[Parade magazine]

--OPEC supplies the United States with about 33% of our
imports. [Roughly 5 million barrels a day.]

---

Note: Last week I did a piece on advertising in the 1940s and
said I couldn’t believe the gas mileage figures in those days for
the Studebaker generally mid- to upper-20s per gallon. So this
elicited a response from a good friend of the family, Fred S.

“I do recall a trip with the folks in a 1950 Mercury from Iowa to
Michigan. I believe we got 21-22 mpg. The 1950 Mercury was
a much heavier car than the 1941 Studebaker but it also had
overdrive. Dad drove 60-65 mph so it might be possible with a
lightly loaded Studebaker at 50 mph to get numbers like those
quoted in the ad. By today’s standards, the car was
underpowered and had no comfort options (AC, PS, PB, etc.) but
it had an ‘economy’ orientation. Maybe the ad isn’t that far-
fetched!”

Fred adds that gasoline in those days was around 19 cents a
gallon.

Wall Street History will return next week. More on energy; the
past, present and future.

Brian Trumbore