EIA: Annual Energy Outlook 2006

The Annual Energy Outlook 2006 presents a forecast and analysis of US energy supply, demand, and prices through 2030. The projections are based on results from the Energy Information Administration's National Energy Modeling System. The AEO2006 includes the reference case, additional cases examining energy markets, and complete documentation.
Just wanted to give everyone a heads-up that it was out: (link). (and here's a link to the general forecasting page which links to this report...). I am betting we'll be talking about this over the next few days...
I love how all the projected oil and gas prices magically begin to plummet starting today even though all of them have sharply upward trends.

I wonder if they even believe what they're writing?

Jon, your cynical comments are in line with most here and hence require the reality check that only Mike Lynch has a better record for long term production forecasts, going back as far as 1991.  Our challenge to the element of TOD'rs that are of the apocalyptian ilk stands:  Show us who has a better record and we'll add him/her to our 11 Scenarios.  In the meantime, keep whining...

Our EIA Scenario is not affected today as the extraction forecast in the AEO is based on their reference scenario while we chose their 2005 "high price scenario" which is more conservative than today's outlook.  The URR remains exactly the same as the last release an thus does not affect the exhaustion date next century.

All Scenarios and EIA's 1991 outlook is at http://trendlines.ca/economic.htm  

Can someone disagree with your outlook and not whine?
If so, tell us how.
First, this is not my outlook.  It is a compilation of the world's 11 best modelers.  On Christmas Day, Colin Campbell reviewed the year's data and moved his conventional production peak to 2005 from 2004.  Again.  And he has increased his "all liquids" production peak to 86-mbd from 85.  Again.  In November, Rembrands Koppelaar reviewed all the current data for one of the most comprehensive outlooks (incl refining capacity component) and forecast a 92.4-mbd peak ahead of us.

Yet pundits here ignore the best Peakist predictions and dwell on their navel gazing and ad nauseum posts that we are post peak.  As if our friends from Ireland and the Netherlands had somehow joined "the dark side".

So yes, Bio, it is mere whining.

In 1991, Lynch said we be at 81-mbd in 2005.  It was indeed 84.  IEA was next best with its 1996 forecast of 80-mbd for 2005.  And EIA (aka DOE) saw 79-mbd coming back in 1997.

All the while Campbell foresaw 55-mbd in '91 and upped it to 64 in 1997.

In this our third year of publishing the Scenarios, we continue to see the optimists coming down and the Peakist revising upwards.  And IEA's middle-of-the-road outlook continues to represent the likely outcome...

Extremists at both ends of the spectrum face gnashing of teeth each year end.  We have two sets of whiners...

Apologies to followers of Jean Leherrere of France and his excellent Hubbert type modeling. It was excluded above and his 2005 Outlook forecasts an 87.7-mbd peak in 2014.
What is more extreme?

Saying April was peak, like the "whiners" on TOD or that production will continue to rise to 120 million (or whatever number) in some far off date?

We both know the answer.

Freddy, longterm production moves at an annualized rate of between 1.1% and 2.2%. It doesn't take any forecasting skill past 4th grade math to figure this out. Notice how slim this window is. What exactly is the mystery that you are so good at deciphering?

The worry here is that this rate cannot be maintained. The evidence is growing that it cannot.

While I still think your input is needed, it must be noted that the reason some people here think you are a complete douchebag is that you never bring any evidence to the table suggesting the opposite.

Nobody cares about trendlines. I know. I actually follow them. Try providing some indicators that we can continue "producing" oil at 1 or 2 million barrels per day more than the year before for the next few years. Dotted lines on a chart mean nothing.

Skip the personal insults please - thanks.
Drilling down into the EIA/AEO data, i see that the max 2025 outlook has been pushed out to 2030 in this new release.  The reference case is down 8%; but the high price case production has been cut an incredible 12%.  And peaks at 102-mbd.  We will show the modified graph for this and ASPO after the Olympics.  The merging continues...
Thanks Freddy. EIA suggesting possible peak at 102 mbpd sounds very ominous, I guess that's about 2015. I wonder how long it'll be before CERA begins to shift towards the median?
Just checked your site, seems that the EIA is anticipating a considerable reduction in rate of production growth compared with the previous high price scenario, with peak still as late as 2030 maybe. That's only half the rate of production / consumption increase we've had in the last 5 years despite tripling of price over that time. Smells a bit odd.
A comment related to government reporting from an interview on "The Financial Sense News Hour."

"The same is true as you pointed out in natural gas where the stocks were reported as going up when one day 2 months ago the EIA web page showed that there was a notice to participants that the pressure readings inside the salt-dome storage capacities were so low that the structural integrity of the pressure chambers was called into question. There's a limit below which the pressure would cause the chamber to collapse. This was reported on the website and immediately removed in a matter of hours later. When you look at the official information on storage there is no record of that low pressure reading in the long term EIA natural gas storage chart. So there's clear evidence that the government is playing around with the storage information for natural gas."


Has anyone heard anything on this, could it have been true?

I haven't been involved with the SPR for a long time, but to my knowledge ,oil is (was) stored in the SPR and NG is (was) not. Therefore I don't understand how a low pressure reading in the SPR could be realted to anything involving NG.
I'm speechless.

Domestic Crude Oil Production
Begins To Decline After 2016

The graph actually shows domestic production bouncing up in a big way between now and 2016.

And this is the assumption that ANWR will not be touched!

I bet the EIA crew comes here and reads this.  They say to one another "yep TOD is right on the money, too bad we would get fired if we didn't put out this propaganda.... aka Future energy Outlook".

I have always wondered who is looking at this blog...it has been implied that some high-level investors and government officials drop in, and that some of the people who are regulars have "high-level" contacts in various areas.  Because of this, I am guessing that there are a whole bunch of conflicting motives for the manipulation of what goes on here.  However, because anything that is posted here has to withstand the force of those conflicting motives, and considering my usually highly cynical nature, I have a relatively high level of trust of the overall conclusions presented on this blog.

I wish we would hear more from the Abundant Oilers - if any of you are listening, let me ask you some questions: "How does it feel to have people call you liars?  How does it feel to be a part of a system that will lead to the majority of the people being blindsided by some nasty scenarios?  If you see that people's lack of the ability to effectively plan has led to massive hardship and even death, will you take any responsibility?"

Come on Abundant Oilers - come out and defend yourself!  Get your buddies who aren't on this blog to join and fight using your cold, hard data.

What I don't understand is why speculation is blamed for the oil prices.  Speculators can't receive the oil and knowing that, all they can do is contribute to volitility, since they don't consume the product and must sell at some point.  Also while we look hard at our own oil inventories, the price of oil is set globally.  So increases in our inventories can have the opposite effect that one might expect, because someone had to go without.

Here is another interesting article:

http://www.mywesttexas.com/site/news.cfm?newsid=15933008&BRD=2288&PAG=461&dept_id=474107 &rfi=6

I agree BaSE.  Maybe your article had a bit of truth to it if they were talking about short-term movements, I couldn't really tell what their timeframe was.  I do some trading in the gold market, and there is no doubt in my mind that the gold market is being manipulated by...the central banks!  I have no doubt that they would do anything to keep the price of gold down, and the apparent value of their currencies up.  So, I wonder if this last plunge in the oil price wasn't caused by intense selling by folks like the Saudis.  Anything to keep the boat from rocking, but then again, I am so cynical that I shock myself sometimes.
So I have to say, perhaps no surprise, that this strikes me as a deeply implausible document. These official projections all seem to start with the assumption that the future will be more or less like the present for the populace, and then fudge the numbers to justify that conclusion. The sharp changes in their assumptions about 2025 prices based on the price changes from 2004 to 2005 should be enough to give one serious pause...

If we drill down, we find that the fudging is getting less and less plausible, even compared to AEO's of a few short years ago. Here's the graph of what they claim for domestic US production (a subject I happen to have looked into somewhat).

In the text surrounding this figure, there are basically no arguments justifying why it's believable. Here are the issues I see.

  • The deepwater production is all in the Gulf of Mexico. The last two years in a row, it's been seriously impacted by hurricanes, and the global warming evidence to me suggests this will continue to be a major issue - much more so by 2030 than today. Thus that big increase in deepwater production is, IMO, contingent on figuring out Category-5 proof techniques of subsea oil extraction - I'm not saying that can't be done, but I expect it to spread production of the available reserves out significantly. However, let's let this point slide - I accept that my view is certainly not mainstream yet.
  • The lower 48 onshore has been declining at a gradually increasing pace for many years - it's now up to several percent a year. They are proposing that in the future, production will level out and become almost constant (ie the gradually increasing decline rate is doing to gradually decrease back towards zero). No region has ever done this. I don't know why any would - it seems completely implausible.
  • Ditto the shallow water offshore which also miraculously levels out.
  • The net effect of all this is that, after many years of basically decreasing production (with the odd exception before JD calls me on it), we will now have a sharp trend break and production is going to increase again for most of a decade.
  • The area under the curve to 2030 corresponds to about 50gb of oil. Judging by the relatively shallow declines obtaining in 2030, it would seem they are calling for another 50gb-100gb after 2030 before we hit the final URR. Ie, they are estimating total that the US can producing another 100gb-150gb of oil, versus the roughly 190gb we've used to date. My estimate was remaining oil production was 27 &plusmn 8gb. Proved reserves stood at about 22gb at the end of 2004.
Now, maybe some would like to argue their extrapolations are more reliable than mine. What I would have liked to have seen is their argument for why their extrapolations are plausible. There's absolutely no justification provided in the text (see p91). When I see unlikely looking extrapolations, with no justification, which lead to a politically convenient conclusion, I tend to draw the inference that the process which produced the document was too flawed to be worth further reliance on it.

Maybe McKelvey (or a disciple of his) works for EIA now.
We can always look at the bright side.

... But then again, staring into the sun can make a fellar blind and deranged.

as can some other actions which the EIA report resembles.
I agree that it is frustrating that no justification for their supply graphs is provided. Again, it seems they grossly minimize effects of well and field depletion and decline. A search for the word "depletion" let to 4 hits in the entire report, generally alluding to issues outside the US. Even without the hurricanes, one wonders what their prediction would be for peak and then decline of the Thunder Horse platform, for example, and the drilling required to replace the larger GOM fields in play right now.
Hi all,

On energyresources a while back (I can't find the ref# dang it!), Glenn Morton <http://home.entouch.net/dmd/Oilcrisis.htm>
ran down a list of the deepwater GOM fields with the projected production rates and the actual, to-date, production rates of those that had started up. All were fairly well below projections. Seems that optimism is the hallmark of any entrepreneurial endeavor. Maybe there is a psychological principle involved which dictates that the higher the stakes, the grosser the exaggerations of projections. We could call it the Kurzweil effect :-)


In my opinion, John Maynard Keynes had the most astute observations about the connection between excess optimism and investment. He talked about "animal spirits" as a sort of metaphor for the surging hormones you need to be crazy enough to start a new enterprise. Everybody knows in his rational mind that 80% of new restaurants fail within five years. Everybody who opens a new restaurant thinks that she will beat those odds. The ones who do become known as Ben and Jerry, or Colonel Saunders, or Dominoe's pizza.

'Twas ever thus.

Its the geologists. They can't help themselves. If optimism was a psychotic illness there wouldn't be any of them on the streets. Their math allows only limited usage of negative numbers, so their error margin is always (+)30% or so. I think they only use negatives for describing how far below the wellhead they are. Then once they see the +30% figure, their optimism blurs into amnesia so they forget any number lower than the last one they got. And now remember that if another geologist gives a higher estimate on his project, its his project that will be developed and that a 30% error on a large reserve is higher than a 30% error on a small reserve.
I agree that it is frustrating that they don't provide a justification for their extrapolations. From what I have read of earlier reports, they never provide them. This makes it impossible to go back to earlier reports and analyze what went wrong, so as to avoid making the same mistakes again.

Having said that, there are some points in their favor. The deepwater graph shows steady growth interrupted by the recent hurricanes. EIA forecasts that growth will resume. Basically they are assuming that the last couple of years of bad hurricanes were an anomaly. I think that this accurately represents the mainstream meteorological view.

I understand that you don't agree, and that there are those in the community who say that global warming is beginning to have an effect, but even among that group I don't think they would claim that we are going to see a repeat of 2005 every year from now on. Even if the average is getting worse, it is a very slow, gradual climb, and there is a lot of random year to year variation in terms of how any given region will be hit by hurricanes. I doubt that even you would predict that there is a greater than 50-50 chance that 2006 will produce significant hurricane damage to GOM oil production.

As for the rest, my eyeballing of the lower 48 production curve shows it concave upwards. This is exactly what you expect from exponential decrease. Their extrapolation looks just fine, visually.

The main one that I agree is questionable is shallow water, which has been concave downwards but where they show it leveling off. Still, this is the smallest contribution to the overall production so it wouldn't change the main conclusion much.

As far as your estimate of 27 +- 8 GB remaining, does that include deepwater offshore? Kind of an awkward question, I'd think. The HL technique doesn't exactly respect geographical boundaries. You draw a curve and fit a line. If that curve includes the beginning of a ramp-up of deepwater production, then what, the line automagically knows how much will come from that region? I don't think so!

Their extrapolation of the lower-48 curve really is not ok. I put their picture in the background of a graph on the same scale, matched their lower-48 curve, and then did a straight expontential fit/extrapolation. That gives:

That's what a constant decline rate matching the 1990-2004 data would do (the red line). So they are definitely assuming that decline rates are going to get milder in the future for some reason. However, don't forget that over the long haul growth/decline rates have been fairly continously, if noisily, getting worse, not staying constant:

So even the exponential is likely over-optimistic.

In response to your point on extrapolating the Hubbert Linearization (which indeed was of all US production in including Alaska and GoM deepwater): it obviously is feeling the beginning of the deepwater GoM bump because it has been going on for a decade or so. However, if one felt that there was a very large amount of GoM such that only a tiny fraction of it had been so far developed or proved up, the linearization would miss that (I agree). I do not believe that is the situation - there is not large amounts of unproved discovery out there (Bubba could speak more strongly to this). It's possible GoM will push things up towards the top of my error bars, but I see no reason to revise my estimate at this point.

Well, your graph and even that of the EIA show no "missing" huge proven reserves number if this is reflected by increasing expected daily production rates. This World Oil (pre-hurricanes) estimate seems to be reflected in the EIA data
Oil production in the Gulf will increase to a record 2 MMbopd by 2006, compared to the current rate of 1.5 MMbopd, and could reach 2.25 MMbopd by 2011, according to MMS projections....

A rise in deepwater oil production is fueling this dramatic increase, and almost 80% of Gulf oil production in 2011 is expected to come from this resource-rich region. Watson said, "We expect our greatest oil production to come from the deepwater region of the Gulf. For gas, both deep water and the shallow-water deep shelf hold the most promise."

Look at this MMS document Gulf of Mexico Production Forecast 2004 to 2013. Here's a graph from there.

There is some disagreement between all three sources (EIA, MMS and World Oil) but it is relatively minor up to about the year 2012. Even outside of hurricanes, only a very minor bump can be expected from GOM oil production. And it looks like the MMS predicts that GOM production actually peaks in the 2009 to 2011 period. Somehow, the EIA has GOM production increasing after that to about 2016/2017 or so. Needless to say, I'm skeptical about that.

And of course Stuart's Lower 48 estimate is real based on historical decline rates. The EIA's is an unsubstantiated fantasy that doesn't seem to consider declines at all.

I don't know if the bid price on a new lease block has to be paid up front or not. Assuming that it must be paid before drilling begins, I offer the following; if not, skip to the next post. The World Oil article you mention says they will start offering royalty discounts for those fields that are, "too costly and financially risky to attempt". Since there is risk involved, the higher potential net back comes in the form of reduced royalties paid on the produced HCs. That strategy is only valid if you do make a strike, which depends on the high initial costs of winning with the high bid for a new block and mobilization costs to start drilling the first well. It would seem a more effective incentive would be a program that would get everybody out there drilling exploratory wells while minimizing the initial hard cash loss potential. Since the service companies might not go along with reducing the mobilization and drilling costs for nothing, we should look at the bid prices paid for new leases. Wouldn't it make more sense to take bids from all prospectors, chose the winner, then reduce the highest bid amount to be paid to the MMS by, what?; 50%? Since any dry holes wouldn't cost so much in cold hard cash up front, a potential total loss on a dry hole wouldn't be so devestating and, if a strike was made, the producer would still have the same net back. Or, if MMS still wants all the money, let them take some of the risk too. They could reduce the highest bid by 50%, paid up front, and then the remaining 50% would only be paid if the hit was commercially viable including that 50%. Anything less would mean no payment for MMS. That'll get them thinking seriously.
Actually, I put up the wrong MMS graph. Here's the corrected plot.

But really, it changes my conclusions very little. The peak is 2011 at about 2.2/mbpd for GOM oil production. Again, no disruption from hurricanes.

I do see what you mean on the lower 48 graph with the production declines. It's intersting that the EIA has a little bump upwards in the 2006 time frame, in addition to an overall slower decline rate. I wonder if there is some specific source of oil associated with that bump.

As far as GOM deepwater, their graph seems to show a good 15+ GB coming out of there, but I don't know if that is plausible or not. I don't see how the USA-based Hubbert curve could predict the GOM total, since we are so early in its production history at least as shown on the EIA extrapolation.

To the extent the GoM is comparable or smaller to other sources of "noise" in the curve, it seems to me likely it will be taken account of. Eg, probably GoM deepwater is not larger than Alaska which is the largest single bump in the US curve. If there is a chunk of discovery not in production that is large compared to existing noise in the production curve, the linearization will fail (eg the double peak structure in the UK curve that gives rise to two linear regimes with radically different answers).
While I would be (only moderately) surprised at disruptions as great as 2005, I would actually expect significant disruption for a variety of reasons. One is that we seem to be in a period where more frequent and more intense hurricanes are expected, based on historic trends and water temps. Second, platforms such as Thunder Horse as being placed further into the gulf, and if you look at hurricane paths, you see they will be affected by hurricanes taking a variety of paths from the Fla panhandle to Eastern Texas. Several hurricanes have affected the TH platform and others nearby, from significant damage to several days evacuation. I think as we go deeper to get the remaining oil, this is an increasing problem.
I couldn't figure how to post the picture, but this link gets you to an interesting graphic.


Note that Katrina and Rita aren't even on the above graphic.
Regarding the coming hurricane season:


"THE COMING HURRICANE SEASON - The director of the National Hurricane Center is warning Americans that the 2005 hurricane season may end up being mild compared to 2006. The effects of an El Nino weather system in the Pacific that raises ocean temperatures could increase the intensity of hurricanes this year. He says far too many residents ignored hurricane evacuation requests in 2005."

I'm not exactly sure what a production platform does.  Would it be horribly difficult or expensive to make them into submersibles?  Sitting below the wind and waves would remove a lot of risk.
My understanding is that much of the damage has been done to underwater pipelines that are damaged by the fierce surge generated by the hurricanes. A lot of the delay in restarting has come from a complicated inspection process before restarting oil flow.
My understanding is that the damage to the pipes connecting the wells to the platforms was mostly due to the platforms being blown out of position and pulling on the pipes (pipelines in the path of underwater mudslides are another matter).  If I'm wrong, I hope someone will describe the process better.
Probably was the production equipment that got blown over, the boat landings that got bent up. Stairways and walkways smashed. I think they probably had waves over 54 ft that did a lot of the damage to the lower levels. The platforms are very well stapled to the bottom with piles that penetrate into the mud and below ocean bottom to (at avg water depth) 250 to 360 feet down. I would imagine any semisubmersibles were moved to safe harbour. A completely submersible "production platform" would be way too expensive. Basically your talking like 50% nuclear submarine technology (without the reactor and rotating parts) (and the atmosphere inside would not be a pleasent place to work) so they'd probably be about 1 billion each or something. Certainly that much for deep water. Remember the GOM has about 4000 platforms out there. What's the North Sea have; 400 max I'd guess, but I haven't counted them lately?
My sense is that tiebacks have been getting longer and longer, and one now sees projects with 20km+ undersea tiebacks. I'm wondering if there's any in-principle barrier to them tieing all the way back to land. Or tieing back to a much smaller number of extremely large hurricane-proof platforms.
They probably are, since the farther out you go the cost of more than 1 plfm is prohibitive, so they must develop the surrounding area using more subsea satellite well heads and the resulting longer tiebacks to the central plfm.  Deepwater drilling & plfm costs easily reach 500 million these days.  

Mars Tension Leg Platform BK MC 807 is at 3250 ft water depth and should produce 220,000 BOPD and 220 MMCFD

Good discussion of the Magnolia field development ($ 600 MM) at 4,700 ft water depth 180 miles south of Cameron, Lousiana, in Garden Banks blocks 783 and 784.  Magnolia will tieback to Shell Enchilada Plfm 50 miles away.


Notice the graphic showing the increase in TLP depths over the years from 1000 to 4000 ft.

As near as I know, 5000 ft depth is thought to be the limit for anything to be semi-attached (using Tension Legs) to the ocean bottom.  Water deeper than that requires a semisubmersible and a lota' anchors.  Anadarko's et al Mississippi Canyon block 920, in a water depth of 8,000 feet
will serve as a hub for the development of 17 (!) blocks in the surrounding area.  Cost $ 400 MM.  Project fiche is here.

A new pipeline from Magnolia to the beach would run (I estimate 2 MM/mile) = $360 MM so total would be a cool $1E9, so that's out of the question.  Besides, as the older shallower fields run out, the existing pipelines gain excess capacity, so they'll naturally want to take advantage of those existing assets.  I finally started to feel my 38 year age one day when I arrived on Galveston 144 to inspect the old plfm there to see if it was suitable for removal and recycling it as a pipeline junction platform we needed over towards Corpus Christi.  I had designed the pipelines that connected 144 and 146 across the Galveston Anchorage Area and Galveston Shipping Fairway to the beach 10 years earlier, but it had finally run out of gas and was being decommissioned (that was 1988).  The pipelines are still there waiting for a deeper strike in the vicinity to come along.  

I think this year there are probably a lot of offshore platform engineers running around in Houston updating their design wave height much higher than the 54 ft they used before.

Oh. Forgot.  Besides the expense, running a pipeline all the way back to the beach from deep water gets a little complicated, since there might have to be oil, gas and salt water mixed flow.  Separating the oil and gas into 2 flows would then need 2 x pipeline cost, and you'd still have to dispose of the water, or transport that back to the beach too.  Needs some more pipeline diameter and wall thickness for that.  Then, its a 4000 ft climb to the beach, so thats about 1500 psi of pressure just for the lift, never mind any losses due to flow friction, so it would definitely be a long thick walled pipeline to contain a minimum pressure of say to 2000 psi or more.  Many of the wells start out with 3-5 times that pressure and the flowlines can be designed for that for a short range, but all the way to the beach would be tough.  Most of the time 2 phase gas/liquid flow doesn't have good hydraulic characteristics, depends on the amount of gas in relation to oil quantity.  Sometimes they flow as a froth, bubbles of gas in liquid, a free gas jet down the center of an oil layer running along the walls, sometimes  gas with slugs of liquid flying along.  There can be a lot of wax that deposits on the pipe walls, gas hydrates can form (esp. in the presense of water) as the fluids cool down, internal corrosion from any H2S content mixed with water is very fast.  These only get more complicated as the well pressures decline and flow slows down.  Especially if the water starts getting trapped at low points along the pipe.  Corrosion runs rampant there.
The good news is that deep water pipelines are not affected by waves. In fact, pipelines in GOM are not burried in the mud if the depth is > 200 ft. They do have weight coating that gives them enough negative buoyancy so they get some lateral friction resistance from slight wave currents that penetrate to those depths and a bit of normal currents, which are also low on the bottom. Pipelines < 200 ft deep, generally only have about 3 ft of mud cover. Beach approaches usually have 10 ft or so. The bad news is that sooner or later relatively few pipelines bring in most of the production and must cross shallow water to arrive at the beach. Now, the really bad news is that in most of the GOM the bottom only slopes 1 ft per mile, so 100 miles out is only 100 feet deep. I don't know where the PL damages were exactly, but if you can find a map showing where, I'll bet you'll see all pipelines damages due to wave surges were in shallow water (< 50 ft deep). Of course there is potential to damage pipelines that climb up and down the platform legs in deeper water, as there they pretty much exposed to full wave forces. Normally they have clamps holding them onto the platform legs at intervals of 20-30 feet. Of course that depends on the contractor that was supposed to install them. I had the opportunity to go scuba diving on a particular platform where I had designed the pipeline and the riser clamps, so instead of spearfishing, I went pipeline inspecting. Brown and Root Offshore contractors did not install 3 clamps. (I think it was Mustang Island 246, but I'd have to check.) When I got back to the house, I called the gas company I used to work for (Enron) and reported it. I'll bet that did some good.. heh? And other mistakes happen too. I worked for another very large gas company that thought the pipe remained clean and round, so they were using a drag factor for a cylinder of 0.6. Since I was a scuba instructor, I had seen many platform legs and pipelines with a good 8-12 inches of oysters and barnacles growing on them, especially in the wave zone which I figured should have a drag factor of about 1.75 to 2.0. I got them to change that design standard pretty quickly. The other bad news in the Mississippi Canyon, they have mud slides which have moved pipelines several hundered yards from time to time, but they have a lot of flexibility if designed correctly and can still remain in service in a lot of cases after only a ROV (offshore SUV) inspection. Most GOM platforms I had something to do with were designed for a 100 year wave return frequency, which if I recall correctly, amounted to a 54 ft wave, trough to crest.
This is in the works if hasn't already been done. I think? Heading Out would know.
Briefly, After they're finished drilling, they control the flow from the wells from the control room. They receive the production from the well flow lines. They separate water, oil and gas. They meter each stream. They add corrosion inhibitors and sometimes have pig launching stations (used to keep the pipelines clean). Then they put all the HCs that they can into a pipeline and send them to another pipeline and eventually to a collection station on the beach. They can also serve as platforms to do workovers and well treating via fracturing, acid disolution ... whatever. They often serve as a tie-in for (say) 24 wells that were drilled from the same location or several wells drilled in the area that have been fitted with subsea wellheads and flowlines back to a central platform. They also gave me a few good places to get off the damned vibrating, noisy, gyrating helicopter I was riding for the last 4 hours, or a boat for the last 28 hours and have a good meal and get a somewhat peaceful but still noisy nights sleep.
Halfin said: "Basically they are assuming that the last couple of years of bad hurricanes were an anomaly. I think that this accurately represents the mainstream meteorological view."

Yes, yes, but that NOT accurately represent the mainstream CLIMATOLOGY view. There are some diferences between climatologists and meteorologists. Science is one diference...

Bsically, the meteorologists give no explanation for the "anomaly" while the climatologists MAINSTREAM vision is that Greenhouse Warming is real. There are almost no controversie between climatologists currently, the GW is mainstream between climatologists and the "sceptics" lose the last terrain they had the last year because 3 scientific papers showed that the troposphere was going warmer as predicted by the GW's models. The "sceptics" are being reduced to say that the GW will be not so strong as the models say it will be, because they were forced to admit that there are GW.

We too need take note that the Pacific's Typhoons are geting more intense the last years too and that the meteorologists cannot explain it. While the meteorologists say that there is a Gulf's anomality they cannot say that there is an Pacific's anomality, see you, the Pacific Ocean have too much water to have an "anomality", anything happening to the Pacific Ocean is mainstream and not an anomality. So, the only explanation for the Pacific's Typhoons geting more intense is GW.

The meteorologists have no explanation for the "Gulf's anomality". They cannot give a physical explanation for that "phenomenum", they simply give no explanation, nada. The only scientific papers explaining it show a strong correlation between warmer Gulf's waters and stronger hurricanes. But meteorologists are having a strong aversion to link the dots and say that GW is geting the Gulf's waters warmer. The problem is that there is no other explanation for the Pacific's waters geting warmer, only Greenhouse Warming. And there are scientific papers that show a correlation between warmer Pacific's waters and stronger Typhoons...

The scientific vision is that there are GW. There is no real controversy between the scientists. The TV's meteorologists are not following the scientific trend for now. The meteorologists will need sooner or later to account the GW effect to make correct weather predictions or they will have problems if they continue to predict a weak hurricane season at the year start and after they change the prediction for a strong hurricane season (yes, that happened the last years... see you, that is the reason there is a hurricane "specialist" that never get a wrong prediction about the hurricane season, he ever change his predictions from "weak season" to "strong season" when start to be evident that will be a strong hurricane season).

And while we maybe not have a strong hurricane season this year (well, USA can get lucky, luck happens), strong and maybe stronger hurricane seasons will happen because there are Greenhouse Warming (don't count on good luck forever, Fortuna is capricious). By the way, while maybe there is not a strong hurricane season this year, it is problable that the summer will be very hot because the winter is being warm. Take note that very hot summers make the energy consumption go up to he sky, all that people using air conditioners. And there are a good deal of electric energy that come from oil...

João Carlos

Sorry my bad english, my native language is portuguese.

Not to worry, João, your English is far better than our president's.
João Carlos, I second solarfan's comment and also your distinguishing the difference between meteorologists and climatologists.

I happen to be well acquainted with a National Weather Service meteorologist.On several occasions I tried to get his thoughts on climate change. He seemed to be completely disinterested in it. Their entire focus in on getting the short-term forecast somewhere near right. In my words, meteorologists study the noise not the trends.

One can distribute the effects of a given yearly return frequency storm season intensity onto any year(s) of interest to yield a probabilistic production rate including the effects of the given storm intensity return frequency. Ie. if last year represents a storm season with a return frequency of 1 in 500 years, there is some probability (say 2.075%) that a 1:500 year storm season will happen again next year and each and every year thereafter. Now just cut the production estimate for each year of interest by our assumed 2.075% X last year's production cut that was due to the storm conditions.
Halfin et al,

In all likelyhood we will see more seasons nearly as active as 05, as the trend is for the next fifteen years or so to see above normal activity. This is from both the meteorologists and the climatologists. (And some mets really do care about this stuff) :)

This is from NOAA's forecast for the 2005 season:

"3. Multi-decadal fluctuations in Atlantic hurricane activity

Historically, Atlantic hurricane activity has exhibited very strong multi-decadal variability, with alternating periods lasting several decades of generally above-normal or below-normal activity.

Hurricane seasons during 1995-2004 have averaged 13.6 tropical storms, 7.8 hurricanes, 3.8 major hurricanes, and with an average ACE index of 159% of the median. NOAA classifies all but two of these ten seasons (El Niño years of 1997 and 2002) as above normal, and six of these years as hyperactive. If the 2005 season verifies as predicted, it will be the seventh hyperactive season in the last 11 years. In contrast, during the preceding 1970-1994 period, hurricane seasons averaged 9 tropical storms, 5 hurricanes, and 1.5 major hurricanes, with an average ACE index of only 75% of the median. NOAA classifies twelve (almost one-half) of these 25 seasons as being below normal, only three as being above normal (1980, 1988, 1988), and none as being hyperactive."

In other words, every 25 years or so hurricane activity "flips" from an inactive mode to an active one. Since we are still a few years away from even the mid-point of the latest active cycle, and since SST's in the Gulf and Carribean have been at record levels the past few years, with no sign of a reversal in the trend, we are almost assured of several more seasons like 05.

It strikes me that EIA is doing basically the same thing that the CERA people are doing; that is, counting the projected future projects to come on line (optimistically at that) and totally ignoring the 'D' word. Cognitive dissonance maybe?? Or maybe they figure that projecting depletion is a more arcane and difficult art than projecting increases because of new fields coming on line. Would seem just the opposite to me. Once a field has been well developed, petro-engineers should have a pretty accurate picture of how depletion will happen. Early development in a new field, on the other hand it seems, would be much less certain for projections.


What really gets me about that deepwater line are the little kinks in it.

It looks like they have deliberately 'wiggled' the line to make it look more believable.

How can they predict such a 'noisy' curve?

Good eyes there Duncan.
Besides the arguable claims of upward trends in US domestic production (even withou ANWR), the most striking is to see how these people project a steady increase in imports and don't even blink.

Even if domestic production could rise, an increase of around 35% until 2030 in Oil consumption is completely unrealistic. Probably not even CERA would came out with something like this.

As for prices, projections these days are completely useless. When the heat turns around the corner some economies will simply colapse, progressively easying away prices. But as production continues to fall prices will go up again and other economies will in turn fall.

These kind of reports are very very dangerous.

Has anyone done an historic comparison of EIA projections, as compared to actual outcomes, year by year? There would be a record of how far out the EIA is (out by X% in 2000, Y% in 2001 etc), firstly so we can see whether they are getting better or worse, and secondly so that we know quite how large the dose of salt should be that needs to be taken when we read this years.
I happened to look at their 2000 report and see:

The near-term price trajectory in the IEO2000 reference case is considerably different from that in last year's International Energy Outlook (IEO99). In IEO99, the rebound from the plummeting oil prices of 1998 and early 1999 was expected to occur gradually out to 2005, based on a recent series of unsuccessful attempts by OPEC member nations to adhere to announced production cutbacks. The IEO2000 reference case incorporates the dramatic 1999 price increases that have followed the latest, so far successful, pledges by OPEC and some non-OPEC producers. In both outlooks, the reference case price trajectory beyond 2005 shows a gradual increase of about 0.4 percent per year out to 2010, reaching $21.00 per barrel (in constant 1998 U.S. dollars) in 2010 and $22.04 in 2020. Three possible long-term price paths are shown in Figure 40.


I don't actually know how one would do a good comparison ... perhaps a plot of their five year previous projection alongside the actual outcome?  I'd expect to see them "trailing reality"

Excellent point, Odo.  

Looking at the history of their previous projections compared to what subsequently happened is certainly an important level of response.  

Because of their importance in the public's eye, that history should always be but one click away on TOD.

I suggest that major arguments that have been slowly developed here be easily accessible.  The crtique of their reliability as forecasters should be high among our arguments.  

One click away.  Put these in a sidebar.   Unfortunately, blog structures allow major arguments to be slowly buried.  Not a good structure.

I don't actually know how one would do a good comparison ... perhaps a plot of their five year previous projection alongside the actual outcome?  I'd expect to see them "trailing reality"

I tried that once but on three years:

Their predictions don't mean much!

Kind of interesting how each of their plots tends to fall in the long term.  I suspect if we did comparisons to their 3, 5 and 10 year projections ... the longest comparisons would me the most cruel.
You can't just look at post 2000 figures. Oil's steady rise since then has surprised everyone. Equally surprising was the steady fall through the 1990s. My guess is that just as EIA's forecasts during the 2000s were too low, their forecasts during the 1990s would have been too high.

And you can't just blame EIA for this. It's the nature of, well, reality. I've tried to explain this before. The future is unpredictable and nobody knows what future prices will be. People do their best to guess at them but those are only guesses.

Due to the nature of oil, its ease in storage (namely, just leave the stuff in the ground!), the market automatically adjusts prices not only on the basis of today's supply and demand, but based on its guesses of supply and demand for the next several years. This means that expected and anticipated oil prices can never be much different than today's prices plus a modest percentage increase. Otherwise today's prices will adjust to erase the difference.

So it's not the EIA's fault that they tend to forecast future prices as being about the same as present ones. They are just listening to the combined wisdom of every person in the world who is working in oil related businesses and investing in oil markets. And it's true: the whole world has been wrong. They have been surprised about the future. Some people conclude from this that the world is stupid. My conclusion is that the future is surprising.

If you really think the world is stupid, then you ought to find it easy to become rich. And maybe you do; if so, good for you. But my experience is that it's not easy to get rich or, well, everybody would be doing it.

I think I said something about predicting the unpredictable.
Halfin, I like the way you put that. Good reasoning.
 I always look at the longterm track records of any prophets no matter how respected an authority they are. I've done a little research on Value Line's predictions on oil pricing. I think Value Line is about the most useful tool an investor has for compilation of data, but for advice on oil they are worthless. Any sensible researcher of oil has to tune out the wisdom of all the movers and shakers of energy policy, who are clueless.
These oil policy movers and shakers may not be clueless after all. Instead, they are paid to obfuscate the peak thingy to keep the public and/or Wall Street from launching into a full-scale panic. Having to keep the public placated (to prevent mass uprising) they by necessity look clueless to us TODers. Of course, 99 percent of the general public IS clueless about the oil peak. So, the policy people are either clueless OR play the part well.

Like someone else said, it would be great to get these cornucopians come and post here. We would likely end up with a permanent flamefest. We'd need a separate site to flare off the flamefest, maybe flareingrefinery.com?

I would love to see such an analysis.  I may be a little new and a little naive, but I don't understand what the EIA motivation would be for perpetuating such a dangerous myth as plentiful oil.  I recenty read EIA's last International Energy Forecast, which has Russia producing 17 and 20 mbd respectively in their reference and high price cases for 2025.  That seemed stunningly high (ok, fantastical) but I was at a loss to figure out why they would intentionally (musn't it be intentional as opposed to massive group-think?) mislead.  Politically convenient? How?  If the EIA says we are running out of oil, doen't that make ANWAR easier to tap?  Wouldn't telling the truth make otherwise uncomfortable foreign policies aimed at securing overseas supplies easier to swallow?   Wouldn't telling the truth make it easier to open up U.S. offshore blocks and give exploration and development tax breaks to U.S. oil companies?  Doesn't the EIA as an institution have a lot to lose by being wrong?  For me such answers would help disabuse me of the notion that those of us who are concerned about PO are looking at the landscape through a straw, while the EIA and other 'official' forecasters, by virtue of their collective numbers and access to data, have a wider and thus more accurate scope of the matter.  
It's a good question, I don't know what's the answer. What's surprising is that a lot of "amateurs" on PO.com, like myself, have predicted two years ago that prices will be above $60 today based on public data scavenged from the web and simple regression techniques! It seems that analysis from this kind of institution have a tendency to produce conclusions biased by prior beliefs, in that case "there is a lot of oil out there".
That's impressive that you were right before. Unfortunately, past performance is no guarantee of future results. Many an investor has learned this sad truth only through expensive losses.
I see two possibilities.  One is that they have institutional pressure to be optimistic.  The second, which is certainly possible from my point of view, is that they are predicting in a domain that is inherently unpredictable ... too "noisy" with market and political events.

Heck, in an unpredictable market ... one might project predictability in an attempt to promote stability.

It is tempting to ascribe innacurate forecasts of EIA to nefarious plots to hide peak oil.  But it might just be incompetence.  

I know of many "experts" in other fields who were frequently and consistantly wrong.  Few people have a lock on truth.  Look at the breadth of people at TOD trying to devine the true state of oil based on data sets.  Imagine a much smaller group with similar viewpoints/worldviews interpreting the data.  They could all come to the same conclusion and all be equally wrong.

All of us who promote peak oil are currently being called incompentent (or worse).  And this would be proved true (the incompetence part) in the future if production keeps going up!

If they could really predict the future would they be working some G-5 gov job? Get real! They would more likely be found shacked up in some gold palace in Vienna.
Its not near as much as the THC you need to come up with those wiggly lines, ...or is that why I see them that way?
I have to admit that I've stopped paying much attention to the AEO for the last few editions.  The EIA is a terrific source for historical data, but their projections, shall we say, strongly suggest that key people in their organization have more than a passing familiarity with recreational chemistry.

I'll likely break from my recent pattern and read this edition, even though my wife gets tired of hearing me yell, "Oh-- COME ON!" every 5 minutes.

Using Occam's razor, I have to agree: Simplist explanation is massive and chronic overdoses of LSD.

Now think: If you knew what they new, wouldn't you want to be on drugs?

I have a lot of problems with EIA figures. This AEO is not quite understandable and doesn't seem to match with any other prediction (IEA for example).

I have another problem with stockpiles. Trying to explain the huge increases in gasoline stocks, I tried to compare them with the difference in total gasoline supplied (ie gasoline sold) and the total gasoline imports and output from refineries. I must say that I cannot explain the increase in stocks (as I can't explain the huge decreases like in July 2005 for example). I mainly work on the weekly summary from EIA. Any suggestions ? Are there unknown buffers for gasoline (but the same holds for fuel, kerosene and even crude) ?

Unless more Iraqi oil is coming in than reported.
With this bunch running the show, I see no reason why they would not do it.
Talking about the IEA and not the EIA, Peter Tertzakian in "a thousand barrels [...]" writes:

The data published by the IEA is always succeptible to revisions because the supply and demand volumes don't balance easily - in other words, supply minus demand rarely equals what is withdrawn or put into storage.  There is always a balancing item, or fudge factor to account for all the oil produced, consumed, and stored.  The corrections can sometimes be large, and can accumulate over time.  In the late 1990s, when oil prices were really low, teh accumulations were so large it led analysts to question where the "missing barrels" were going. [...]

He goes on to talk about bad data, long reporting periods, in many corners of the world ... reminds us that not everyone has US style accounting rules, etc.

Thank you biodiesel and odograph for your comments.

To be more specific, today's example.

Gasoline imports : 1094 kb (kb=1000 barrels)
Gasoline output from refineries : 8526 kb

Gasoline sold : 9083 kb

exces production : 537 kb

in the same time : stock of gasoline increases 2115 kb

... with american acounting rules. This is going on since the beginning. I must be missing something, there must be inputs in the stock I don't see or my reasoning is just wrong.

What is the link to your source data?
Perhaps the problem is, storage is based on 7 days and the other data is on a daily basis, anyway I did the same thing some months ago.
you're absolutely right. The units in the weekly summary are in kb/d and not kb/week. Now the problem is the other way round (the excess production over one week is about 1mb higher than the increase in stocks), however I have some explanations :

  • One part of total production is recirculated or directly invested into production as an energy source for example
  • Another little part is exported

thank you.

My source : EIA

How long have you been experiencing these symptoms? :-)

How far are they out of whack?

S! Maybe they're using too much gasoline to refine more, or they're re-refining it... or its another Enron deal showing the auditors the same assets, from one tank farm to another ;-)

The hypothesis has been put forward that the people that put this report together were stoned when they wrote it up but this theory has two subcases
  1. It contains what it does because they were stoned
  2. They were told what to write and subsequently got stoned in order to write it up
I favor case #2 since the current administration can not justify tax breaks to the oil companies unless the EIA maintains the illusion that new E&P activities will, in fact, result in finding more oil--even though as most of us here know that oil does not actually exist or in most cases can not be recovered. Though there is that "technically recoverable potential" from CO2 injection that HO mentioned the other day. I point you to Table 18 from this EIA document (pdf) from the report.

Technically recoverable U.S. crude oil resources as of January 1, 2004 (billion barrels)

Proved Unproved Total
 23.1      124.1    147.2

Note that whichever subcase you prefer, they were stoned in either case. However the theory is not testable and is only a reasonable inference working backwards from the actual contents of the AEO2006.

Alternative syntheis of both hypotheses:
  1. They were seriously stoned when they wrote it.
  2. Then they got more stoned when they finished and began dropping mass quantities of acid in hopes of happy hallucinations.

. . . but it turned into a bad trip.
If you were an omniscient president and had all resources at my disposal (not saying ours does), how could you play with the markets and data released to the public to drop oil prices, reinforce the US dollar, and indirectly prop up the DOW?

Not to be conspiracy-minded, but I'm just curious what expertise we have here to answer this question?


  • Hiding M3 stats and printing more currency?
  • Using hedge funds through 3rd parties?
  • Altering US EIA and MMS data?

What else?
Sorry...."all resources at my disposal"...read "all resources at you disposal"...guess I was just dreaming there for a second.
There are also some other things my conspirational sub-personality is questioning:

  1. Inflation all 5 recent years is stable and stuck around 2%.  However I and most people I know don't feel like it; of course I can not prove it but IMO the cost of living has risen much more than 10%. I'd say 20% would be much closer.

  2. GDP growth - no comment here, but that same sub-personality tells me that if you "lower" inflation/deflators you "raise" GDP.

  3. Unemployment - also stuck in the middle 4%-s in spite of evidence of growing population, loss of jobs overseas etc. This one is less suspisious, but still...

Overall it could be true and could be false, I don't have enough information to decide. any ideas?
"Inflation all 5 recent years is stable and stuck around 2%.  However I and most people I know don't feel like it; of course I can not prove it but IMO the cost of living has risen much more than 10%. I'd say 20% would be much closer."

Also anecdotal, but an annualized CPI of 2% over the past five years seems absurd to me. In my case, it's closer to 7%. Someone's cooking the books.

Sounds like you might like to read John Williams' 'Shadow government statistics' articles:
(and links upper right of page to other articles in the series)

A bit more about employment in the middle of this:

And on inflation measures:

If we were measuring these data now in the same way the US did 20 years ago I would guess the reality to be:
CPI inflation: +6%
GDP yearend 2005 yoy: +0.5%
Unemployment: 7.5%

Thanks, very interisting readings indeed.

Especially the last one. I wonder... if the evidence presented for inflation manipulation leaks into the financial market what will be the effect? I have that little feeling that the major players have that information already and know that the end-game is near. It is hard for me to believe they are not having their plan B when it comes to it, and are relying on the little dummies to pay the whol multiTrillion bill (yeap with T). Plan A we know of - GAU (greed as usual), but I wonder what is plan B?

The answer is Enron-like book cooking. More on the order of cooking books into meth. Inflation is "measured" by a pre-set subset of goods and services that is apparently not all-inclusive. Often inflation is quoted as both including and excluding energy prices. And of course, they emphasise the energy-excluded figure to trumpet.

GDP growth is also books-into-meth. GDP is calculated by the addition of ALL economic activity. If you buy a TV, that adds GDP. But so does it add to GDP when your father gets cancer and undergoes a million bucks' worth of ICU care. Same with building a house shredded by a hurricane. And also it adds to GDP when housing prices climb faster than a space shuttle with steroid-laced fuel.

And unemployment is also a case of books well-done. Has been for as long as I was aware of economics. An obvious omission is "discouraged workers" who ran out of unemployment benefits and still jobless.

Of course, the books are cooked for political expediency. Gotta keep the masses from panicking you know! ANY wannabe dictator knows that! Cooking books is as old as the hills. It happens on corporate scale all the time. A company with a union will cook books and put out propaganda to get leverage in negotiations. This is predictable with the postal service, When contracts come up, the postal service "loses money". During intervening 3 year periods, they "gain" it all back, resulting in break-even over the long run. (until collapse, anyways)

A good project would be to dig up economic stats before and after major elections. The incumbent wants to keep his party in power! As far as the oil reports, my bet is they sure wanted to get stoned after putting out the solid bull emissions.

Is it just me or couldn't someone contact the publishers of this EIA article, ask them for their justifications and how they came to their conclusions??  Where would we start??
How dare they publish this and ruin my oil drunk:


Gasoline bottlenecks?

Bottlenecks may also be looming for U.S. gasoline supplies, which could make the recent drop in pump prices only a temporary reprieve.

"This is a bipolar market," said Kloza. "We're in probably the advance stages of one of the more depressive phases, but I think the manic phase is going to follow in the second and third quarter of this year."

What will drive prices back up again? For starters, demand typically rises in summer, which will add upward pressure on prices.

There are also several potential bottlenecks that could put a crimp in gasoline supplies. Though most refiners damaged by hurricanes Katrina and Rita are now back on line, the rest of the industry was forced to postpone routine maintenance to keep the markets supplied. As those refiners begin to go offline to take care of maintenance and repairs, that lost production could tighten supplies.

Gasoline stocks could also get tighter as dealers in many parts of the country switch to so-called reformulated blends for summer, which are required to make fuel burn cleaner and prevent smog. Until recently, that meant using a fuel additive called MTBE. But after the chemical was found seeping into groundwater, and chemical makers failed to win liability protection in last year's Energy Policy Act, most refiners have stopped using MTBE. The only available substitute is ethanol, which is more costly.

"Bipolar market . . ."
I like that metaphor.
N.B. manic-depressives typically suicide not at the bottom of the depressive cycle but when they are on the beginning of an upswing off a deep low.

There has been a lot of pretty good socilogical research done on revolutions. IMO, the best one is still the classic by Crane Brinton, in which he compared American, French, Russian, and I think was English revolution of 1688. ANATOMY OF REVOLUTION is the title.

Every time a new book comes out, I reread an old one.

Is it in the manic phase that we Lemmings imagine we have wings (technology to save us) and we leap forward, over the edge and into the blue horizon with only a prayer but no real wing to carry us on?

Right click and View Image to see bigger version)

Is it step back, as in from the cliff?
Y'all are being too kind.  I consider anybody who approved of this document to be a traitor to the United States of America.  It's difficult for me to see it any other way.

A democracy is based upon informed choice.  This document intentionally undermines the truth, and therefore undermines democracy and the Constitution.

It's not funny.

We have choices:
  1. Laugh
  2. Cry
  3. Puke

Well I prefer to laugh.
You haven't mentioned this completely bullshit notion of "GREENHOUSE GAS INTENSITY."

This parameter was invented in order to make growing greenhouse emissions look like they are diminishing, by dividing by GDP.  

There is a meeting in March, put on by DOE.  All scientists should show up and protest.

I have no money, but if such an event took place, I would find enough to go.

Paul Krugman had this to say in yesterday's New York Times:'Last week Mr. Cheney announced that a newly created division within the Treasury Department would show that tax cuts increase, not reduce, federal revenue. That's the Bush-Cheney way: decide on your conclusions first, then demand that analysts produce evidence supporting those conclusions.'

I suspect the conclusion the regime started with was that Republican success in the mid-term elections was not likely to be helped by high oil prices.  Looking at the supply situation realistically, the gang-in-charge decided that, in light of real world supply constraints, talking down the price of oil was the best course of action.  Hence more disinformation.

Are there analysts at the EIA who will confirm or deny my suspicion that they have been led to produce evidence to support prior (political)conclusions?

doug gabelmann

This administration is the Gang that Couldn't Shoot Straight, as Cheney's hunting partner found out last weekend. They are much too incompetent to even formulate let alone execute any market manipulations.  
I tend to agree. There ain't no such thing as Intelligent Design -- at least not in Washington, D.C.
Why gas stocks are so high:  it's all about the new addatives law that goes into effect in April - no more MBTE.  In Europe they have a large stock of gas with MBTE in it and they are shipping it here as fast as they can to get rid of it before the law goes into effect.  US refineries are starting to re-tool for the new season and new rules, so stocks of gas are building rapidly to account for the US shutdown for re-tooling and they are coming in from Europe as well.  

All of this will start turning around the other way as Europe stops importing within a few weeks or earlier (since all their MBTE gas must be sold by the end of March), and gas stocks will drop rapidly as March progresses.  This should offer some solice to the crude market.  Besides, by that time the hedge fund guys that have been panicking about too much inventory will have all sold out.  Plus we'll start worrying about a hot summer around the corner.  


Interesting, I had not heard this up till now. One question I have is why Europe needs to get rid of the gasoline with MTBE in it. Are they phasing out their use of MBTE as well? I thought MTBE use in gasoline started in Europe, and that they are still using it. If so, why would they need to liquidate stocks of this fuel?

If anyone else knows more about this please comment as well - thanks.

We don't use so much MTBE. MTBE % is limited to about 20-25% that of the US. The groundwater aquifers are different in England than they are in California and the EU does not believe it poses any health risk (neither does the US EPA! http://www.epa.gov/mtbe/water.htm). In the US you can spill up to 5 gallons of it from every tank each day before it would hit the detection threshold. Here, its not permitted. Using a "better safe than sorry" model, the E.U. has instituted hundreds of bans on industrial compounds linked to cancer, reproductive problems, and other ill health effects. The newest piece of such legislation, set for evaluation by European Parliament this fall, would require companies to provide scientific data on some 30,000 chemical compounds, in many cases evaluating their effects on environmental and human health. Actually that's just to keep out imports from US manufacturers there that don't want to do all those tests (well at least the ones that still do send us some stuff). But, there is some disagreement as to its taste in drinking water and some countries don't use it and some allow up to 9% content (Finland). http://www.ukpia.com/industry_issues/environment_air_quality_health_safety/methyl_tertiary_butyl_eth er_mtbe.aspx http://www.efoa.org/page1207.html Denmark phased it out in 2000 due to bad taste in some drinking waters. http://www.mex.dk/uk/vis_nyhed_uk.asp?id=597&nyhedsbrev_id=74 Finland allows up to 9%