The oil suppliers are becoming demanders
A so-so article in the New York Times today regarding how the world's major oil suppliers have been using the wealth from high oil prices to build their economies, which in turn, is driving up domestic consumption of oil and gas.
The economies of many big oil-exporting countries are growing so fast that their need for energy within their borders is crimping how much they can sell abroad, adding new strains to the global oil market.
Experts say the sharp growth, if it continues, means several of the world’s most important suppliers may need to start importing oil within a decade to power all the new cars, houses and businesses they are buying and creating with their oil wealth.
Indonesia has already made this flip. By some projections, the same thing could happen within five years to Mexico, the No. 2 source of foreign oil for the United States, and soon after that to Iran, the world’s fourth-largest exporter. In some cases, the governments of these countries subsidize gasoline heavily for their citizens, selling it for as little as 7 cents a gallon, a practice that industry experts say fosters wasteful habits.
I suppose we won't talk about how this justifes Iran's pursuit of nuclear power for civilian energy purposes, or mention the billions in tax breaks given to oil companies in Canada and the US, or the big write-off for people buying big SUV's in the States, but they are important points to keep in mind.
The article also fails to mention one other recent oil producer turned importer, China. Now one of the major drivers in world oil consumption, China was still exporting oil until 1993.
The big problem I have with the article is that there is no mention whatsoever of a possible decline in world oil production. Production declines are significant, since both Mexico's and Iran's "flip" from exporter to importer is driven as much by decreasing production of oil as increased consumption. The authors seem willing to acknowledge the oil peaks in individual countries but refuse to do the same globally. They state that Saudi Arabia will be increasing production by 40% by 2010. I would really like to know where that number comes from, because nothing I've read indicates that the Saudis have that much reserve capacity. There is mention of the Alberta tar sands, without any acknowledgement that prouction there can't be increased very quickly. While production there continues to grow, the conventional fields in Alberta, which still provide most of its oil, are starting to tap out. Canadian oil production as a whole is likely to start declining within the next decade.
The fact that more producers are becomng importers begs the question of just who it is that's going to be able to export to them.
I suppose I should give some props for the NYT for acknowledging at least part of the problem, but leaving out the global peak oil issue makes the problem seem less severe than it is, which means less urgency and efort put into alternatives, meaning a harder hit when the crunch time comes.
