Over lunch I found this from a writer who I think finally
understands the "oil" problem. Of course, if America did
not consume 1 in 4 barrels produced worldwide things could
be a little better! Damn those Hummers.
Energy It's Only The Beginning
David Andelman, 08.25.05, 3:00 PM ET
There's a fun battle going on in the pages of The New York
Times between columnist John Tierney and Sunday Magazine
writer Peter Maass. It's over just how much oil we have
left in the world--and therefore, it would appear, how
much time we have before we hit the wall of an oilless
Armageddon.
Tierney thinks it's all bogus--that like we have many
times before, we will get past this momentary bubble in
oil prices.(THE YERGIN VISION) The Saudis or some other
still to be identified oil power will simply stick a few
more straws in the ground and suck up some more oil, and
all will be right with the world.
Maass, however, believes there are simply no more straws
to stick in the ground in the Great Arabian Desert, and
that we are on the cusp of seeing the most oil we will
ever find being sucked out of the ground today.(THE
SIMMONS VISION) Implicitly, of course, even if demand
remained constant, the price would have to begin soaring
--indeed it already has.
The problem is that they're both wrong, though Maass has
it closer to correct. The fact is, they're arguing over
the wrong question. They're arguing how much supply is
left. The elephant in the room that neither appears willing
to acknowledge, isn't how much oil is left, but how many
people there are consuming it. (INSIGHT!)
Thursday morning's news out of Beijing is the most ominous
to date for those who, correctly in my view, are arguing
over not how much supply we have left, but how quickly
demand is overtaking and blowing past--way past--the ability
of any new supplies to keep up.
The Chinese government disclosed that its oil imports surged
15% in July over the year-earlier level to 2.62 million barrels
per day. That's a stunning and, frankly, frightening increase
in just one year. It's still far short of U.S. imports of 10
million barrels a day, but at that rate of growth in China,
it won't be long before the two powers will be neck and neck.
And it's only the beginning. The fact is, the Chinese are
off trolling the world for sources of supplies that haven't
yet been locked up by Western oil giants. Though they
missed getting Unocal (nyse: UCL - news - people ) away from
Chevron (nyse: CVX - news - people ), last week, they offered
some $4 billion for PetroKazakhstan (nyse: PKZ - news -
people ). And they've invested heavily in some of the crown
jewel fields of Russian oil giant Yukos after the Russian
government came in and stole it from its owners. Their goal
is to become the destination of choice for any oil
neighboring Russia manages to coax out of the ground.
The Chinese are desperate because they, at least, see the
locomotive at the end of the tunnel headed straight for us.
The fact is that China has barely a third of its 1.3 billion
people consuming any quantity of oil at all right now.
And yet, its consumption is exploding at the staggering
rate of 15% a year. When the rest of the Chinese head for
the pump--look out .
The reason the demographics are so frightening is that
just 400 million or so Chinese are in the developed regions
along the coast from Shanghai down through Hong Kong and in
other big cities like Beijing. If China, as its leaders suggest
they'd like to do quickly, bring into the developed world
even a third of the 900 million in the primitive interior of
the nation, that would mean bringing another entire United
States online in just a few years. And just imagine all the
oil they'll consume.
And of course this is ignoring completely hundreds of millions
more in India and Indonesia--the world's second and fourth most
populous nations. Eventually, they'll want their share too.
India already imports 76% of its 2.57 million barrels per day
consumption. And it's growing as well, though at a fraction of
China's pace.
Can the world and its oil supplies withstand that kind of
strain? I think the only question is how quickly all this
will dawn on oil traders and how fast we reach $100 a barrel.
Which itself may be only the beginning.
Some get it....some don't.
Bob
