BIG DEMAND, REFINERIES FALTERING: OIL PRICES UP

Don't miss the Peak Oil observation, the very last quote.

Oil prices inch up after energy report
George Jahn, July 13, 2007 (AP via Yahoo News)

WHO
International Energy Agency (IEA), Department of Energy (DOE), Energy Information Administration (EIA)

WHAT
Oil prices continue to rise on reports of refinery inadequacies and the International Energy Agency has released a report asserting the rather obvious: the world’s appetite for energy will not abate.
Demand does not look like it will get any smaller. (click to enlarge)

WHEN
- July 2007: 74.2 million barrels/day refinery production. August 2007: 75.2 million barrels/day.
- 2008 world energy consumption increase: 2.5%, (2.2 million barrels/day of oil)

WHERE
IEA is based in Paris.

WHY
- The IEA predict continued U.S. refinery inadequacies.
- Recent U.S. refinery shutdowns: Coffeyville, Kansas (flooding) and Whiting, Indiana (oil processing equipment failure)
Oil prices are playing with the $75/barrel level.
- BP announced the Whiting 250,000 barrel/day refinery was ready and DOE’s EIA statistics unit reported refinery utilization rates up. These reports have slowed gas price increases.
- The IEA reports said 2008 would energy consumption go up faster than ever but predicted consistently $70 prices might curb it slightly.
- Factors expected to stimulate demand: a cold 2007-08 winter and growing consumption in Asia and the Middle East.

QUOTES
IEA report: "North American crude throughput remains constrained by the large number of refineries running at less than full capacity due to operational problems."

and

International Energy Agency: Oil Supply/Demand Trends for 2007-2012
July 13, 2007 (Seeking Alpha via Yahoo Finance)

WHO
The International Energy Agency
Supply just ain't what it used to be. (click to enlarge)

WHAT
The Medium-Term Oil Market Report [MTOMR]

WHEN
- 2007 report on the 5-year outlook.
- 2012 oil demand: 95.8 million barrels/day
- 2007-2012 supply grows 4.0 million barrels/day of capacity.

WHERE
- Demand growth in OECD and non-OECD nations.
- Supply growth (70%) in Saudi Arabia, United Arab Emirates and Angola. Non-OPEC supply growth of 1%/year, down from 1.4%/year 2000-2007.

WHY
- Produced by 150 researchers, funded by Organization for Economic Cooperation and Development (OECD)
- In sum: Demand rising, supply falling, refineries barely keeping pace.
- Biofuels will grow to 1.75 million barrels/day by 2012 (78% ethanol, probably driving up crop prices).

QUOTES
From the article:
The report…can be generalized to “above-ground” and “below-ground” factors.
Below-ground is "how much oil is there, really?"…MTOMR…states…net oilfield decline rates to “average 3.6% annually for non-OPEC and 3.2% per year for OPEC crude.” And it warns that “aggregate levels mask much sharper declines in a 15-20% per annum range for mature producing areas and for many recent deepwater developments.” All in all, the industry is going to need to “generate 3.0 mb/d of new supply each year just to offset decline.” …The conflict over the peak oil hypothesis isn't getting any quieter, but the peakies have more ammunition in this report than the non-peakies…