The balancing act perspectives of the global and domestic oil markets
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The Balancing Act: Perspectives of the Global and Domestic Oil Markets. Frederick J. Lawrence Vice President - Economics and International Affairs. Alien Vs. Predator. Demand appears to be driving Fundamentals in a Tight Market – is it Sustainable?

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The Balancing Act: Perspectives of the Global and Domestic Oil Markets

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The Balancing Act:Perspectives of the Global and Domestic Oil Markets

Frederick J. Lawrence

Vice President - Economics and International Affairs


Alien Vs. Predator

  • Demand appears to be driving Fundamentals in a Tight Market – is it Sustainable?

    • Global Economy, Asia Growth Components & More?

    • World demand up an estimated 2.7 Mmb/d (3.4%)

    • US demand up 460,000 b/d (2.4%) & China demand up an estimated 860,000 b/d (16.5%) in 2004.

      +

  • Supply Reacts to Demand and Price but hitting Capacity limitations

    • OPEC & Non-OPEC Potential – Market Share vs. Reserves

    • Spare Capacity & Just in Time Behavior – narrow the gap

    • Energy Security, Interdependence & Diversification – growing connectivity between foreign and domestic policy

      = INCREASED VOLATILITY & FEAR FACTOR


Where is the incremental demand coming from by region?


Demand is breaking out and we’re en route to 90 Mmb/d

QUARTERLY AVERAGE

YEARLY AVERAGE


China – Growth Spurt


China will continue to be a big part of the demand story.


Don’t discount growth in the rest of Asia – especially India


UN Perspectives on Sustainability


Global Population Surge


Demand Bites


Projected Global Petroleum Demand


Proved Oil Reserves – Not Created Equal


Supply is also adapting to a new threshold but can it be maintained?


Comparative Oil Production


OPEC is building capacity and trying to manage production based on demand.


Non-OPEC has captured market share but sustainability in question.


Former Soviet Union Dominates Non-OPEC Supply Gain


Pragmatic Oil Diplomacy


Projected Source of Global Conventional Oil Supply


The Wrong Cow is Getting Fat


U.S. Energy Shares (2003)


U.S. Petroleum Balance


U.S. Petroleum Consumption


U.S. Import Sensitivity by Region (2003)


Domestic Crude Production


Where Does Our Energy Come From?2003 Wells Drilled

= Gas

= Oil

= CBM

= Horizontal

= Dry


Where is Our Energy Used?


Vermont Energy – where a woodchuck could chop wood


Producing 18 Quads of Energy Per Year

Biomass


Percentage of US Congressmen from Selected States Voting for Energy Issues


Volatility at Work (1986-2004)


U.S. Oil Deficit


Refinery Situation


Conclusion

Demand calls shots until proven differently

Market volatility looks sustainable

Integrative solutions needed

There will be a sequel

Demand calls shots until proven differently

Market volatility looks sustainable

Integrative solutions needed

There will be a sequel


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