1 / 37

Markets and Politics

Markets and Politics. Bob Tippee Editor, Oil & Gas Journal PVF Roundtable General Assembly Meeting Aug. 18, 2009. Crude prices. Oil prices track stock prices. Source: KBC Market Services, Monthly Oil Market Outlook, Aug. 6, 2009. World oil demand (MMb/d). 83.9 -2.8%. 86.3 -0.2%.

alesia
Download Presentation

Markets and Politics

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Markets and Politics Bob Tippee Editor, Oil & Gas Journal PVF Roundtable General Assembly Meeting Aug. 18, 2009

  2. Crude prices

  3. Oil prices track stock prices Source: KBC Market Services, Monthly Oil Market Outlook, Aug. 6, 2009

  4. World oil demand (MMb/d) 83.9 -2.8% 86.3 -0.2% FR: 85.4 Source: IEA

  5. IEA’s demand view 2009 vs. 2008 Million b/d 2008 vs. 2007 To 83.8 MMb/d for ‘09 Forecast month Source: IEA Monthly Oil Market Report for each month indicated

  6. World oil supply (MMb/d) 84.6 -2.2% FR: 85.7 *Plus other biofuels. Source: IEA

  7. Non-OPEC supply (MMb/d) Source: IEA; Note: Includes OPEC members as of 1-1-09. Angola (1.7 MMb/d), Ecuador (0.5 MMb/d) joined OPEC in ’07. Indonesia withdrew from OPEC in ’08.

  8. OPEC NGL (MMb/d) 5.2 +11% 2010: 6.1 Source: IEA

  9. Forcing balance (MMb/d) Source: IEA *OGJ assumption.

  10. Observations (MMb/d) • Call = 28.2 • Quota = 24.85 • Call - Iraq @ 2.4 = 25.8 • June OPEC-11 crude = 26.12

  11. OPEC’s market view Source: OPEC Monthly Oil Market Report, January 2009

  12. OPEC production/OECD stocks Source: OPEC Monthly Oil Market Report, June 2009

  13. OECD stocks (days’ supply; EIA)

  14. OPEC spare capacity (EIA)

  15. The market: a snapshot • Demand will be down in ’09 – but the amount of expected decline is stabilizing • Cushions thick: stocks, p’n capacity • OPEC has tried to follow demand down with production cuts • Demand revival depends on economy

  16. IMF’s World Economic Outlook* Percent; quarter-over-quarter; annualized. *Updated July 8, 2009.

  17. The questions • What drives prices? • Fundamentals (supply and demand) • Investment flows • Currency fluctuations • Will OPEC wait too long to raise output? • Non-OPEC output? • Role of speculators?

  18. US energy shares Source: EIA for 2004-08

  19. US product demand (MMb/d) 18.76 -3.4% 18.73 -3.9% Note: Before exports (1.76 in ’08; 1.85 in ’09). Source: EIA for 2004-08.

  20. Gasoline, distillate demand (MMb/d) 9.01 +.02% 3.76 -4.7% Source: EIA for 2004-08

  21. Gasoline, ethanol use (MMb/d) 9.01 +0.2% EISA mandate: 2.4 MMb/d in 2022 (all biofuels) ’09 is mandate (724 Mb/d) Source: EIA for 2004-08

  22. ULSD, biodiesel use (MMb/d) 3.008 -6.2% Applied 80% factor to dist. demand ’08 production: 44,500 b/d; ’08 consumption: 20,900 b/d ’22 mandate: 326,160 b/d Source: EIA for 2006-08

  23. Industry oil imports (MMb/d) 65% of demand 12.15 -5.8% Source: EIA for 2004-08

  24. US refining MMb/d % Source: EIA for 2004-08

  25. US total liquids production (MMb/d) 7.05 +4.6% Source: EIA for 2004-08

  26. US gas consumption (tcf) 22.75 -2.0% Source: EIA for 2004-08

  27. Marketed gas production (tcf) 21.23 -1.0% 21.2 +5% Source: EIA for 2004-08

  28. US gas imports (tcf) LNG 0.53 +50% Source: EIA for 2004-08

  29. US drilling--completions 43,384 -16.7% 36,788 -29.4% Source: API for 2004-08

  30. US drilling – rig count 1,503 -19.5% 1,235 -33.9% Source: Baker Hughes for 2004-08

  31. The budget’s costs (ex. climate)

  32. Renewables instead of oil – 1 From Treasury Department explanations of budget oil, gas provisions: “The [measure or its result], like other oil and gas preferences the administration proposes to repeal, distorts markets by encouraging more investment in the oil and gas industry than would occur under a neutral system…”

  33. Renewables instead of oil – 2 “…To the extent the [measure or result] encourages overproduction of oil and gas, it is detrimental to long-term energy security and is also inconsistent with the administration’s policy of reducing carbon emissions and encouraging the use of renewable energy sources through a cap-and-trade program.”

  34. Closing the gap takes money Source: US Energy Information Administration

  35. Oil & gas in 1981 38.1 x 1015 btu $10.9 billion subsidies (percentage vs. cost depletion and expensing E&D costs) Ethanol in 2007 550 x 1012 btu $3.2 billion subsidies Arithmetic of subsidies - 1 29¢/MMbtu $5.82/MMbtu Source: “Federal Financial Interventions and Subsidies in Energy Markets 2007,” Energy Information Administration, April 2008

  36. Oil & gas in 2007 30.57 x 1015 btu $1.74 billion subsidies (various, mostly for small producers) Ethanol in 2007 550 x 1012 btu $3.2 billion subsidies Arithmetic of subsidies - 2 $5.82/MMbtu 5.7¢/MMbtu

  37. Cost to displace oil and gas • By 5% from projected 2020 usage levels • Assuming $6/MMbtu subsidization of 2.93 quads of solar, wind, and biofuels • Requires subsidies totaling $17.6 billion NOTE: 2007 subsidy levels: solar $7.16/MMbtu, wind $6.87/MMbtu (production), $5.82/MMbtu ethanol (consumption/blending)

More Related