While The World Sleeps Oil Picture Changing Dramatically
The largest monthly drop in more than 30 years(since 1973 Oil Embargo) for total crude inventory levels for the United States has occurred for the month of December 2006. Total Crude inventory levels(includes Strategic Petroleum Reserves) for December 2006 dropped a littel more than 20 million barrels from the previous month. December 2006 month end inventory for crude oil for U.S. was 1.028 billion barrels compared to 1.008 billion barrels for November 2006 month end. For most of 2006, crude oil inventories for 2006 were 15 million barrels or higher than crude oil inventories for 2005.
The graph below shows U.S. crude oil inventory levels for 2006 were substantially higher than 2005 levels for most of the year. However, December 2006 inventory levels droppped substantially from November 2006 levels. December 2006 month end inventory levels were less than December 2005 month end inventory levels. Graph below does not include Strategic Petroleum Reserves. However, for the month of December 2006, there was no change in the Strategic Petroleum Reserve Inventory levels.
U.S. Crude oil production has steadily declined since its peak year clear back in 1970. Since 1992 there has been a decline for every year. However, in 2006 for September thru December production outpaced production for the same time period in 2005. U.S. Crude oil production in 2006 will probably either be equal to or greater than production for 2005. The graph below shows that the United States with all the production from the Gulf of Mexico may be able to halt the steady production decline.
World crude oil production for 2006 will probably be less than 2005 crude oil production. Global inventories of crude oil in November 2006 dropped 50 million barrels compared to October 2006 crude oil inventories. When there are significant drops in U.S. and Worldwide inventories of crude oil, it is a strong indication that we are near the World's peak production of oil!!!!!! Annual Consumption of crude oil for the last 25 years has been greater than annual new discoveries/additions of crude oil. This means there is significantly less crude oil to be used for future production/consumption than there was 25 years ago. The demand for crude oil has been increasing at about 2% increase every year. This increased World demand for crude oil for the next 20 years was expected to be supplied by increased production from Saudi Arabia. The oil fields of Saudi Arabia are beginning to show a production decline. 2005 crude oil production from Saudi Arabia was 9.55 million barrels/day compared to only 9.23 million barrels/day for 2006. This annual decrease for Saudi Arabia crude oil for 2006 was able to be offset by a .16 million barrel/day increase for Russia for 2006 and a .22 million barrel/day increase from Rest of World(Kazakhstan,etc) for 2006. Future World Supply of Crude oil will probably struggle to keep pace with World demand for crude oil. The World must start decreasing demand for Crude Oil by providing alternative fuels(coal gasefication, tar sands, ethanol, hydrogen fuel cells) and improving fuel efficiency of cars and trucks(little or no improvement in average fuel efficiency for the last 25 years).
