Expect Oil Shortages to Occur
Partial of a report by Oil Price is dated May 17 as written by Irina Slav. As expected, the United States is headed for a shortage while our president fiddles away with attacking Iran. He started something which is going to be difficult to end and has put the US as well as other countries in danger from a shortage to come.
“Oil Shortage Scenario Looms Large,” Oil Price.com
“The world is running out of oil. Implausible three months ago, the likelihood of a crude shortage on a global scale is becoming increasingly realistic with each day that the Strait of Hormuz remains almost completely blocked. Analysts are no longer modeling for a swift end to the war between the United States, Israel, and Iran. They are now also allowing for an extended period of severe energy flow disruptions—and it is not looking good.
Kpler reported earlier this month the cumulative loss of oil supply in the Middle East since February 28 had hit 782 million barrels as of May 8 and was on track to expand to 1 billion barrels by the end of the month. In daily output terms, the picture looks no better. Saudi Arabia is losing over 3 million barrels daily, Iraq is producing 2.88 million barrels daily less, and Iran is at 1.69 million barrels daily lower output, while Kuwait has suffered a decline of 1.75 million barrels daily.
With so much production offline, the most sensible thing to do is tap reserves. Estimated at record highs, the world’s oil stocks were cited as a big reason for predictions of a severe glut that could exceed demand by almost 4 million barrels daily, according to the International Energy. But that was before the war began. Now, the IEA is warning that demand for oil will exceed supply this year.
In its latest monthly report, the IEA said it expected global oil supply to fall by some 3.9 million barrels daily over the current year—which is a lot less than what the actual current supply loss is from the Middle East. The IEA estimates that loss at 10.5 million barrels daily. Yet while supply falls by 3.9 million barrels daily—which may turn out to be an optimistic scenario—demand would only fall by 420,000 barrels daily, according to the international authority on energy.”
I’m wondering where exactly the tipping point is for the US consumer. Gas here is $4.50. My kids, who are not well off at all seem to be just taking it in stride. No bitching!?! I don’t know exactly how to interpret this. Is it that in real terms, gas prices have not increased that much? Or that vehicle fuel efficiency has increased to the point that the overall budget hit is not that big?
In any case, there has to be a tipping point. Maybe it won’t be prices. Maybe it will be gas lines. Or maybe food prices, particularly take out. Who knows?
John:
If you were around in the seventies, you would recall the lines to get gasoline when there really was no shortage. In Chicago there were lines. An hour outside of Chicago near rotes 55 and 53, there were no lines. People were over reacting to publicity then and paid premium pricing of 65-70 cents per gallon. My Datson 510 had a 12-gallon tank. I was good for ~350 miles.
My 2015 Passat with 72,000 miles on it and a 20-gallon tank is good for about 650 miles. The CD50 is good on gasoline too.
Efficiency is one factor. The other factor is gasoline inventories are not low yet. I think Joel will tell you similar.