BP Complaints

0 to “IEA sees stronger global oil demand”

1. 

   posconvex says:

   July 5, 2010 at 10:53 pm

   Any discussion about oil prices over the next decade must include an attempt to quantify emerging economy demand as an important driver at the margin. Here is a simple thought experiment using Chinese demand:
   – China moves from 3 bbls/person/year to the South Korean per capita consumption level of 17 bbls/person/year over the next 30 years
   – No peak in global production

   In next 10 years we must find 44 million BOPD:
   – 26 million BOPD to maintain supply – 30% of current production, almost 3 times Saudi Arabia’s output
   – 18 million BOPD to keep up with demand – 22% of current production, almost 2 times Saudi Arabia’s output

   If you superimpose peak production on top of this demand profile using the following parameters oil prices would increase approximately 250% in real terms over next 10 years:
   – Oil demand elasticity of -0.3
   – Current production 84 million BOPD, current price US$ 80
   – Peak production 100 million BOPD
   – Post peak decline rate of 3-4%

   If you want to try the model for yourself using your own assumptions it can be found at Petrocapita: http://www.petrocapita.com/index.php?option=com_content&view=article&id=128&Itemid=86

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