Economy - The Economy Supply, Demand, Speculation and Energy Model If any has recently filled the tank of your car is likely to have had a good scare. At least I did not stay indifferent when I checked a few days ago to fill mine dangerously close to 80 euros. If anyone can remember well, remember that not long ago lived a similar situation back in July of 2008, when Texas beat barrel price historical records. I remember back then I began to prepare an academic paper on CSR and the so-called "Economy Case", or whatever it is, what strategies affect overall economic growth sustainable. When I had the data and even some surprising finding, Lehman Brothers fell, the world economy slumped and oil is no longer a problem. At least for a few months. Specifically 30. What is behind this gradual rise in oil? Is this a problem of supply and demand or is that speculators have become a refuge in the black gold to the uncertainty of global markets? How sustainable is our energy model? Let's see if I can answer a few of the questions posed without being able to get into puddles ininteligibles.Partimos two very specific and simple ideas: One, energy and economic growth go hand in hand, two, oil is a source of renewable energy, finite and has no worldwide.
Energy and Economic Growth: It is known that since the 60's until about 2004, for every 1% GDP growing global energy demand rose more or less by 0.65% . Almost 40% of global energy consumption came from oil, something that has barely changed since then. It was estimated that in 2000 our energy mix required 85% of fossil fuels. The other 45% additional to the black gold came from natural gas (23%), coal (21%) and other fossil fuels (1%). The economic growth rate and demand for energy, however, it has undergone significant changes. Since the BRIC countries (Brazil, Russia, India and China) joined the bandwagon of development every global economic growth of 1% means an increase in energy demand from 1.11%. Put another way, our current pace of development requires more energy and, therefore, more oil.
There are some data that I think are clairvoyant. During the period 2004 - 2009, world oil demand increased by 2.34%. While in the OECD it fell by 7.5% in non-OECD countries (mainly those BRIC), oil consumption increased a 17.10%. Not been for the current crisis, Lehman Brothers had not fallen, it is estimated that global demand for oil could have broken historical records in 2008 with an average of nearly 87 million barrels per day, 4.5 % more than in 2004. Not appear by chance, therefore, that this year batieran all price records. Since then many things have happened. The current recession we are experiencing fierce was that global consumption in 2009 fell almost 2% to recover in 2010 and being located closer to the demand of 2008 to 2009. The trend in 2011 so far this year is up.
Bid Oil: Oil prices have or not have, does not occur. Let's add that behind the main deposits in the world is a cartel, OPEC, where cohabiting characters of all kinds. It is very difficult, therefore, know where we are, if you really face a crunch period of oil or on the contrary, major pumps inflate the price to get higher returns. This debate is complex and full of theories and counter-theory . I do not want to get into too many pools in which it is possible to lose me, so show two very simple ideas. A reference to what are the oil reserves, types and the so-called Hubbert Peak "and other interested whether or not OPEC an expensive black gold as the present.
oil reserves are divided between conventional and unconventional. Among the first would be those of "lifetime" that manages OPEC and among the latter the bottom of the sea, from tar sands, which are below the Arctic and liquefied gas. We speak of "Recoverable Reserves" when they are removable (viable from a technical standpoint and energy) with the techniques current. Over the years there are reserves that become recoverable by the improvement in extraction techniques, as well as discoveries of new deposits (increasingly less) can increase them. It is estimated that there are now "Recoverable Reserves" that could range from 1 to 2 trillion barrels. Unconventional reserves are not without controversy. First because they are considered in many cases a simple patch. Secondly, because its removal, especially the oil sands and the Arctic, has a huge environmental impact.
Hubbert was a geophysicist, who developed a mathematical model according to which one could predict the level of extraction from a reservoir over time. His theory posits that a well reaches a peak of extraction and from there begins to decline their production making it relatively more expensive per barrel. There comes a point where it no longer profitable to get more oil from the reservoir, it is necessary to use more energy and costs in the extraction of a barrel that would be obtained on the market with it. Aim for mathematicians: Hubbert postulated that the production curve of a well was always a Gaussian function, so I thought it was easy to calculate the peak of production ("Hubbert Peak") of an oil producing country. After the completion of "Peak" begins a phase of exhaustion. Hubbert predicted world production would peak between 1995 and the year 2,000. His calculations were wrong because the world oil demand has not been linear over time, but hit full in the U.S.: its peak is reached in the year 1,970.
The Association for the Study of Peak Oil and Gas
(ASPO), founded by the geologist Colin Campbell estimates that the peak could be achieved in this decade. The
United States Geological Survey (USGS) , meanwhile, estimated in 2000 that that "peak" could be reached worldwide in 2026, but felt that there are sufficient reserves to continue the current harvest levels for 50 years as a pussycat. Similarly, the "Cambridge Energy Research Associates (CERA
), understand that the peak will not arrive before 2030, and dare to venture that is oil for the entire century.
Mathematical modeling aside, the reality we call common sense. Of the current world oil producers, harvest levels appear to have fallen hopelessly in the U.S., Russia could maintain their current levels for some time thanks to its long-term investments and only Saudi Arabia appears able to increase their production in some productions in the coming decades . From other countries, which have much lower capacity, can only maintain and increase its production Venezuela, Iran, Mexico, China, Gulf countries, Kazakhstan and Nigeria. If, as providing the IEAllegamos a consumption of 120 million barrels a day in the year 2030 (to 50% on the year 2004) (Rosell, 2007), the questions they plan on oil rise to the hub. It seems that we have reached the end of the era of cheap oil because it seems clear that current producers increasingly find it harder to meet demand and that this difficulty will only increase, despite possible short-term declines that other aspects may cause.
The OPEC is not interested in an oil so expensive. Moreover, during the Period 2004 - 2009, producing countries have increased by 1.55% the supply of oil. It is nevertheless true that there is a shortfall of 800,000 barrels per day on average. Still, as long that there has been a rise in the price of the barrel in international markets has intensified the search for alternatives through biofuels and renewable energies. This is a purely economic reason. For many years it was thought that oil demand was inelastic. Ie not affected by price rises. This is not true. short term, oil demand is extremely rigid, as it is a necessary good for many production processes and transportation. But long term, the crisis has shown that oil is a good stretch and that increases of the price they usually follows a significant drop in demand.
Finally we have to talk about speculators who invest in the futures market. For those not entered in the field, give you an example: in the futures market, I can I buy an option to buy, say, oil in April at a price fixed today. Come April when I can run the option or not acquired. Such markets are created in the late nineteenth century in the U.S. to provide the prices of agricultural products. Depending on how the coming harvest, corn or wheat traded at a price or other in the futures market. Today one of the top products in these markets is oil.
the futures market and speculators who live in it have been blamed for the comings and goings in the price of oil on several occasions. However study of the Interagency Task Force on Commodity Markets (ITF), directly linked to the U.S. government were inconclusive: The price increases of 2008 were the result of a mismatch between supply and demand. Furthermore, there were causal relationships between movements in futures markets and increases in the price of oil. Quite the contrary, it was noted how each price increase was followed by a slow motion of speculators. Put another way, and as ever we have discussed, the more it seems that speculators are the friends who join the party and even encouraged, but not that organized.
The geopolitical tensions around the nuclear debate and the rise of renewable seem to confirm what data we glimpse, it looks like it really is becoming increasingly difficult to satisfy our need for oil. This scenario is not new but has been occurring for some time. Doubts about the future of oil are being producing more than a century. Yet there is something different this time: we live in a transparent society, with more information and resources than ever. The energy debate should be open once and for all leaving aside short-termism and interests bastards. Energy and development go hand in hand, do not forget.
