By New Deal Democrat
Over the last couple of weeks, I have been following up on my prediction two years ago that the oil choke collar would probably begin to loosen this year. At the moment, gas prices at the pump are almost 10% less than they were a year ago, and also less than they were two years ago. Since prices started to rise at the end of the 1990s, this has been very unusual.
In 2011, I said that one of the components of the oil choke collar loosening would be the coming to market of new discoveries of oil, chiefly deep offshore. One of those I mentioned was the Guara Oil field off Brazil. Now renamed the Sapinhoa field, the first well has started to produce:
The Cidade de São Paulo has capacity to process 120,000 barrels of oil per day and 176 million standard cubic feet of gas per day.
Another deep Oil discovery that was described at the time as a "gusher" turned out disastrously to be exactly that -- BP's Macondo field in the Gulf of Mexico. Even that oil field is now poised to recover. According to a recent story in the Wall Street Journal:
After a steep drop in oil production in the wake of the Deepwater Horizon disaster, the U.S. Gulf of Mexico is set for an energy boom.
Gulf oil flows will increase by nearly 28% by 2022 to 1.8 million barrels per day, according to consulting firm Bentek Energy.
Including natural gas as well as oil, production in federal waters reached a peak of almost 1.8 million barrels per day in 2009. But the 2010 Deepwater Horizon spill led to a six-month drilling moratorium as the government drafted new safety rules.
Oil and gas flows in 2010 were off just slightly from the 2009 peak, but dropped 18% in 2011 to 1.4 million barrels of oil equivalent. They are expected to bottom out this year at 1.3 million barrels.
But new discoveries of crude oil coming online is dwarfed by an alternative fuel, the usage of which has boomed almost overnight. And the alternate source isn't electricity.