Bill James

Oil: Does Supply and Demand Still Apply?

Oil production does not really matter. There will be some minor increases in production as mega-projects come on line.

Ignore the really big whoppers of politics, hoarding and weather. These can completely disrupt current concepts of supply and demand.

What is critical is oil available to be bought. Tally production increases, current field depletions and increasing domestic consumption in oil to get World Oil Exports or Net Oil Exports. This peaked in 2005 at 46.342 mbpd, 2006 at 45.838 mbpd, 2007 at 44.832 mbpd, 2008 at about 43.8 mbpd.

From the peak, this creates an oil deficit 3 times larger than the deficit caused by the 1973 Oil Embargo.

Worse, Economic Growth is equal to Energy Growth times Efficiency Growth. Energy Growth has stopped. Efficiency has not changed much. The decay in Economic Growth can be seen in foreclosures.

On the good side, efficiency in urban transportation is at 4%. This can be increased to about 70%. seekingalpha.com/artic...