JRip

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    • Fri Mar 7th 23:03 PM | Rating: 0 0
      Commented on:
      Two Explanations for Surging Oil Prices
      Challenges listed by John Hess:

      Firstly, in terms of demand, we need to make significant progress in conservation. The growing population of hybrids and an overall improvement in automotive miles per gallon is helpful, but we need to spend more money on research to make hydrogen fuel cell vehicles a commercial reality so that the average fuel economy of a new passenger car could increase to the equivalent of 80 miles per gallon or better.
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      In all these conservation efforts, the United States, the nation with 5 percent of the world’s population and 25 percent of its oil consumption, needs to take the lead by continuing to encourage fuel efficiency and improvement in mileage standards while driving for a technological breakthrough.
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      We think that, given the long lead times from investment to production, the current sum that both OPEC and non-OPEC nations are investing is far below what is needed to ensure sufficient production for our future. Our overall investment needs to grow significantly from current levels – and the sooner the better. Without that, the models that we have put together suggest that with oil demand growing 1-to-1.5 million barrels per day each year, global crude oil supply capacity will fall short of global demand between 2015 and 2020.
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      An oil crisis is coming – in the next 10 years. That means we need to act now to avoid this outcome. It is not only a matter of demand. It is not only a matter of supply. It is both.
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    • Fri Mar 7th 21:47 PM | Rating: 0 0
      Commented on:
      Two Explanations for Surging Oil Prices
      The Hess Oil company sent me the official text of the speech Jphn Hess gave at the Feb 12, 2008 CERA conference.

      Here are some quotations:

      Given the long lead times of at least five-to-ten years from discovery to production, an oil crisis is coming -- and sooner than most people think. We need to act now. Unfortunately, we are behaving in ways that suggest we do not know there is a serious problem. It is imperative that we change our mindset, our sense of urgency, or the consequences will be severe.

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      On the Demand side:

      In the developing countries of the world, the problem is worsening with the fast-growing demand for transportation. Currently, China and India have only one registered vehicle for every 100 eligible drivers – compared with 114 vehicles for every 100 eligible drivers in the U.S. Goldman Sachs has estimated that by 2050, the number of cars in China could rise to 500 million and in India could rise to 600 million. That’s 1.1 billion vehicles in two countries that three years ago had fewer than 20 million cars total – creating an overwhelming increase in the need for automotive fuel.
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      Recessions may interrupt this growth, but only temporarily.
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      On the Supply side:

      First: exploration. Since 1980, discoveries have not replaced our annual global crude oil production. Discoveries are getting smaller and located in more difficult environments, such as the deepwater Gulf of Mexico, Brazil and West Africa, where companies are now drilling in water depths of up to 7,000 feet and searching for targets that are in some cases more than 30,000 feet deep
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      It is a real concern whether the countries outside of OPEC can play as much of a role in production as they did in previous years. U.S. production peaked in 1970. The North Sea peaked in 2000. Mexico peaked in 2004.
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      more later
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