Some important concepts for the day...
1. Short-term prices of crude oil are notably affected by:
a. large-scale economic disruptions (like the late 200s resession or the European economic slowdown
b. armed conflict in the Middle East
c. changes in supply due to KSA or OPEC increasing or decreasing production
d. releases from the strategic petroleum reserve
We will get into long-term prices later.
2. The strategic petroleum reserve is a series of above- and underground storage facilities in TX and LA that have the capacity to hold 30+ days (at current consumption levels) worth of oil.
3. Increases in drilling activity for both oil and natural gas closely follow (in time) increases in the price of oil and natural gas suggesting that increases in drilling activity occur in response to increases in price.
4. Wellhead price of natural gas shows several large spikes after 2000. Prices for natural gas are more susceptible to supply disruption-related increases than oil because of our reliance on domestic production and the concentration of natural gas production facilities in the hurricane-prone GOM states.
5. There is no relationship between the price of oil or natural gas and their consumption in the US
6. Before 1996, there was a positive collection between the price of oil and the % oil oil that the US consumed that was from domestic production. After 1996, imports began to exceed domestic production and we (the US) have been stuck at ~40% domestic production regardless of the price of oil since.
7. The mismatch in the estimated reserve size that is predicted by Hubbert linearization and the actual production curve is a result in the technology and price driven changes in the reserve volume that are evident in a system that is increasingly reliant on petroleum from unconventional sources.
8. This mismatch is not as evident with world oil reserves.
Slides from lecture today are on Sakai. There is no reading assignment for Wednesday.
No comments:
Post a Comment