Peak oil exports?
A fun idea I read tonight at - http://www.fcnp.com/index.php?option=com_content&task=view&id=937&Itemid=33 The Peak Oil Crisis: The 4 Facets of Peak Oil By Tom Whipple
Whether world peak oil is last year or in 20 years might not matter as much as when there's a peak of exported oil for trade. Case-in-point, Mexico's production appears in decline, and at some point it won't be able to meet domestic consumption.
It's an interesting question. Generally oil exporting nations SUBSIDIZE local consumption, even at the cost of black market exports. When Mexico production approaches consumption, will it allow domestic consumption costs to equalize with export value? Will it risk domestic outrage to have local shortages when exports can earn the government more money?
Overall I assume a compromise, but still "subsidy" (from global prices) even as exports drop and government income drops.
I know Canada as a part of NAFTA is obligated to sell oil to the U.S. at the same price it sells oil domestically, although I heard Mexico did not make this agreement.
The black market of oil exports is an interesting reality. The U.S.-Mexican border is one of the steepest in the world between the have and have-nots. If the Mexican government puts price controls on domestic sales, there's an incentive for corruption - for both oil producers, and oil distributors to BUY cheap and find black market buyers who will pay more than the domestic price, whether domestic or exported. Maybe I'm wrong, but suggests that maybe there CAN be no goverment controls to keep domestic prices low AND supply high anyway. Just like 1970's price controls merely created shortages.
So by "market power", oil will generally continue to flow away from oil rich nations to oil poor nations, regardless of the wealth of the people in the exporting countries.
Still, even with this "leaking", I imagine an interesting graph would show "World oil exports" rather than simply "World oil production", and exports will likely peak significantly before production.
Well, since I have no pretty graphs, just a fun thought. Fun in the "What will happen?" curious sense, not in the happytimes sense!
It's strange sitting in a country consuming 25% of the world's oil with 3% of the reserves. Something's gotta give you have to think, and wonder how we'll continue this trick in the coming years. Wonder how we'll continue borrowing to pay for consumption and government spending as well, and how trillion dollar ways can be maintained.
Wonder how investors keep up their enthusiasm for this the game of "Musical chairs". Maybe the chairs haven't started being removed yet?
Whether world peak oil is last year or in 20 years might not matter as much as when there's a peak of exported oil for trade. Case-in-point, Mexico's production appears in decline, and at some point it won't be able to meet domestic consumption.
It's an interesting question. Generally oil exporting nations SUBSIDIZE local consumption, even at the cost of black market exports. When Mexico production approaches consumption, will it allow domestic consumption costs to equalize with export value? Will it risk domestic outrage to have local shortages when exports can earn the government more money?
Overall I assume a compromise, but still "subsidy" (from global prices) even as exports drop and government income drops.
I know Canada as a part of NAFTA is obligated to sell oil to the U.S. at the same price it sells oil domestically, although I heard Mexico did not make this agreement.
The black market of oil exports is an interesting reality. The U.S.-Mexican border is one of the steepest in the world between the have and have-nots. If the Mexican government puts price controls on domestic sales, there's an incentive for corruption - for both oil producers, and oil distributors to BUY cheap and find black market buyers who will pay more than the domestic price, whether domestic or exported. Maybe I'm wrong, but suggests that maybe there CAN be no goverment controls to keep domestic prices low AND supply high anyway. Just like 1970's price controls merely created shortages.
So by "market power", oil will generally continue to flow away from oil rich nations to oil poor nations, regardless of the wealth of the people in the exporting countries.
Still, even with this "leaking", I imagine an interesting graph would show "World oil exports" rather than simply "World oil production", and exports will likely peak significantly before production.
Well, since I have no pretty graphs, just a fun thought. Fun in the "What will happen?" curious sense, not in the happytimes sense!
It's strange sitting in a country consuming 25% of the world's oil with 3% of the reserves. Something's gotta give you have to think, and wonder how we'll continue this trick in the coming years. Wonder how we'll continue borrowing to pay for consumption and government spending as well, and how trillion dollar ways can be maintained.
Wonder how investors keep up their enthusiasm for this the game of "Musical chairs". Maybe the chairs haven't started being removed yet?
posted by Ares Olympus at 8:52 PM
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