In reading the “news of the week” posting on WUWT, there was an article about future oil production.
Worth reading in its own right. The major thesis being that advances in oil production methods, and fielding those methods due to the oil price spike of just a couple of years back, means a price collapse from excess production in the next few years.
I think there is another angle to consider. What happens when politics meets with that reality? I suspect folks with power will not sit by and twiddle their thumbs.
In particular, this chart from the article speaks volumes:
Look at it for a minute.
First thing I noticed was just how MUCH is produced in the USA. Then how much the USA is predicted to add (based on present plans and actions). We are projected to be challenging Saudi Arabia in total production, and ahead of Russia.
Then I noticed that a lot of countries that I tended to think of as larger oil producers are really rather small. Libya, Mexico, even Venezuela.
But the big item is Iraq. Knocked down to Norway size in production, it is expected to expand to #4 in global production.
Something has got to give…
I would predict that the “something” is Iran.
Saudi Arabia, the USA, and Russia all share one thing. LOTS of oil production. They will all be hurt by large price drops in that oil. Forget OPEC (what do Nigeria and Indonesia matter on that graph? Or even Lybia and Qatar? The Big Boys are all at the other end. So would it be all THAT hard for them to agree that a little “excess capacity” needed to come out of the system? And where better than in Iran… Almost, but not quite, enough just by itself.
So I’d expect sanctions to be applied that forbid their oil exports. And then an eventual war as those things blow up into conflict. A war that will “incidentally” happen to break their oil infrastructure for a decade or two… Rather like Iraq was knocked off line for a decade…
Right now oil is $80 / bbl and has dipped a couple of bucks lower. Bring that much more capacity on line, we’re looking at $50 oil as a real potential. None of those first half dozen countries can afford that. And who has the weapons?
So looks to me like it isn’t a very long stroll from this chart to “Capacity Reduction” and the quickest way to get there is take down a large supplier. Of those suppliers, I only see one that is a big time “Nobody really likes them”… The others are all “Friend Of Somebody”, one side or the other.
It might be interesting to find the exact growth projections for Iraq and see just when it is projected to spike most. Then figure a year prior for the “clean up time”…
Place your bets… ;-)