Fear over the environmental impact of using crude oil, natural gas and coal reserves means we may never run out of untapped energy stores, according to a leading petroleum industry economist. It also means the relative price of crude oil will not necessarily increase over time, as predicted by the peak oil theorists.

A global battle for the crude oil market is under way among exporting governments. Those countries with the deepest pockets, such as Saudi Arabia, are using low oil prices to enter new markets – often at the expense of Russia, one of the world’s top crude producers. Saudi Arabia has started supplying oil to Poland, becoming another Middle Eastern producer to enter a market traditionally supplied mostly by the Russians.

Mexico’s first attempt to open up its oil industry to foreign companies was a failure. Its oil exploration auction only attracted $2.6 billion in potential investments, compared to $17 billion maximum potential. Brazil had a similar failure recently, with only 10% of its blocks being auctioned receiving viable bids. These latest failed auctions, coupled with lowering economic growth worldwide and lower global oil prices, suggest a permanent peak in oil production at current prices.

The US Geological Survey estimates Cuba has at least 4.6 billion barrels of undiscovered crude oil and 9.8 trillion cubic feet of undiscovered natural gas.

In the Central Asian country of Azerbaijan, construction or preliminary work has begun on three new pipelines designed to send new supplies of natural gas to consumers in Turkey, Bulgaria, Greece, and Italy. For more than a decade, companies have been announcing proposals to build new natural gas pipelines to connect natural gas resources in Russia, Central Asia, and the Middle East with consumers in southern Europe, however most of these projects have failed to materialize.

UBS Group AG forecasts central bank and sovereign wealth fund assets will shrink by $1.2 trillion, or almost 7 %, by the end of this year as China and oil states including Russia and Saudi Arabia must use up their savings amid slower growth and lower crude oil revenues.

Norway’s petroleum production, which had been declining since 2001, increased almost 3% during 2014 and will likely continue increasing in 2015. The production growth in 2014 was mainly the result of four new fields in the North Sea coming online. During 2015 and early 2016, another four fields will come on line.

According to oil industry monitor, Platts, OPEC is unlikely to cut back on crude oil production for 2016. OPEC said in its latest monthly market report that output from member states in September increased by 109,000 barrels per day for an average 31.6 million barrels per day.

The West African country of Angola has cut oil industry spending by 53% this year following a plunge in  world oil prices. Crude oil accounts for about two-thirds of the nation’s revenue, putting the country at risk after crude prices fell by more than half since July 2014. The government is looking for funding from The World Bank and China to help cushion the fall.

Canadian railroad companies are slashing rates for shipping crude oil. According to shippers and terminal operators, discounts of as much as 25% are now common.

The drop in oil prices has led Canadian energy companies to eliminate about 36,000 oil and natural gas jobs. Most of these jobs are located in the oil and gas provinces of Alberta, British Columbia and Newfoundland.

The low price of crude oil is affecting the revenues of US states that depend heavily on the energy sector, Fitch Ratings said. The main states affected are Texas, Wyoming, Alaska and North Dakota.

In 2013 a Swedish research institute released a report about potential impacts on the country’s food supply if the country was to face sudden oil import shocks. In the worst case scenario, where 75% of oil imports disappear, the authors found that the diesel price could skyrocket and the country would likely experience widespread starvation.

The Pilgrim nuclear power plant in the US state of Massachusetts will close by 2019.  Cheap natural gas prices (a competitive electricity power input) are pushing wholesale electric power prices lower in the US and making it more difficult for nuclear to compete.

 

 

h/t Tom Whipple

 

 

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