Boston Consulting Group suggests that within 15 years China will be the largest market for autonomous (driverless) vehicles. Automated taxis will most likely lead the trend. A number of Chinese companies are working on these vehicles including the Internet company Leshi Internet Information & Technology, carmaker Great Wall Motors, and the search engine company Baidu. Elon Musk, the chief executive of Tesla, has predicted that completely self-driving cars may be on the road in the US in two to four years.

While world crude oil prices continue to flounder in the mid-$30 a barrel range, some analysts are concerned about five of the weakest crude oil exporters, known as the fragile five, which could easily suffer a political collapse and cease to export oil in the foreseeable future. These countries – Algeria, Iraq, Libya, Nigeria, and Venezuela – suffer from a variety of economic and geopolitical ills which could easily turn one or more into failed states unable to export much oil. Together they produce a total of about 10 million of oil per day (roughly what Saudi Arabia produces). They have little in the way of other revenues and, with the exception of Libya, do not have the large sovereign wealth funds that other oil exporters have accumulated in the last decade. They are currently selling much of their oil below the cost of production. Should one or more of these exporters collapse within the next two or three years, the global glut of stored crude could quickly be eliminated. If this is coupled with the coming impact of the ongoing massive reduction in capital expenditures by major oil companies to find and produce more oil, it is thought crude prices could be at much higher levels before we are very far into the next decade.

In Nigeria, lines of automobiles stretched for more than a kilometer last week in the capital Lagos because of a petrol shortage in sub-Saharan Africa’s largest crude oil-producing country. While officials promise a solution within a week, analysts say it will take longer to resolve a shortage they say is the product of longstanding refinery issues and pipeline outages.

The US Energy Information Agency reported that the costs of drilling new shale oil wells in the US last year were 25-30% lower than in 2012. The cost decline was due to greater efficiencies as well as lower labour costs.

The International Energy Agency said it expects that Iran can increase its crude oil supply by some 500,000 barrels per day but that getting to its goal of a 1 million b/d increase will take time and money to drill new oil fields.

Mexico’s proven crude oil and natural gas reserves declined 21% last year as world oil prices dropped and new discoveries were modest. Proven oil reserves fell to 7.64 billion barrels from 9.71 billion barrels, and natural gas reserves fell to 12.651 trillion cubic feet from 15.291 trillion cubic feet.

The world’s largest oil companies are draining their petroleum reserves faster than they are replacing them. In 2015, the seven biggest publicly traded Western energy companies, including Exxon Mobil Corp. and Royal Dutch Shell, replaced just 75% of the oil and natural gas they pumped.

The Saudi Arabian government plans to set up a $2 trillion “Public Investment Fund” that will aid in diversifying the economy into new sources of revenue in a post-oil era. The fund, which would raise 50% of its capital from abroad, would become the main source of revenue for the Saudi government. Some question whether the Saudis have waited too long to start a major diversification of its economy given the country has few other natural resources, has rapid population growth, and cannot feed itself.

The International Energy Agency forecasts the demand for gasoline in China will likely grow by nearly 7% a year for the rest of the decade, despite efforts to move as many drivers into electric cars as possible to counter pollution in large cities.

Israel’s Supreme Court ruled against an agreement to develop and export that country’s newly discovered offshore natural gas reserves. The Court called the deal unconstitutional, citing a clause in its framework that gave energy companies pricing and regulatory stability for ten years regardless of potential shifts in the government. The Court said the government did not have the authority to make such a long-term deal, which would bind its successors, especially “when the issue at hand is a matter of real political controversy.” The deal will be suspended for one year, to allow for revisions. The gigantic natural gas finds have the potential of making Israel and major energy exporter in the Mediterranean.

 

Tags: , , , , , , , , , , , , , , , ,