LONDON—The International Energy Agency Friday slashed its 2012 oil demand growth forecast for the second time in just a few weeks as the economic outlook weakened, just as oil production from the Organization of Petroleum Exporting Countries reached its highest level since October 2008.

The IEA has cut half a million barrels a day from its 2012 oil demand growth forecast since the start of this year, a change that it said leaves the oil market with enough flexibility to adjust to any loss of Iranian crude exports due to sanctions that will take effect in July.

This shows that basic oil supply and demand figures don't support prices at their current level of around $118 a barrel for Brent crude, said analysts at Bernstein Research in a note to clients.

. he said that the 2008 IEA energy report was a real eye-opener. Unfortunately it's not even being discussed at national level in the US, whereas it should be talked about non-stop. Then ten minutes later he talks about unrest in the middle east, NATO interventions etc. etc. and how they are all exactly what we'd expect in a world of depleting oil. So nobody's talking about oil depletion but the powers-that-be are secretly fighting wars over it.

Demand down again


http://online.wsj.com/article/SB10001424052970203824904577214710375566808.html?mod=WSJEUROPE_hpp_LEFTTopWhatNews

Jim welcomes back to Financial Sense Newshour geologist and Peak Oil pioneer Dr. Colin Campbell to discuss the global energy situation. He believes that oil insiders around the world know Peak Oil has arrived, but don’t want to alarm consumers and shareholders with the truth. Unfortunately for those weary of high gas prices, Dr. Campbell sees this as just the beginning of much higher prices.

Dr. Campbell has over 40 years of experience in the oil industry. He earned a Ph.D. in geology from the University of Oxford in 1957, and has worked as a petroleum geologist in the field, as a manager, and as a consultant.

link

Jim welcomes Eoin Treacy, Global Strategist at Fullermoney.com in London this week for a global-macro discussion. Eoin sees a renaissance in US energy production with the recent massive natural gas discoveries. He also sees the bull market in stocks lasting for at least another year, and believes that China will be able to engineer a soft landing for its economy and avoid a crash.

link

At today's level of $105, crude oil prices are beginning to get to a stage where demand destruction could set in. Some consumers will simply no longer be able to use as much energy. At some point (last seen in 2008) energy prices get to a point where they inhibit economic growth and cause recession. This is a temporary solution to energy supply and demand because once energy prices fall, the demand component kicks back in and the cycle begins once more.

Investments in energy efficiency either through high cost alternatives to fossil fuel such as wind and solar are primarily aimed at cutting consumption and bringing down prices. However, they have so far been unsuccessful in mitigating the rise in the marginal cost of energy despite massive investment.

Battery technology holds out great hope to lower energy consumption by evening out variability in supply however, the necessary technological advances have not yet been made. (Also see Comment of the Day on January 27th).

Natural gas prices are low today because technology developed in the energy bear market can profitably be applied to previously inaccessible reserves. A surfeit of supply is helping to depress prices. The higher oil and other energy prices rise, the more competitive natural gas becomes. If the Jevons paradox tells us anything, it is that demand will invariably rise for an energy source which is cheap and abundant relative to other sources.

The building of LNG terminals is helping to create a global market for natural gas and consumption is expected to rise more than 50% in the next 20 years. This comparatively clean fuel should also help it to gain credence among the green lobby and it is reasonable to expect that the number of uses for the fuel will increase over time.

Cost to the end consumer should be the central aim of all energy policy. Greater efficiency as well as new cheap sources of supply will be required to help improve global economic growth and raise standards of living.

there is more

Excluding Iran from the global oil market would increase the shortfall between worldwide supply and demand sixfold, based on February production and consumption estimates, the U.S. Energy Department said.

Global fuel use averaged 3 million barrels a day more than output when Iran is excluded from the calculations and 500,000 more when Iran is included, the department’s Energy Information Administration said in a report yesterday.

Israel warns time short to stop Iranian nuclear plans

http://www.bbc.co.uk/news/world-middle-east-17268478

If Israel goes it alone, chances are Iran will just stop selling oil. Israel obviously feels it is being pushed into a corner, and may not have any other choice.

“If you want to be certain that you can drive a car in ten year’s time (in Europe) then you should drive a gasoline-powered vehicle”, says Kjell Aleklett.

“In ten years diesel fuel in Europe will probably be rationed.”

Yes, when you refine a barrel of oil, you'll only get a certain percentage of each fuel type out of it.
The mix of fuel consumption has to match the supply to prevent shortages & gluts of individual fuel types.

Doesn't Europe export gasoline to the US for this reason, while the US exports diesel to Europe?

Only the "spare" fuel is exported.