Energy Journal: Big Oil, Big Data

June 13, 2013 by  
Filed under Wind Energy Tips

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Wednesday was a big day for data junkies as the latest edition of the oil industry’s numerical bible–the BP Statistical Review of World Energy–was released.

This annual slab of numbers–global oil production back to 1965, gas production back to 1970, and oil prices back to 1861 (it was 49 cents a barrel, in case you are wondering)–revealed an impressive year for U.S. oil production.

In 2012, the U.S. posted the largest annual increase in oil production in its history, and biggest rise in the world that year, write Keith Johnson and Russell Gold of The Wall Street Journal. Production growth exceeded an astonishing 1 million barrels a day as a new wave of crude flowed from North Dakota and South Texas.

The BP figures give a more complete picture of the growth in U.S. oil production than similar numbers already released by that other data giant, the U.S. Energy Information Administration, because it includes production of natural gas liquids, which can be counted along with regular oil because they are often blended into refinery feedstock.

The shale-gas boom happening alongside the shale-oil boom means that natural-gas liquids are an important, but often overlooked part of the U.S. comeback. Counting only crude oil, U.S. production rose 846,000 barrels a day in 2012 to 6.5 million barrels a day, according to EIA data. Adding in natural-gas liquids, as BP does, production rose 1.04 million barrels a day to 8.9 million barrels a day.

Impressive stuff, but Saudi Arabia still rules the oil-market roost, according to Amy Meyers Jaffe, executive director of energy and sustainability at the University of California at Davis. Despite rising U.S. output, “there is no replacement for Saudi exports,” Ms. Jaffe said in a speech reported by If there were to be a serious disruption to Saudi oil exports, Americans would still feel pain at the pump, she said.

The other headline from BP’s data dump was a drastic reduction in gas reserves in countries of the former Soviet Union, namely Russian and Turkmenistan. BP sliced 20 trillion cubic meters, around a third of the total, from its reserve estimates for those countries, reports the Journal’s Selina Williams.

The revision, despite its huge size (that amount of gas could supply the entire world for six years, according to BP data), doesn’t quite spell doom for Russia’s preeminent position in world gas trade. Rather, it reflects an adaptation of BP’s data-gathering methodology. The former Soviet republics had a different way of accounting for proved reserves–those that are both technically and economically recoverable–and this change brings their figures more closely in line with international standards, said BP’s chief economist, Christof Ruehl.


Falling living standards have become a major political issue in Europe, even in countries such as Germany, France and the U.K. that have avoided debt crises.

Stagnant wages and inflation have played a big part in the squeeze on household spending power, but now high energy prices are coming to the fore. It’s become a hot-button issue in Germany, which is preparing for an election in September.

German Chancellor Angela Merkel leaped into the debate Wednesday, telling an energy conference in Berlin that spiraling costs for supporting the expansion of renewable-energy sources could damage the country’s economic competitiveness and need to be scaled back, the Journal’s Jan Hromadko reports.

Ms. Merkel is responding to pressure both from the general public and from big business. Earlier this week, a German industry lobby group said dealing with the rising cost of low-carbon energy subsidies should be the first priority for the new government that forms in September. The CEO of German industrial giant Siemens AG has warned that high energy costs threaten Germany’s world-class industrial economy.

Despite her high-profile speech, Ms. Merkel was criticized by some senior industry executives for offering only vague solutions to the problem. Rolf Martin Schmitz, executive board member and deputy chief executive at the utility RWE, noted that Ms. Merkel ruled out the most aggressive measure available to cut costs—retroactive cuts to renewable-energy subsidies.

One of Europe’s most troubled economies doesn’t appear to have the luxury of ignoring the problem of increasingly unaffordable renewable-energy subsidies. Spain is expected to announce next week cuts of between 10% and 20% to subsidies for wind and solar projects.

The U.K. government, which has already trimmed some low-carbon energy subsidies, went a step further last month by saying that the European Union’s target of getting 20% of its energy from renewable sources by 2020 was a costly mistake.


The International Energy Agency’s monthly oil market report, released Wednesday, was packed with conflicting signals about the direction of oil prices. The agency trimmed its forecast for Chinese demand growth, but warned of a surge in refinery demand that could outstrip crude supply in the summer.

The IEA’s full-year oil demand forecasts also look a bit funny, implying a significant increase in oil consumption in the second half of 2013, which is the opposite of what has happened in recent years, said Petroleum Policy Intelligence.

Questions about demand aren’t the only thing hanging over the oil market. The highest U.S. commercial oil stocks in 30 years, and the role that low interest rates and quantitative easing have played in their formation, could become a major driver of prices, writes the Journal’s Liam Denning.

The oil market does seem slightly confused by the competing influences. Crude prices rose Wednesday, despite a surprise increase in U.S. oil stocks.


Oil futures traded lower Thursday morning in a well-supplied market. Read the Journal’s market report here.


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