Yep, fracking’s here to save America from peak oil. Or not.
1. Oil is a globally traded commodity. Increased production from America domestically doesn’t decrease prices locally. It’s a global price, reflecting global supply issues.
2. While America’s going up, the IEA says the world’s going down. Previous reports from the IEA guaranteed us that extra western demand for oil would be met not by America, but by Saudi Arabia and Russia. The IEA’s recent report gushes enthusiastically about America while smuggling in bad news about Saudi Arabia and Russia. Positively peaknik news about them, actually. As in, they used America’s fracking story to shout “Look, bright shiny thing over here!” while smuggling some rather bitter cyanide into your Texas tea. The global truth?
As Michael Klare points out:
This is one hidden surprise in the report that’s gone unnoticed. According to the DoE’s 2011 projections, Saudi production was expected to rise to 13.9 million barrels per day in 2025, and Russian output to 12.2 million barrels, jointly providing much of the world’s added petroleum supply; the United States, in this calculation, would reach the 11.7 million barrel mark.
The IEA’s latest revision of those figures suggests that U.S. production will indeed rise, as expected, to about 11 million barrels per day in 2025, but that Saudi output will unexpectedly fall to about 10.6 million barrels and Russian to 9.7 million barrels. The U.S., that is, will essentially become number one by default. At best, then, the global oil supply is not going to grow appreciably — despite the IEA’s projection of a significant upswing in international demand.
In other words, don’t let the Wall Street Journal tell you everything’s hunky dory with oil supply and that prices will eventually bottom out. In 2005 our oddball little gang (Sydney Peak Oil) briefed the NSW Upper House minority parties that oil prices would eventually double. The headline news back then? Oil had just hit $60 a barrel for the first time. As they say, “those were the days”.