The good news for opec is that oil will be an

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: dropped to between 0.7 and 1.2mb/d. While Saudi Arabia and United Arab Emirates were able to boost their production (by 400,000mb/d), Venezuela, Indonesia, Nigeria and other leading oil producers either no longer had any appreciable reserve capacities or had their own domestic political crises and production stoppages to deal with. The International Monitory Fund (IMF) warned the OPEC countries to increase their spare production capacity to 5mb/d in order to ensure the future stability of world economy (Economist, 2005). During the last few years, OPEC’s supply capacity has operated at 99% of its total crude oil productive capacity, compared with 90% in 2001 and a mere 80% in 1990 (Barnes and Myers Jaffe, 2006; Harks, 2007). But only Saudi Arabia seems currently willing to increase its spare production capacity. At the same time, the global refinery capacities are limited forb coping with a variety of crude oil qualities, especially the lowest quality, and convert the different grades of crude oil into refined products, such as gasoline and diesel. In Asia, the unsophisticated refineries can also not cope sufficiently with medium and heavy oil. The United States is now the only market in the world that faces even a net deficit in refining capacity (20% of domestic demand). It is the result of inadequate investment in exploration during the last few decades and the overproduction in the 1980s and the 1990s (Maugeri, 2006). Without these refinery systems, even excess supplies of crude oil will not satisfy the global demand. With sufficient investment, the global refinery problems will last at least for another 5–6 years. 278 Oil DDW 2012 1 ***Super-Secret Warming Answers and Other*** 279 Last printed 9/4/2009 7:00:00 PM Oil DDW 2012 1 Can’t Solve Oil 280 Oil DDW 2012 1 Non-OECD makes global oil dependence inevitable for decades Goldthau, head of the department of public policy and associate professor at Central European University and White 11 Andreas Goldthau, head of the department of public policy and associate professor at Central European University and Jan Martin White, 9-7-11, [“Assessing OPEC’s Performance in Global Energy,” Global Policy Special Issue: Global Energy Governance Volume 2, Issue Supplement s1, pages 31–39, September 2011] E. Liu Hence, while the aforementioned efforts are designed to reduce fossil fuel consumption, some of the measures also have the potential to increase uncertainty with regard to future consumption patterns, energy choices and, as a corollary, global investment needs. To be sure, recent policy initiatives to reduce the carbon intensity of economies are unlikely to put a significant dent in demand for oil in the near future. The good news for OPEC is that oil will be an integral part of the global energy balance for the next couple of decades – only the consumer structure will look fundamentally different. A ll future oil demand increases will now come from non-OECD countries, and particularly from Asia. Even in what the International Energy Agency (IEA) calls the ‘New...
View Full Document

This note was uploaded on 01/30/2013 for the course ECON 101 taught by Professor Burke during the Spring '13 term at Southern Arkansas University.

Ask a homework question - tutors are online