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In the past few months I have often asked myself deep soul searching questions to enhance my intellect. These have included 1) What is the purpose of life? 2) Why does my wife spend so much? Or more recently 3) Why do analysts get paid so much for this? http://www.forbes.com/markets/2006/08/07/bp-taketwo-0807markets12.html, http://www.iht.com/articles/2006/08/07/business/oil.php The comments which I am referring to can be found buried deep within the article. Briefly, they mention that the recent BP disruption in Alaska cut global oil production spare capacity by 20%. It has been mentioned to the point of hurling that the world now has 1-2 million barrels of “Spare oil production capacity”. There is a point at which the voice of reason has to speak out against the decimated intellect of the collective. We are way past that point. What spare capacity are we talking about? What exactly is this spare capacity and what freaking price does it come on the market? $80? $150? Oh wait, this is unusable heavy oil capacity? Exactly what use is this spare capacity if it does not come on after three disruptions in the past year? These people get paid for this work? We have lost over 1.7 million barrels per day (bpd) of supply since the hurricanes, the Nigerian conflict and the BP debacle. That would mean we had over 3.3 million bpd of spare capacity in July 2005. Alternatively we had all this new capacity come online recently. Really? Where? Which country? Well for one thing if these guys get fired then they surely can make a career writing fiction. For a moment though let us assume they are right. Surely then we would have seen some form of spare capacity coming online after the disruptions, right? Let’s look at the production profile of Saudi Arabia who most analysts believe holds this elixir of camel dung which cannot be used by any refinery. We had the hurricanes (a) and the Saudi’s said “ We will respond”. We had the Nigerian conflict (b) and they said “ We will respond”. Now we have the BP debacle (c) and they said , you guessed it “ We will respond”. See for yourself.
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