Outside the US and Canada, the world is in peak oil mode for more than 10 years now. There are many events which have brought about this bumpy production plateau. The sequence of these events has never allowed oil production to grow much over a longer time. We have seen the predicted negative feedback loops when oil production gets harder and more expensive. The end result of this phase is a weakened financial system with more debt and many government budgets in deficit.
The response to peaking conventional oil production was money printing and unconventional oil. In typical US style huge amounts of material, equipment and labour were mobilised to extract shale oil from tight rocks, a last resort after US production had declined since 1970. Skilfully designed propaganda of the oil industry employed the media to spread the news of an energy revolution. The objective of becoming independent of oil imports and thus beat OPEC excited the whole US nation. But it was overdone. The light shale oil – not your average crude oil – could not all be absorbed by US refineries and ended up in inventories. In a strange way, market forces did not work.
Later than expected US shale oil is peaking now. The latest case is the Chesapeake stock slump. If oil prices stay low for a longer time, oil production will ultimately go down and 2015/16 may be the global peak. Price spikes will be certain, further damaging the financial system. And then we have the Middle East. The sinkhole around Syria is widening month by month. There is no way a revived US shale oil industry could compensate for any losses when fights start in the Persian Gulf.
The red horizontal line is the maximum crude oil production level in May 2005 (the Katrina year). We can see that almost all additional oil produced now above that level is US shale oil. In other words: without US shale oil (which required cheap money from quantitative easing), the world would be in a deep oil crisis.
The grey line shows the September 2005 production level outside the US and Canada. The graph shows that the October 2015 production level is only slightly higher than in 2005, possibly within the accuracy of statistics.
We can therefore confidently say that growth of the world economy managed to make itself completely dependent on unconventional oil from the US and Canada.
This article was written by Matt Mushalik from the CrudeOilPeak,info website. He does excellent charts and articles on the U.S. & World oil industries and production. I started the article with his “Summary and Conclusion” because it perfectly describes what is going with the current state of affairs in the Global Oil Market.
Please click on the link and read the entire article as he breaks down the different continents production profiles. Especially, check out Europe’s oil production since 2001 and you will see why they are in serious trouble.
Matt sent me this chart showing total world crude oil and condensate production minus the U.S. and Canada:
Here is the link to the data from the chart above: EIA International Oil Production
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