Wednesday, August 23, 2006

The Oil Situation

The oil price of today is about $72 a barrel, a price not necessarily due to geopolitical issues, but a structural issue that barely produces enough capacity to supply the world. The world produces 81.5 million barrels of oil per day, with only a capacity of producing 82 million barrels per day. The world is only left with an excess of 5 million barrels, a number that sees the refining process scraping it very fine. This is predominately why the price of oil is rising, because consumption is reaching close to global capacity. The growth of China, and her future needs on oil will inevitably create more demand then supply, sending prices and political tensions skyrocketing. The simple fact is this, if a hurricane wipes out the oil supply in the Golf of Mexico off the south cost of America (U.S produces 9 million barrels per day), or a war in Iran (Iran produces 5 mb per day) or a terrorist attack in Iraq (Iraq produces 3 mb per day) the world will have no excess oil and the price of a barrel of oil will jump to $110. A creation of more then a recession, a depression! The world is left with only 38 yrs left oil to feed the world; it is really something to think about

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