Now we are faced with the global oil-production peak
revised their predictions and now concur that
2005 is apt to be the year of all-time global peak production
It will change everything about how we live
We know that our national leaders are hardly uninformed about this
predicament. President George W. Bush has been briefed on the dangers of the oil-peak situation as long ago as before the 2000 election and
repeatedly since then
In March, the Department of Energy released a report that officially acknowledges for the first time that peak oil is for real
plainly that "the world has never faced a problem like this
. Without massive mitigation more than a decade before the fact, the problem
will be pervasive and will not be temporary
China 'could trigger oil collapse'
Thursday, June 16, 2005 Posted: 0214 GMT (1014 HKT)
At it's meeting in Vienna on Wednesday, OPEC lifted output limits to 28 million bpd.
(CNN) -- World oil prices are in a "final frenzy" ahead of a possible collapse soon, with the likely trigger a sharp drop in China's crude imports,
according to noted China-watcher and economist Andy Xie.
Xie, who is the Hong Kong-based chief economist for Morgan Stanley in Asia, said in a commentary Thursday that global oil demand is weakening as the
global economic cycle starts to turn down.
His warning of a price collapse later this year comes as OPEC lifts its output limits to 28 million barrels a day and oil continues to trade above $55
a barrel, within sight of the $58 record high it reached in April this year.
At the time, rival investment bank Goldman Sachs warned the oil market could be in the early stages of a "super spike" that could see prices go as
high as $105 a barrel.
But Xie said on Thursday that the reason oil prices have kept rising this year in the face of weakening demand is the weight of speculative money
betting on oil price moves.
"The financial sector may have become dependent on the trading profits from oil. As evidence accumulates over weakening demand and strong supply, I
believe oil prices could collapse," Xie said.
On Wednesday the Organization of the Petroleum Exporting Countries, the oil cartel that supplies about 40 percent of world demand, agreed to raise its
formal production quotas by 500,000 barrels a day to 28 million bpd and foreshadowed a possible further 500,000 bpd increase within weeks if prices
While most analysts say oil demand is still strong, Xie says it is weakening and that huge investment in the energy sector, including alternative
energy supplies such as LNG, oil sands, coal gasification and liquefaction, should keep supply high for years.
"The hype over 'endless' energy demand from China and India has triggered a massive boom in investment in this sector," he said.
He said the production capacity that would flow from these investments "may keep a lid on oil prices for many years to come".
According to Xie, China's oil imports are declining as it switches to coal for electricity generation, while at the same time the United States' oil
inventory is rising.
Xie said China's oil imports declined by 1.2 percent year on year in the first five months of 2005, while the U.S. oil inventory increased by 6.4
percent in the first quarter of 2005.
But instead of oil prices falling in the face of weakening demand, prices were up 46 percent in the five months of the year and 50 percent higher in
the first quarter, on a year on year basis.
-- "The answer, I believe, is that there are too many oil traders engaging in oil price speculation. They will likely keep prices up until an oil
market collapse. That day is not too far away, I believe
," Xie said.
-- He said he expected deceleration in the global economic cycle to quicken in the fourth quarter of 2005, to the point where the "oil bubble"
-- Xie's view is in sharp contrast to most other analysts. After the OPEC decision on output Wednesday, most said they were concerned about supply
constraints in 2005
-- "Even at the most optimistic estimate the spare capacity of OPEC is still too slim to reassure the market," William Davie, chief economist at
energy consultancy Simmons and Co., told Reuters news agency.
-- Global demand is expected to hit 86.4 million bpd in the fourth quarter from a seasonal low of 82.5 million in the second quarter.
-- "What's scary is that we're just moving out of the lowest period of demand for the year and OPEC at full stretch was unable to keep prices
down," Gary Ross of U.S. consultancy PIRA Energy said.
-- "World demand in the second half will average 3 million barrels a day more than in the second quarter."
-- But as evidence of weakening demand became more apparent, the market "may panic and correct in the most speculative fashion -- it could