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Peak Oil Review - December 31st, 2007

..............While gasoline stockpiles appear adequate for the time being, US distillate stocks dropped by 2.8 million barrels last week as imports dropped to 143,000 barrels per day. Distillate stocks are now down 11 percent for the year and are at the bottom of the 5-year average range for December.

Net US crude and product imports during 2007 are down by 93 million barrels (2 percent) over 2006. Total US consumption of petroleum products, however, increased by a modest 17 million barrels over the year. The situation for distillates, which are currently much in demand by China, is worse with US stockpiles dropping by 16 million barrels or 11 percent during 2007.

Some are beginning to ask if a major turning point was reached about 6 months ago. World oil production has been flat for the past three years. US and European consumption has been flat while consumption by India, China, and the oil producers have been increasing rapidly. The shortfalls largely have been made up by reduced consumption in poor countries that cannot afford to import oil at current prices. The poorer countries, however, can only cut back imports by so much before they reach an irreducible minimum.

If that minimum has been reached, then the OECD countries ( which the US is part of ) are living off stockpiles. When the minimum operating level for these stockpiles is reached and shortages start to occur, the bidding war for imports will shift into high gear, and much higher prices will ensue...............

The price of oil reached $100 dollars a barrel today for the first time ever.