Whatever progress oil haters and alternative energy sources would like to have on world oil demand, the price collapse is working. Demand for oil is supposed to increase by 1.5 million b/d in 2015 and 1.7 million b/d in 2016, up significantly from earlier estimates. This is driven partially by industrialization and partly by lower prices—U.S. gasoline demand is rising, as is the demand for bigger vehicles such as light trucks and SUVs.
The issue has been supply and the production surplus; the spread between supply and demand. Over this one-year period, supply has grown by 2.14 million b/d globally even though the price has been falling. As the surplus has increased, the price has gone in the opposite direction, with the exception of this year. However, this price-rise anomaly has since repaired itself.
Years of massive investments in new oil supplies clearly don’t shut off overnight, particularly if those projects have already seen companies invest billions of dollars and are on the home stretch of completion. Such is the case for Canada’s oil sands, which will add some 800,000 b/d in new production in the next three years, although green field projects have ground to a halt. The Gulf of Mexico and other long-term offshore development still have projects nearing or at the completion stage which will also add to future supply, regardless of current market conditions.
But what can be stopped, because it doesn’t make economic sense, has been cancelled or delayed. Tens of billions of future capital spending is on hold. Many producers are scaling back budgets further as prices remain stubbornly low. Conventional drilling in North America is the most responsive to price in either direction. The major decline in the Canadian and U.S. rig count is well known.
OPEC, which the world’s privately-owned oil industry has counted upon to maintain some stability in world oil markets for over 40 years, remains unpredictable. OPEC, which has an official quota of 30 million b/d, no longer even talks about enforcement as it pumps close to 32 million b/d, with Iran ready to add more. Less affluent OPEC members have been asking for cooperation and even talking to the Russians, but the low-cost Persian Gulf producers are staying the course, at least for now.
The global market for abrasive products and materials reached $36.6 billion in 2014. This market is expected to reach about $37.8 billion by 2015 and $44.2 billion by 2020, registering a compound annual growth rate (CAGR) of 3.2% from 2015 to 2020.
In global crude oil prices have always been in the focus of economic and financial news. The higher crude oil prices rise, the more positive is the economic outlook for petroleum exporters. In contrast, those countries dependent on petroleum imports suffer to varying degrees from those same higher prices as import bills increase.
- Refining of petroleum
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- Crude oil distillation
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