There are more reasons for concern regarding the concept of "Peak Oil", which were outlined yesterday.
First and foremost are the rapid quantity and quality of oil reserves. Saudi Arabia hasn't had its reserves verified in decades. It's certain that something is amiss. Most of the exports from Saudi Arabia have deteriorated to a vastly lower quality oil. Crude is actually a blend of many hydrocarbons. The most valuable portion of a barrel is Jet Fuel, which is also known as kerosene. Next is gasoline which is followed by Diesel Fuel.
Crude Oil also is referred to as either "sweet" or "sour". The level of sweetness is dependent on the amount of sulphur found in the oil. The less sulphur, the better. Oil is also classified as "light" or "heavy". Light refers to the proportion of the higher valued liquids, such as kerosene, gasoline and diesel. Sour oil is filled with large amounts of Residual Fuel Oil and Tar. "Resid", as it's known in the trade, is used on marine vessels, as it is known to be highly pollutive. Tar is known for its use in paving roads.
Saudi Arabia exported light-sweet crude, but now exports heavy-sour crude. So clearly, the good stuff is going. Venezuela, another very large oil exporter, also delivers heavy-sour crude.
Even the worst quality crudes can be converted into more valuable products through refineries which have "crackers". No, I don't mean graham crackers! Crackers actually split the molecules, thereby allowing the transformation from heavy to light. The longer the molecule, the heavier the product. But cracking is expensive and the number of refineries with the requisite technology is falling behind the deterioration in crude.
Only a few countries, such as Russia, are producing increasing quantities of light-sweet crude, while most countries are on the decline in quantity and quality.
Marko's Take? Peak oil is coming faster and becoming more dangerous at a rapidly accelerating rate!
Tomorrow, we'll re-examine the latest economic data as new information continues to appear.