Ummm
I am confused.
Consumption remains high as inventories are dwindling.
The option to me is "higher prices".
QUOTE]
My point is simply about the physical flow of oil.
Statistics vary but the world is extracting about 31 billion barrels each year and doesn't seem to have the capacity to extract much, if any, more than this. It doesn't matter how much is in the ground, what alternative technogies we have etc. The installed production capacity and actual production are 31 billion barrels per year.
And we have a few billion barrels in above ground storage. Hard data is very hard to get on this one, but I'd guess that we couldn't take much more than 2 billion barrels from storage before serious problems arose. It's just not practical to have every tank virtually empty, every car running with 2 litres left in the tank and so on.
So, 31 billion barrels of production and 2 billion barrels sitting in storage.
Simple math now... Over the next 12 months there is no way, at
any price, the world can use more than 31 + 2 = 33 billion barrels. $130 a barrel, $50 a barrel or $1 million a barrel doesn't make any difference - we're limited to the actual rate of production plus what we have in storage. We're not going to build 10 billion barrels p.a. of new production overnight no matter what oil fields are discovered and what the price is - it just doesn't happen that quickly (and if we're at peak then it's not going to happen at all).
So we seem to be using more than we're extracting. No matter how much is actually in storage, it will run dry eventually if we keep doing that.
It's like saying someone earns $31,000 per annum. No matter how much they have in the bank (ignoring interest since oil in a tank doesn't grow by itself), they can't sustainably spend more than they earn. If they spend $32,000 this year, $33,000 next year and so on then sooner or later the bank acount will be empty. And from that point on their spending
must be no higher than their income which isn't increasing. (Don't say borrow - oil can't be borrowed into existance).
Same with anything. Water in a dam, water in a tank, food in the cupboard and so on. You have some in storage, a rate of inflow and a rate of consumption. If your rate of consumption exceeds inflow then at some point the storage will be empty and from then on your consumption can't exceed inflows.
Price is simply the means of matching supply and demand. Sure, price will probably head to the moon to reduce consumption to match production. But the key point in physical (not financial) terms is that ultimately consumption just can not exceed production in the long term. If we're at peak oil and consumption is higher than production then it means at some point consumption
must reduce to the level of production - there's just no other option.
I'm talking globally here of course. One individual or one country can outbid another and maintain their consumption. But as a planet that doesn't work.