Tuesday, June 4, 2013

Future Iraq Oil Production

The Oil Drum has a good post on the future of Iraq oil production.  Last year, Leonardo Maugeri introduced people to the idea of an oil revolution.  Perhaps his best argument for such a revolution is price motivation and the behavior of the oil industry (perhaps a result of price motivation).

Many of the top dogs in energy analysis (IEA, EIA, etc) are predicting a surge in Iraq oil production over the remainder of this decade.  The future production estimates range somewhere between 6-12 million barrels per day.  These projections are restricted by any number of political and economic factors - especially concerning a recent increase in violence.  And in almost all cases, Iraq oil exports are seen flowing to Asia, and China specifically.

The projections of oil exports going to China is in-line with some of the more pure economic-oriented claims for the Iraq war, and continued growth in oil consumption is in-line with Michael Pettis' thesis that China will have to transition its economy to a service based economy.  This he argues, must be accompanied by reduced consumption of concrete, steel rebar and copper - at least the hoarding thereof.  An increase in the consumption of oil I think will be a significant part of that transition, as well as job-creating environmental reform.

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