News source says:

Drilling for crude in U.S. stalls. However, U.S. crude oil production rose by 300k bpd to an average of 13.3 million bpd in the week ending February 2. Production rate is now back at previous record before cold weather in January took production offline.

https://oilprice.com:443/Energy/Crude-Oil/US-Oil-Drilling-Activity-Stalls.html

https://markets.businessinsider.com/news/commodities/oil-demand-crude-energy-death-supply-morningstar-finance-markets-investors-2024-2

Learned from this article that new oil wells are only productive for a few years before dropping off in productivity.

News source says more investment in new oil wells is needed for supply to keep pace with demand.

Re: Well Decline.
Yes. Drillers are more and more effective, getting more oil out of places we never thought we could do previously. They also do it faster and faster as well. Downside is the decline rates of these wells is a lot higher (ie shorter lifespans) than previously. Problem is, oil for green reasons is out of favor. Reality is we still use it, but its now bad to be seen investing in oil companies. Hence the sector is under invested/capitalized. Believe this is why you are see the cash rich majors consolidate so many of the smaller producers.

Re: Morningstar article
I think a lot of these forward looking predictions assume very high Electric Vehicle ("EV") adoption rates. Here in the States the EV transition appears to be slowing quickly. Car companies rolling out new EVs only to find there's little demand. Personally I believe that the willing earlier adopters have already switched and the next EV customers are the less willing. In order to convince them to switch you are going to have to resolve the current EV issues. (Range & Battery life at a minimum). Hence it is my belief that the 'demise of oil' is further away than many would believe.

I was with my mom and we saw a Tesla. She asked if I would get one. I told her that I like them but I would not buy an electric vehicle at this time. I said I would rather take 5 minutes to fill a gas tank in an ice car than find a charging station and wait for the battery to charge for an EV. I think the convenience factor is still holding consumers back from making the switch to EVs. Yes I agree with @SMCJB that oil demand is not dying any time soon.

I rented a Tesla last summer from Hertz. Thought it would be an interesting experience since I only had an 80-90 mile drive each way. In theory should have been able to get to my destination and back without charging. When I picked up the car though it was only charged to just over 50%. So immediately I needed to get it charged. Surprisingly finding a charging station and charging was extremely easy. (Was on the East Coast, probably not the same in rural Virginia or Montana!). Then we drove our 85 miles to our destination and this took the battery from 82% to 20%. 85 miles! Lot of Tesla fan-boys I mention this to call BS on me. All I can say is see the screenshot below. It appears that on my 85 mile trip the car used 53% more per mile than it had in the previous 13k miles. Why? Could be because it was 95+F outside and we had the AC on. Apparently in situations like that the AC uses as much, if not more power than the engine does!! In the end we drove about 200 miles and charged 4 times. Of course that does include picking the car up at 50% and returning it at 80%. One time we charged at the grocery store for about 40 mins. Turns out, for the 15 mins the car was idle in the charging spot, Tesla charged us more than they did for the 25 min charge. All in all an it was the interesting experience I was expecting. The car was really zippy, but when you add up all the charging costs (including the 15 min idle fee) it was about the same as gasoline. The issues with range though means I'm a long way away from buying one!

FT Alphaville :- Reimagining the SPR, Adapting the Federal Reserve’s playbook for commodity risk
By Daleep Singh and Arnab Datta'

FT Link :- https://www.ft.com/content/e948ae78-cfec-43c0-ad5e-2ff59d1555e9
Archive Link :- https://archive.is/Lz1wn#selection-1537.0-1825.31

The TLDR / AI generated summary is...

The article proposes repurposing the Strategic Petroleum Reserve (SPR) into a "Strategic Resilience Reserve" (SRR) with a flexible mandate to address broader commodity shocks beyond oil. The argument is based on the changing dynamics of global energy markets and the need to adapt the SPR's purpose to the current landscape.

Key points include:

The SPR, established in response to the 1970s Arab oil embargo, has traditionally focused on mitigating oil shortages. However, the article argues that with the U.S. now being a net exporter and top producer of crude oil, the SPR's mission should evolve to address supply chain vulnerabilities and commodity price shocks, especially in critical materials for clean energy transition.

The proposal suggests creating an SRR that follows the model of the Federal Reserve's efforts to manage financial stability risks. The SRR would aim to prevent crises and reduce harm when they occur, providing a relatively cheap insurance against economic coercion from adversaries and supporting the transition to cleaner energy sources.

The article highlights the concentration of the supply of clean-energy inputs and refined products, pointing out vulnerabilities such as China's dominance in critical minerals. It emphasizes the need for a comprehensive approach to address both domestic and international commodity risks.

The proposed framework for the SRR includes crisis prevention and crisis mitigation tools. Prevention involves ongoing monitoring, evaluating vulnerabilities, and proactively reducing risks. Mitigation includes interventions at different pressure points in commodity markets, such as releasing stored reserves, purchasing excess supply, or providing financial support to producers during crises.

The article discusses potential implementations of the SRR, either through congressional action or executive branch authorities. It suggests a monitoring and evaluation program, cooperation with international partners, and utilizing existing agencies and programs to build a comprehensive strategy for managing commodity risks.

Overall, the proposal advocates for a strategic and adaptive approach to address the evolving challenges in global commodity markets, emphasizing the importance of resilience in the face of potential disruptions.

I know the intention of the SPR is to stabilize supply and prices in the oil market, but the general idea seems anti-market somehow. I think everybody here know that a free market economy has booms and busts, supply shocks, and price spikes among other things. I think(naively) the market will fix a supply problem eventually and things will work themselves out without government intervention. I know I am probably wrong because I have limited experience studying the economy. However, I am skeptical that a "Strategic Resilience Reserve" would be good for everybody. I stubbornly cling to the dream of a market economy without government intervention.

Sorry if my opinion of the article is too political. I can delete it if needed.

Thanks @SMCJB, interesting read.

@blackgrey45 while I obviously believe that we should let the markets sort these things out, that obviously assumes that the markets are fair. The US for many reasons has lost a lot of its industrial base for several reasons, including cheaper labor markets overseas but also due to (unfair?) subsidies of industries. We import our Steel/Lithium/Many things from China, we import our chips from Taiwan, we import our Uranium from Russia. The list goes on. (Thankfully we are now energy independent). The SPR was started because of the oil embargo. Can you imagine what would happen if any of these countries cut our supply of these important items off?

https://oilprice.com:443/Latest-Energy-News/World-News/Global-Oil-Demand-Hit-Another-Monthly-Record-in-December.html

Oil demand rises by 500k barrels per day in December from November.

Iron ore prices down 4% this morning in Asia. News sources saying this is due to weak demand in China. Could this weakness in demand spread to the oil market?