Mexican Crude Oil Production Drops
Do you recall my post about the Export Land Model (ELM)? The basic thesis of the ELM is that once production peaks in a country, you must look at both falling production, and at rising consumption, to see when exports will drop to zero.
As you can see, for illustrative purposes the ELM assumes that, after a country’s oil production hits peak it will decline at a rate 5% annually, at the same time that local consumption increases by 2.5%. The dotted red line then shows the impact those two metrics will have on the ability of the country to export its excess production. Using these assumptions, the ELM shows that exports reach zero in 9 years.
So now we have this news from Mexico, where we get over 500,000 barrels of oil per day, that production fell by a much larger percentage than 5%:
Mexican crude oil production has dropped 10 percent so far this year, compared to the same period a year ago.
The country’s state-run oil monopoly says it produced 2.84 million barrels of oil daily in the first seven months of the year.
The drop caused exports to fall 16.3 percent over the same period, for an average of 1.44 million barrels a day.
That Mexican drop in production implies big oil worries for the US in four to five years. Our solution, in case you missed it, is Drill, Drill Drill! We don’t have 10 years.
[…] Original post by MoverMike […]