2011 February 25

The Master Resource Report  2011-02-25

Saudi exports fell in December. (page 1 )

An oil price forecast. (page 1 )

Not all oil is swappable. (page 2 )

Size really does matter. (page 2 )

Airplane orders and the Middle East. (page 3 )

Oil price graphs. (page 4 )

The number one reason oil will never be cheap again.

This front page from the US print edition of the Financial Times explains in very simple terms why oil will never be cheap again. The ruling elite in Saudi Arabia can’t afford cheap oil they have an entire country to bribe. Actually $36 billion sounds cheap. Maybe even too cheap…! Makes me wonder what it is ultimately going to cost?

Financial Times: “Saudi Arabia’s $35bn “royal gift” in social, unemployment and housing benefits – aimed at averting the spread of popular dissent that felled the Egyptian and Tunisian leaders – has failed to satisfy activists’ demands for reform.”

This is a band aid, unemployment is stuck above 10% and the median age is 24.9. That is correct; half of the population is under the age of 25. If you think the U.S. faces a jobs crisis consider the one the Saudi rulers face.

Net Export commentary by the original experts:

Jeffrey Brown and Samuel Foucher

This report constantly comes back to the importance of the simple yet profound concept of net exports as part of the Peak Oil model. So whenever Jeff and Sam put something new out on the topic it is always worth a good look. Jeff and Sam are the two bright guys who developed the “Export Land Model” (ELM) and have continued to refine it over the last few years.

Below is an excerpt from a recent commentary they did for ASPO titled “Egypt, a Classic Case of Rapid Net-Export Decline and a Look at Global Net Exports.”

“Based on the ELM, we have concluded that given a production decline in an oil-exporting country, the Net Export Decline (NED) rate will exceed the production-decline rate and the NED rate will accelerate with time – unless the exporting country cuts its oil consumption at the same rate as, or at a faster rate than, the rate of decline in production. Furthermore, the bulk of post-peak Cumulative Net Exports (CNE) tends to be shipped early in the NED period.”

An amazing cartoon from Politico.com

Link to Politico.com