Global Oil Crosses Into Structural Deficit

I’m on the record as a long-term bull on oil prices, with us likely to see repeated spikes over the coming decade as weak new supply wars with stubbornly high economic growth in emerging markets. Periodically, high oil prices will, at best, tip us into recession, and prices will bounce back and forth until something breaks, whether in supply or demand.

Some new analysis from RigZone reinforces this view. Picking up from where some related analysis from The Economist left off, and using new BP data, we have the following graph. It shows that oil, on an annual supply/demand basis, crossed over into structural supply deficits in 2005 and has never climbed back. Granted, this does not include biofuels, coal-oil, etc., which BP doesn’t track, but still thought-provoking.

Economists graph 2


  1. charlie says:

    Are they taking into account inventory on tankers?

    Also how much of this was being dumped into various strategic reserves at the time.

    We (US) are making about 1m b/d of ethanol, which is being blended into gasoline. I've seen numbers that suggest last year gasoline production was in the 6 m b/d category, which gives you an idea of how much demand was cut. I'm sure it is back up now.

  2. Freude Bud says:

    eh, you are not accounting for refinery gain, which more than accounts for the difference. the world is not in global deficit, especially if you consider biofuels.