Daily Energy Report
Oil emissions by segment, OPEC oil projections, COP28’s deceptive headlines, US crude inventory, Russia’s oil price, Panama drought effect, Norway invests in oil, ESG funds face oil reality, and more.
Chart of the Day: Carbon Emissions from the Life of a Barrel of Oil
Figure (1) above shows carbon emissions for the life of oil, whether it be from a barrel or a molecule. About 88% of the emissions come from “consumption: the distribution and the burning of oil! The other 12% comes from “production, refining, and shipping.”
EOA’s Main Takeaways
COP28 was delayed as negotiators could not come to terms on the final agreement, especially regarding the phase-out of fossil fuel. To understand the dispute, look no further than Figure (1) above. Most of the emissions from petroleum come from consumption, and most of it is in oil-consuming countries, not in oil-producing countries. Oil producers argued that the problem is not with fossil fuel, oil here in our chart, but in its emissions. What should be phased out is emissions, not the oil. If technology is used to reduce or eliminate emissions, then oil can be used without any problem. Oil producers are advocating several technologies, chief among them carbon capture and sequestration (CCS), which many environmentalists reject as an unproven technology. Producers stress the point that the technology is working but it still needs improvement and to be scaled up.
Regardless, the push by oil consumers, especially in the EU for a carbon tax, carbon border tax, and now the phase-out of fossil fuel, is all the result of the realization that most emissions come from consumption. Producers are concerned because they see the demand for their products disappearing before their eyes. The only way to maintain demand is to support technologies that reduce emissions in the consuming countries such as carbon capture, and hybrid cars!
Story of the Day
OPEC released its Monthly Oil Report earlier today. Its production declined by 57 kb/d last month to 27.837 mb/d as shown in Figure (2). Production declined in Iraq by 77 kb/d, Angola by 37 kb/d, Nigeria by 17 kb/d, the UAE by 9 kb/d, and Algeria by 2 kb/d.
Production increased in Venezuela by 23 kb/d, Libya by 21 kb/d, and Saudi Arabia by 12 kb/d.
OPEC maintained its estimates for world demand growth for both 2023 and 2024, the same as last month at 2.5 mb/d and 2.2 mb/d respectively.