Are we on the verge of another oil crisis? It could be just around the corner.

With our economy in the tank(what recovery, see housing mortgage defaults, overall unemplyment rate and think other indicators)our domestic consumption of oil rising and a declining supply of oil from our foreign sources, another crisis is not very far away. As the artilce mentions, nobody in D.C. has noticed. if they have they are saying nada, zip, zero, not even a duh from Odumbo and friends. This is a really good article.
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It's Official: The Oil Export Crisis Has Arrived

Chris Nelder |

(This post originally appeared at the GetRealList)

Last March, my study of the effect of peak oil on U.S. imports had brought Mexico to the fore (“The Impending Oil Export Crisis”). As our #3 source of imports, the crashing of its supergiant Cantarell field had put the future of our oil supply into serious jeopardy.

The possibility that Mexico’s oil and gas exports to the U.S. could go to zero within seven years looked very real.

As I explained in that piece, rising domestic consumption coupled with declining supply puts an ever-tightening squeeze on imports. I have found no evidence that policymakers are paying any attention to this critically important dynamic, but it is the very point of the peak oil spear.

Were it not for the market meltdown and recession, it would have pierced our vital organs. Instead we felt a pinprick. Hardly anybody realized what it really was, and most ran off on a wild goose chase for evil oil speculators.

Now Venezuela has appeared on my radar for similar reasons…only this time we’re really going to feel it.

Let’s begin with a review of Mexico’s exports.

Mexico
Shortly after publishing that article, I casually remarked to my friend and fellow energy analyst Gregor Macdonald that Cantarell’s production could fall to under 0.5 million barrels per day (mbpd) by the end of the year.

I arrived at this somewhat startling conclusion by calculating the effect of its decline rate–at the time, 38% and accelerating–on production of 0.77 mbpd in January, down precipitously from its 2.1 mbpd peak in 2003.

Gregor’s recent data sleuthing on Cantarell found its production in December 2009 was 0.527688 mbpd, just a hair above my estimate.

To update the data on Mexico, it’s now our #2 source of imported petroleum because Saudi Arabia has fallen from #2 to #4. As of November 2009 (the latest data available) the U.S. imported 1.08 mbpd of crude and finished petroleum products from Mexico. Its exports to the U.S. peaked at 1.46 mbpd in 2004, the same year as its production peaked. Net exports (production minus consumption) fell to 1.06 mbpd in 2008.

For the years 2005 to 2008, Mexico’s exports to the U.S. declined by 0.51 mbpd. In 2010, supply is expected to fall to 2.5 mbpd–nearly half a million barrels per day less than 2009.

Mexico nationalized its petroleum operations in 1938 in a constitutional amendment and handed over total control to the state oil company Petróleos Mexicanos (PEMEX), with predictable results.

Oil now provides more than 40% of the country’s revenues, which have been used to pay for a vast array of public services and line the pockets of the oligarchy while starving investment in both upstream activities (new oil supply) and downstream (finished products).

Consequently, Mexico’s oil reserves have decreased by more than 75% in two decades (owing partly to the correction of a previous, ridiculously inflated figure), production has begun to decline, and exports are falling fast. It now imports $4.5 billion a year worth of gasoline, $10 billion a year in petrochemicals, and 25% of its natural gas, mostly from the U.S.

Remember the lines in 1974?

This despite having nearly 13 billion barrels of proven oil reserves and more than 50 billion barrels of (unproven) reserve potential. Mexico would be in a far better position, were it not for its hostile stance on foreign participation. PEMEX simply lacks the technical ability to develop its more difficult, remaining resources–particularly deepwater.

Continue reading about Venezuela's oil problems and possibities.

Hat tip: Flares into Darkness

Business Insider

http://www.businessinsider.com/the-oil-export-crisis-has-arrived-2010-2