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Politics : Rat's Nest - Chronicles of Collapse
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To: Wharf Rat who wrote (11566)12/13/2010 1:59:45 AM
From: Wharf Rat  Read Replies (3) of 24225
 
Tech Talk: OGPSS - Some limits to oil fungibility
Posted by Heading Out on December 12, 2010 - 10:05am
This is the second in a series I am just starting on oil production and consumption around the world. While it is going to focus more on individual nations and oil fields, over time, there are some general remarks that I want to use to preface the series and this is one of those. (OGPSS – Oil and Gas Production Sunday Series).

One of the first things that I was told when I started looking into whether there was a coming crisis in oil supply was that oil is fungible. What that meant was that if, for the sake of discussion, the Saudi Arabian government cut off oil supply to the West, then the West could turn around and buy an equivalent amount from somewhere else (it turned out to be the North Slope and the North Sea) and the world could continue on its merry way. In fact if you go to Merriam Webster oil is cited as an example of a fungible commodity.

being of such a nature that one part or quantity may be replaced by another equal part or quantity in the satisfaction of an obligation:- oil, wheat and lumber are fungible commodities.

But that assumption is not totally true, and in the world where matching production to demand is becoming a somewhat more difficult and expensive operation the limits to the fungibility of oil may soon become more evident.

theoildrum.com
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