Remember IEA's 300 million bbl of oil missing? Where is it?
Oil & Gas Journal, November 23
Anne Rhodes
An issue on IPAA's (Independent Petroleum Association of America) agenda is the large discrepancy between the International Energy Agency's supply and demand figures in the second and third quarters of this year. According to IEA data, global oil supply exceeded demand by 3.4 million b/d in the second quarter. This difference implies a huge inventory buildup - whether real or a statistical anomaly - and IPAA believes more accurate figures might have changed speculators' behavior and possibly improved oil prices.
IPAA has asked the General Accounting Office to investigate the accuracy of IEA's numbers (OGJ, Oct. 19, 1998, Newsletter). A preliminary report is due shortly.
Missing barrels?
The supply excess implied by IEA's statistics has been termed "missing barrels." In the second quarter, this excess amounted to about 300 million bbl.
Matt Simmons, president of Simmons & Co., Houston, says there is no physical way to store that much excess oil: "We are either hiding someplace over 300 million bbl of petroleum, or our supply/demand numbers are off by 1.5 million b/d (each)."
Simmons says the problem is one of accuracy: "(A) 1.5 million b/d discrepancy is only 2.5%-not very much ellipse. I don't think our industry has the ability to estimate our supply to the tune of 0.5%, let alone 0.1%."
Allen Mensch of Southern Methodist University's Maguire Oil & Gas Institute, Dallas, also sees lack of accuracy as the culprit. He estimates that about one third of IEA's data for any given reporting period are actually projections, rather than historical data. Many developing countries do not have the necessary systems in place to determine those numbers in time for IEA's deadlines, says Mensch.
He also believes the data from members of the Organization of Petroleum Exporting Countries are "pretty bad." "Will it ever be found?" asked Mensch. "It will be found in maybe a couple of quarters, when we go back and revise this quarter's numbers."
Scott Espenshade, IPAA's vice-president of economics and information services, acknowledged that the missing barrels issue was "a data problem." He believes that errors in all three categories-supply, demand, and inventories-have had an additive effect, resulting in a large discrepancy.
"We want to work with IEA and the reporting countries to improve the data that's going into IEA," said Espenshade. IPAA's goal is to make the data more transparent, so that the markets are acting on more accurate data.
Mensch agrees that errors are probably present in all three numbers. "Looking at the numbers, I would guess that those demand numbers are probably wrong."
Espenshade and Mensch both stressed the importance of educating the financial community about how to properly interpret the IEA supply/demand data. |
