Doomberg Goes Off the Rails
The ordinarily knowledgeable and reasonable Doomberg is way out of his lane on oil.
In a recent post “Peak Cheap Oil is a Myth,” Doomberg observes that natural gas liquids have been ignored as a part of what the world considers oil. If they were included, he argues, then it would be evident that there is more than enough oil supply for decades or longer.
Doomberg is so wrong about so many things in his post and in comments on Adam Taggart’s Thoughtful Money podcast that’s it’s hard to know where to begin. I will write another post detailing this soon but for now, I’m just going to address natural gas liquids.
Here’s a speed round of some of his more astonishing statements followed by my reactions.
“In our view, NGLs are oil.”Doomberg
NGLs always have been included as oil. Figure 1 shows the latest U.S. Energy Information Administration (EIA) report on oil supply. NGLs are included as oil along with refinery processing gain, and renewables and oxygenate production.
“People have too narrow a definition of what oil is. Once you widen that definition which isn’t always captured in the official quote-unquote oil production statistics you then can see that we have a tsunami of hydrocarbons coming on line especially in the U.S. and that is a significant headwind to prices.”Doomberg
Every oil agency in the world—the International Energy Agency (IEA), the Energy Information Administration, OPEC—includes natural gas liquids, refinery gain and oxygenates as “oil.”
Figure 2 shows the IEA’s definition of natural gas liquids. All liquids that come from oil and natural gas field operations or natural gas processing plants are considered NGLs and are include in what the IEA considers “oil.”
Doomberg just doesn’t know this.
“Condensate is not currently counted in the world’s quote-unquote oil reserves”Doomberg
Yes it is. Figure 3 shows what the EIA includes as U.S. proved reserves: crude oil, condensate and wet natural gas.
Doomberg should read any annual (10-K) or quarterly report (10-Q) submitted by a public oil and gas company to the U.S. Security and Exchange Commission to see that NGLs are clearly considered oil reserves (Figure 4).
Doomberg has created a straw man fallacy that natural gas liquids and condensate are not included in oil supply or reserves. He’s wrong.
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