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Energy Inaccuracy Agency

The EIA is clearly charged with making stuff up to keep the price of oil as low as possible, including reporting fake barrels in US stockpiles and over exaggerating future production rates. Low oil prices, of course, are NOT in the best interest of unconventional well economics and the shale industry's ability to raise the EIA tries to make up for talking down prices by talking up production rates and the long term sustainability of shale. That also, however, helps to keep oil prices low... which is what the EIA's boss needs to stimulate the economy. Cheap gasoline equates to November votes. Shale oil and gas exports are also used to to influence US foreign policy, another part of the current political agenda. Low oil prices hurt the shale oil sector but Washington needs as much of the stuff as it can get. It's all very complicated and the EIA makes it even more so:

"EIA expects this trend will continue through most of 2020. Despite the decline in rigs, EIA forecasts production will continue to grow as rig efficiency and well-level productivity rise, offsetting the decline in the number of rigs until drilling activity accelerates in 2021."

Rigs just drill holes in the ground and rig "efficiency" in a period of declining rig counts has nothing whatsoever to do with growing production.

"Well (oil) level productivity" has not risen since 2016; this data is directly from realized production reports filed with various state regulatory agencies.

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"With 81 percent of global oil production now in decline, even a plateau in U.S. production would likely result in a worldwide decline. The world is simply not prepared for such an event—in part, because agencies such as the EIA are either unable or unwilling to grasp the plain facts and present them to policymakers and the public.

When the real trouble arrives in the oil markets, the EIA and other forecasters will likely just shift their analysis and cite some "impossible to predict" factors that will have led to the stunning reversal of fortune. But those factors are in evidence right now, if only the EIA and others have eyes to see them." Kurt Kobb

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