Submitted by EnergyTechStocks.com

Texas-based independent petroleum geologist Jeffrey Brown has been warning the world for a while now that rapidly rising domestic consumption in oil-producing countries is limiting the amount of oil they have to export to the United States, China and other big oil-consuming nations.

EnergyTechStocks.com first wrote about Brown last summer. (See Prediction #1 (of 4) from Oil Geologist Jeffrey Brown: Producers’ Own Consumption Rising, Exports about to Plummet) Since then Jeff Rubin, chief economist at CIBC, has written his own report warning about oil producers’ growing call on their own oil. Now in a new report, James Barrineau, global economist at another Wall Street investment banking firm, Alliance Bernstein, has written, “In oil-exporting developing countries, strong economic growth fueled by oil revenues has begun to accelerate domestic consumption faster than production – a trend that seems to have gathered speed in the last two years.”

Published in March, Barrineau’s report has so far flown under investors’ radar screens. But that could quickly change in the current market climate, providing fresh upward momentum to crude prices, because the report warns that, given the “declining ability of developing-country producers to export, . . . crude prices’ stubborn march higher may be difficult to reverse.”

In the report, entitled “Emerging Markets and the Decline of Exportable Oil,” Barrineau concludes that the decline in exportable oil is a trend that could continue for some time because, the higher prices go, the more money oil producers earn from existing fields, making it very hard to justify “the increasingly high cost” of developing new oilfields. Without investment in new oilfields, Barrineau warns, prices will have to keep going “ever-higher” in order for producer countries “to maintain the same level of prosperity” in the face of greater spending on politically popular domestic social programs.

“The trend of declining exportable oil, twinned with stubbornly high oil prices, is likely to continue” until either social spending is cut or leaders demonstrate the “political courage” to develop new fields for the purpose of increasing exports. Neither change appears to be on the horizon, Barrineau concludes.