In the meantime, the geological peaking of world oil production is coming along right on schedule. Last week the Mexicans announced a major drop in output from their flagship Cantarell oil field. Russian production is stagnant and world exports are slowly starting to fall. Unless a major economic crash intervenes to muddy the waters, it should soon be obvious to all but the most biased observers that world oil production will peak within the next few years.
There is a world wide race going to between contracting economies and world oil production, the score of which will be kept in the price of oil. In the last few months OPEC production has increased a bit due to a more stable Iraq, increased Saudi production and scattered increases elsewhere. However, we are likely getting close to the last feasible increase in world oil production. Some OPEC members are already muttering that they deserve prices closer to $150 a barrel than $100 for their oil and hinting that if prices fall much further there will be production cuts.
Those who follow the status of new oil production projects say that if demand holds up, we might see some increases in production for another 24 to 36 months, but then depletion of existing fields will overtake production from new projects, shortages will develop, and prices will rise precipitously.
Starting with the current hurricane, it is going to be an interesting ride.
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