X-Message-Number: 29554
Date: Wed, 13 Jun 2007 11:09:11 -0700
From: "Mark Winston" <>
Subject: Ahem...

The high prices of oil are funding new infrastructure and extraction
methods, but most new supplies are so hard to develop that it will be
several years before they come online. Provided global demand
continues to grow and the global economy remains fairly robust for
another 5 years or so, I bet we'll see production growth escalate at
the end of the decade or slightly thereafter.

The 'easy' reserves in Russia and the Middle East are not being
exploited as fast, primarily because capital-laden firms are trying to
reduce risk by sinking cash in less unstable regions (like Canada,
Scandanavia, Australia), and domestic investment is flat (or, in some
places like Iraq and Iran, declining). Of course, this has the added
risk that if Russia or Saudi Arabia ever decide to start some
domestically-driven resource investment, they've got a wide berth to
drive down prices, rendering many of these recent Western investments
financially infeasible.

Not sure you had your wording right that proven reserves are only 16
days' supply: that would mean all sources in the world will be drying
up later this month. Maybe you meant that new proven reserves for
2005-2006 amount to 16 days' additional supply added to existing know
reserves? Or new total production, maybe?

MW


{{Subject: Ahem...

According to BP's just-published Statisical Review of World Energy for 2007,
world oil production grew by a shockingly low 0.4 percent from 2005 to 2006
(though I come up with 0.5 percent from the table's figures), despite
persistently high prices which should have caused a flood of oil to come
into the market according to standard economic theory:



http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/reports_and_publications/statistical_energy_review_2007/STAGING/local_assets/downloads/pdf/table_of_world_oil_production_2007.pdf

Meanwhile, proved oil reserves declined slightly (by 1.3 billion barrels,
about sixteen days' supply at current production levels):



http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/reports_and_publications/statistical_energy_review_2007/STAGING/local_assets/downloads/pdf/table_of_proved_oil_reserves_2007.pdf

A few more data points like these, and the Peak Oil deniers will have some
explaining to do.

Mark Plus}}

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