isen.blog

We are seeing the all-time peak of global oil production while the demand for oil is growing faster than it ever has. Reuters says:

Oil prices have surged to new 13-year highs above $40 a barrel on concern that OPEC may not pump enough oil to meet rapidly accelerating world oil demand. U.S. light crude climbed to a peak at $40.38 a barrel on Wednesday, less than $1 off the 41.15, all-time high for New York crude futures, reached in October 1990 after Iraq invaded Kuwait. London Brent crude was up 14 cents at $37.50 a barrel.

This is the "back story" behind all today's headlines. But you're not likely to see it on the teevee "news" -- they're going to play it, "Gee-golly, isn't the price of gasoline high," until mid-3-bucks-a-gallon-summer, when the new angle will be "Congress demands an investigation," and finally, some time well into Bush's second term, the real news will begin to trickle out.

Meanwhile, Bloomberg says,

World oil demand this year will rise the most since 1988 as economic growth accelerates and consumption surges in China, the International Energy Agency said. Crude oil traded close to 13-year highs in London and New York. Daily use of gasoline, diesel and other fuels will rise by 1.95 million barrels, 270,000 more than forecast last month, to 80.6 million, the Paris-based adviser to 26 industrialized countries said in its monthly report. The IEA's growth forecast has climbed from 1.06 million barrels in October.

James Howard Kuntsler gets it. He blogs,

The reason that gas is going up is because there are no swing producers anymore. A swing producer is someone who can pump any amount extra a day to meet world demand. America was the world's swing producer for a hundred years until 1970, when US production peaked and no amount of pumping would ever again increase the flow coming out of the ground. For the past 34 years, Saudi Arabia has been the world's swing producer . . . But the status quo of the past thirty-odd years is unraveling quickly. Saudi Arabia may not be the world's swing producer anymore. We don't know for sure because the information they release is dodgy and unreliable. But they may be pumping as much as they can, which is one way of saying that they may have reached peak production . . .

The ultimate authority here is Princeton Geology Professor emeritus Kenneth Deffeyes -- his book, Hubbert's Peak, is a must-read.