In the last few weeks much hot air has swirled around the suggestion that "speculators" have driven the surge in oil prices. Yet a review of the record on oil consumption and production for the last two decades clearly shows the hole that we chose to dig for ourselves:
- World Oil Production Mbbl/day: 65.0 (1990), 85.0 (2007) (31% growth)
- US Oil Production Mbbl/day: 7.5 (1990), 5.0 (2007) (-33% growth)
- World Oil Consumption Mbbl/day 66.6 (1990), 87.0 (2007) (30% growth)
- US Oil Consumption Mbbl/day: 17.0 (1990), 21.0 (2007) (24% growth)
The world demand for oil has grown by 20 Mbbl/day since 1990, of which the U.S. consumption growth has grown by only 4 Mbbl/day, and at a rate less than the world consumption growth. Meanwhile, we have crippled our own petroleum production during the same period of time. Furthermore, world oil production has now stalled at about 87 Mbbl/day, while world consumption growth continues unabated. The world's excess production capacity has also collapsed in the last several years (it has become utilized capacity), from 7 Mbbl/day to 2 Mbbl/day.
When we chose to destroy our ability to produce our own petroleum resources by banning expanded offshore drilling (despite dramatic improvement in drilling technologies in the last forty years) , what did we think was going to happen?