July 12, 2008

Will Saudi Arabia manage to raise their production to 12.5 million barrels per day? BusinessWeek has a reliable source that says the Saudis can not ramp up their production nearly as much as they claim they will.

But the detailed document, obtained from a person with access to Saudi oil officials, suggests that Saudi Aramco will be limited to sustained production of just 12 million barrels a day in 2010, and will be able to maintain that volume only for short, temporary periods such as emergencies. Then it will scale back to a sustainable production level of about 10.4 million barrels a day, according to the data. BusinessWeek obtained a field-by-field breakdown of estimated Saudi oil production from 2009 through 2013. It was provided by an oil industry executive who said he had confirmed it with a ranking Saudi energy official who has access to the field data. The executive, who has proven reliable over several years of reporting interaction, provided the data on condition of anonymity to protect his access to the kingdom and the identity of the inside contact who confirmed the information.

Among those who dismiss Peak Oil fears oil reserves in Saudi Arabia were supposed to provide so much increased production that world oil consumption could continue to rise along with economic growth and increasing demand. But the great Saudi hope is a dud.

Meanwhile some other major oil producers are in decline.

Mexico’s average crude exports plummeted 17.3% to 1.46 million barrels a day during the first five months of the year compared to the year-ago period, contributing to record oil prices.

In spite of record high oil prices and a big push to drill in the United States oil production in the US declined in May and June of 2008. The surge in oil prices over the last few years caused a temporary halt and small reversal of the long term declining trend of oil extraction in the US. Is that long term trend now going to resume?

My advice: make lifestyle and career adjustments to reduce your dependence on oil before rising oil prices force you to make changes. It is easier to make changes from a position of relative strength than from a position of relative weakness. If you are going to move then consider moving closer to work. When buying a car go for more fuel efficiency. For some types of occupations telecommuting might be a possibility Organize a car pool or ride a bicycle or take a bus..


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