Peak Oil Closer Than You Think

Brian O'Keefe, and editor at Fortune Magazine wonders why OPEC isn't opening the spigots to prevent a world wide recession with the possible result of a collapse in oil demand which would drive prices down.

There are two answers, they want the money now, or the spigot is already full open.

Well, Steve LeVine at competitor Business Week has received a copy of a document which, if true, settles the dispute, because it says that the House of Saud is incapable of pumping oil at the volumes that they promise:

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. Business Week 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.

The fact that the House of Saud is notoriously closed mouth about its assessments of its oil reserves lend additional credence to this document.

It means that oil is high because we are pumping, and burning, as much as can be pumped out of the ground, and so minor disruptions create spikes, and a long term minor spike could create actual physical shortages.