Tapped Out

Does it never occur to these morons that perhaps OPEC is tapped out and cannot possibly pump anymore oil? Darth Cheney is being dispatched to Saudi Arabia, in a last ditch effort to persuade the people who flew those jets into the World Trade Center to pump more oil so Americans can continue to "party on". For those who haven't been paying attention, the price of crude oil continues to rise, reaching height's never seen before. Crude closed today at $108.75 a barrel and shows no sign of dropping back below the century mark anytime soon.

Now I still maintain that this price isn't exactly warranted, at least not on the basis of supply and demand, as a lot of the increase in price can be blamed on the currency it's traded in, the worthless US dollar. That being said, I really do think that people should stop bitching about how much it cost them to fill up the SUV. Gasoline is, in terms of what it does, grossly underpriced. At current pump prices, you can still get a cup of gasoline for about 15 cents and that cup will drive the average car about 2 or 3 miles. Any way you slice it, that's pretty cheap.

But back to Cheney's visit to the Desert Kingdom. I'm more than convinced that Saudi Arabia is damn near tapped out. They probably have a couple million barrels a day of spare capacity, but with ever increasing domestic consumption and continued declines in Ghawar and it's other giant fields, it will become increasingly difficult for the Kingdom to produce much more than they currently do. If Saudi Arabia can't increase, well, there isn't anyone else out there to come to the rescue.

The all time monthly crude production in May of 2005 still stands, though it nearly went down in December as production failed to surpass the all-time peak by only 96,000 barrels a day, though the months production numbers will probably be adjusted down in the coming months. It's still possible that we'll set a new all time monthly production figure, in fact I would probably bet on it happening this year, but it doesn't really matter as for all intents and purposes, we're on the bumpy plateau and I can see the dropoff coming up quickly.

Party on for a few more months but get the hangover remedy ready, we're all going to need it soon.