Over at the Oil Drum, Ace has a very informative post up about how the Non OPEC 12 countries (Basically every oil producing country outside of OPEC) saw a peak in oil production in 2004. At 4 years out, it's pretty clear that non-OPEC countries just don't have the ability to grow production and it's all downhill from here. Why?
1. Russia now admits that its oil production has entered terminal decline.
2. Gulf of Mexico production peaked in 2002 and has experienced steady decline ever since.
3. Norway, The UK and Mexico are all experiencing significant declines and will continue to do so. The UK is now a net oil importer and Mexico will be soon.
4. Brazil, Canada and a few others are still showing increases in production but not enough to offset declines elsewhere.
So why does this matter? It essentially means that it's now up to OPEC to grow global oil production and while they talk a nice game, the reality is probably much different with only Saudi Arabia able to ramp up production in a meaningful manner. Any upturn in economic conditions will now be contingent on OPEC increasing oil production, something they most likely won't be able to do. Peak Energy (declines in oil, gas and coal production coupled with the inability of alternatives to scale up) will see to it that whatever economic upturn we might see in the next few years will be smashed by a lack of energy needed to recover.
Image courtesy of The Oil Drum