World Oil Production – Looking for Clues as to What may be Ahead

If we look at a graph of historical world oil production, we see a somewhat bumpy production pattern with two major price spikes (in 2009 $)–one peaking in 1981 and one peaking in 2008.

Figure 1. World oil (crude and condensate) average daily production and refiners average acquisition cost in 2009 $, both based on EIA data. 2010 is partial year through September 30.

The first spike in prices occurred when Persian Gulf production dropped starting in 1980, so seems to be oil supply related. The second spike occurred when world oil production would not rise above a bumpy plateau, despite rising demand, in the 2005 to 2008 period.

In this post, I will show some breakdowns that I think give a little insight into our current situation. Continue reading