The Oil Drum’s chief oil supply expert, Stuart Staniford, recently published a comparative analysis of data from various sources regarding global all liquids production.  Emphasis was on the mystery of recent months’ acceleration of production to new high water marks. 

However, what struck me as a far more important mystery was the deceleration of the rapid growth rate in the 2002 - 2004 time frame.  One would think that with oil prices quadrupling from 2002, the rate of increase in oil production would keep increasing or at least stay at a high level.  But starting  in early 2005, the rate began to decrease and, as Stuart notes, looked like it was headed for negative growth territory until in early 2006 it leveled off at close to zero.

While the "new news" is that growth seems to be re-accelerating in recent months, the amazing thing to me is how, inexplicably, oil supply growth ground to a halt in early 2006 despite much greater rewards being offered to producers.

Could this phenomenon reflect the introduction of a hoarding mentality among producers?  Perhaps so.  The chart below may tell us exactly when the psychology of oil production among exporting countries changed to hoarding.  Of course most observers at The Oil Drum think this is the time the world reach Peak Oil, which is why the more recent increase in production is troubling to them.  Hoarding may be the better explanation, since by 2005 producers could begin to see that higher prices were not causing a global economic slowdown.  If that is true, then why keep pushing out all you can?

Here is a part of Stuart’s post that deals with the declining growth:

"I am still mystified by the large and growing discrepancy between the EIA and IEA total liquids numbers. It does not seem to come from one or a small number of countries, and it does not seem to arise out of any particular component of oil supply (at least in so far as it’s possible to tell).

However, all of the curves share a common feature when looking at the year on year growth rates (here in the moving averages):

Caption

As the growth decelerated in 2004/2005, it was possible to think that it would continue through zero and the world would go into decline. That hasn’t happened, and instead the growth rates have been fluctuating at or near zero - we have been on the bumpy plateau, with the forces trying to increase production and those trying to decrease production in approximate balance. And so the endless debate on whether the plateau would eventually break upwards, or downwards, or continue more-or-less flat for a long time."

Tags: energy investments

This entry was posted on Tuesday, February 26th, 2008 at 4:53 pm and is filed under Peak Oil, oil supply. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.