Monday, October 13, 2008

EIA's magic disappearing oil

A while back I commented that I was surprised that oil prices would increase so much given that oil production finally seemed to be increasing. I now believe that I was wrong. I have now regularly watched EIA oil statistics fairly regularly for about a year. One rather absurd trend seems to have become apparent within the numbers for world oil production. Just about every month the EIA reports that we produced more oil than we ever have. Than they go and lower the estimate again and again over the next six month period.

The most current numbers for world production are:

Thousand Barrels Per day
2005 January- 73,202
February -73,481
March -73,800
April -74,082
May -74,241
June -73,859
July -73,700
August- 73,736
September- 73,301
October -73,396
November- 73,869
December -74,157
2005 Average -73,737

2006 January -73,673
February -73,583
March- 73,419
April- 73,507
May -73,068
June -72,976
July -73,997
August -73,677
September -73,390
October- 73,730
November- 73,362
December -73,141
2006 Average- 73,461

2007 January -72,801
February -73,047
March -72,975
April - 73,220
May -72,744
June -72,348
July -72,869
August -72,224
September -73,028
October -73,689
November -73,395
December -73,873
2007 Average- 73,018

2008 January -73,910
February -74,085
March -74,206
April -73,791
May -74,339
June -74,259
July -75,099
2008 7-Month Average -74,245

You can see from taking a look at that list the maximum production for 2005 was in May with 74, 241 thousand barrels of oil per day produced. In 2006, and 2007 we never managed to produce as much oil as we did in 2005. Then in May 2008 we heroically managed to surpass that production level, again in June, and again by even more in July.

There is only one problem with all of that. The EIA said the same several months back. First in October and November they claimed we finally beat the peak in production that occured in may 2005. Than, quietly, those numbers were lowered a few months later, now they are almost a million barrels a day lower than May 2005. Once again in January, February and March they made the same claim, we finally beat the peak in production that had occured in 2005. Once again, those numbers got subsequently lowered.

Now, I am not saying there is some huge conspiracy here, oil statistics are often not completely accurate for as long as two years. A great deal of guess work goes into producing the numbers since many countries do not publish any production numbers. Still, a really good case can still be made that the world hit peak oil in mid 2005. Even the high prices of 2007 were not enough to break that trend, and the verdict is still out as to whether the prices of 2008 were enough. If that proves to be the case I will be kicking myself for not investing in oil right now when it is down to $80 a barrel.

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