We have too much $105 per barrel oil? (funny, I know) What to do? Cut supply. Make a virtue out of a necessity. Saudi Arabia’s Oil Minister Ali al- Naimi demonstrates his keen sense of wit.
“Our production in February was 9,125,100 barrels a day,” al-Naimi said, as he arrived in Kuwait for a conference. “In March, it was 8,292,100 barrels. It will probably go a little higher in April. The reason I mention these numbers is to show you the market is oversupplied.”
The US economy is at risk of falling back into a recession due to rapidly rising oil prices draining off so much consumer cash. Why isn't the claimed swing supplier (hint, it sits on a big peninsula next to a gulf) boosting oil production to prevent Peak Oil Recession #2? Recall that less than 2 months ago Saudi Arabia was dropping strong hints it would compensate for lost Libyan oil production by exporting more oil. Yet as Stuart Staniford points out, Saudi Arabia did not make up for lost Libyan oil and now the Saudis admit they actually cut production in March. Give that rapidly rising Saudi internal consumption is leaving less oil for exports and Saudi oil exports peaked in 2005 we can not expect Saudi Arabia to provide relief for high oil prices.
Robert Rapier actually sees a double dip recession as the optimistic scenario. He expects what he calls a Long Recession where the economy stagnates for several year. I think it is going to be more like the Long Depression. My advice: Lower your living standard before the lowering becomes unavoidable. Adjust to less oil before circumstances force that adjustment. If you make changes on your own schedule the changing will be much easier to do. Prepare for what's to come. The warning lights are flashing brighter. Change jobs, change dwellings, change your lifestyle before you have to.
|Share |||By Randall Parker at 2011 April 17 04:47 PM Economics Energy|