In trying to understand the flatness of global liquid fuel production in 2012, the first question to ask is whether this is due to the behavior of OPEC (a semi-coherent grouping of countries which sometimes restrain production to maintain oil prices), or the rest of the world (which are usually presumed to produce all the oil they economically can at current prices).
The overall split between OPEC and non-OPEC is as follows:
This is based on EIA data for all-liquids through October 2012. However, it's more illuminating to look at the data in a different way. The next chart shows the two streams on shifted scales. The non-OPEC is on the left scale, while the OPEC is on the right scale. This allows us to more easily see the changes, and compare the changes with each other.
Doing so makes it clear that non-OPEC production pretty much reached a new plateau in mid 2010 and hasn't increased since. In other words, the post great-recession recovery ended then, and (if we discount the single month of October) hasn't resumed since.
By contrast, OPEC production has mostly increased since the recovery began in early 2009, with two exceptions: the sharp fall associated with the loss of Libyan production in early 2011 (since made up), and then a less dramatic fall in late 2012.
The flattening of non-OPEC production suggests that the plateau in overall global production in 2012 is not a function of deliberate OPEC policy, or at least not mainly so. Instead, notwithstanding the tight oil revolution in the US, the world outside of OPEC is having trouble increasing overall production, even with Brent oil prices well over $100/barrel for most of the last two years.
Stuart. Thanks for this analysis. Your bumpy plateau thesis certainly seems to be holding true. Don't know if you caught this IMF related paper from Michael Kumhof. Given that we are so far out of sample, these models are highly speculative but very useful in terms of understanding risk:
ReplyDeletehttp://www.stanford.edu/~kumhof/oilroyalsoc.pdf