This post at The Oil Drum blog goes a long way towards explaining why oil prices have risen so sharply over the last couple of years. According to international oil agencies, global oil production has been pretty flat since the middle of 2004, even as economic growth around the globe has boosted demand. The chart below, derived from US Energy Information Administration figures, shows OPEC production only; but world figures are much the same.
Of course, the global petroleum system is so huge, and some production poorly enough tracked, that there’s a lot of uncertainty in the graph above. But it’s hard to escape the notion that high prices are being caused by actual global supply limitations, not by oil company malfeasance or somesuch.
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So it’s worth pondering a bit—what happens if oil demand continues to grow, even as supplies remain flat? Will we look back 5 years from now, thinking of $3 per gallon oil as a bargain? And if so, what will that mean to the automobile and housing markets in the Pacific Northwest? And what about transportaiton policy?
Seems to me that those are huge questions that state and provincial transportation agencies, in particular, aren’t facing squarely. There’s still a presumption out there that the big highwayprojects that were deemed smart in the 1950s will remain smart through 2050—a presumption that’s seeming harder and harder to justify.