Those of you in the "Oil is a bubble" camp should read this article in today’s WSJ, titled, Oil Exporters Are Unable To Keep Up With Demand:
"The world’s top oil producers are proving unable to
put more barrels on thirsty world markets despite sky-high prices, a
shift that defies traditional market logic and looks set to continue.
Fresh data from the U.S. Department of Energy show the
amount of petroleum products shipped by the world’s top oil exporters
fell 2.5% last year, despite a 57% increase in prices, a trend that
appears to be holding true this year as well.
There are several reasons behind the net-export
decline. Soaring profits from high-price crude have fueled a boom in
oil demand in Saudi Arabia and across the Middle East, leaving less oil
for export. At the same time, aging fields and sluggish investments
have caused exports to drop significantly in Mexico, Norway and, most
recently, Russia. The Organization of Petroleum Exporting Countries
also cut production early last year and didn’t move to boost supplies
again until last fall.
In all, according to the Energy Department figures,
net exports by the world’s top 15 suppliers, which account for 45% of
all production, fell by nearly a million barrels to 38.7 million
barrels a day last year. The drop would have been steeper if not for
heightened output in less-developed countries such as Angola and Libya,
whose economies have yet to become big energy consumers."
We not only have strong demand, we have an ongoing supply problem. The map below reveals that the world’s top 15 exporters are shipping 1 million barrels a day less in 2008 than in 2007:
Oil Exporters Are Unable To Keep Up With Demand
Domestic Needs, Sluggish Investment Crimp Shipments
NEIL KING JR. and SPENCER SWARTZ
WSJ, May 29, 2008; Page A8
Public WSJ/Digg Version