Deffeyes: Update, End of 2006

Happy New Year! It’s time for an oil update. The groups that report 2006 oil production numbers explain that their estimates are subject to later revision. However, we need to know the implications right now. With that warning, away we go.

From April 2005 onward, crude oil prices have been above $50 per barrel. For several months during 2006, oil prices rose above $70. At those price levels, virtually all producers pumped every possible barrel. With that kind of cash flow, any well operator who suspected one morning that his Blakenship #7 well did not produce its usual share last night will have Halliburton out there in the afternoon trying to fix it.

The US Energy Information Agency publishes monthly estimates of world oil production at www.eia.doe.gov/emeu/ipsr/t11c.xls. (Microsoft Office Excel Workbook) Of course, we hope that their estimates are not politically biased. Their current posting shows May 2005 as the month of greatest world oil production. Earlier, I estimated that the peak would be in December, 2005, but May will do. I’ll take it. I’ll take it.

If you open that EIA spreadsheet, read the first footnote. It says that the “other” column, which is one of their most successful categories, was obtained by subtracting the individually-listed countries from the world total. Wayminnit, how could they get the world total except by adding? This would be hilarious, except that they are doing it with my tax money.

Hubbert’s Peak, Current Events