Saudi Crude Production Falling

Apparently the story coming from the technical experts in the oil fields is very different than the story coming out of the political types in the royal family and the oil ministry. The ministry says it can boost capacity by 25% in two or three years, when there has been no ability to increase it at all over the last two years despite record prices. The technical types are saying that it will take fairly heroic measures to keep production flat.

My bet is that the technical types have it right. If the incremental oil to meet growing demand does not come from Saudi Arabia, it is hard to see where it will come from. If so, the bull market in oil is only beginning and we are unlikely to ever see $50 oil again, not in our lifetimes, our children’s or our grandchildren’s. In other words, peak oil maybe happening even sooner than I had thought, and I have been on the relatively pessimistic side. I hope I am wrong, but fear I am right.

On the Road Again…

June automotive sales released today confirmed the basic trends that have been present for the past several months: U.S. producers are losing market share. Overall U.S. sales declined 10.5% in June and are down 2.4% YTD, due to the negative effect of higher interest rates.

General Motors (NYSE:GM) sales fell 26% in June and are down 12.3% YTD. Ford (NYSE:F) sales are down 7.1% in June and down 4.1% YTD, with Explorer and Expedition sales being particularly weak. The Mustang and Fusion kept the decline from being worse. SUV sales were weak at both companies due to higher gas prices. DaimlerChrysler (NYSE:DCX) sales were down 13.2% in June and down 3.3% YTD. Comparisons were all affected by the positive impact of employee-pricing plans one year ago.

Business Wire