The Age of Aquarius

I wonder if much of the debate about the run-up of oil prices could be resolved simply by looking at this graph.

Graph:

World Oil Supply & Demand (all liquids) from 2003-2007
Source: EIA supply and demand data

As you can see, world oil demand surpassed the available supply in 2007. Demand rose 7.51% during period shown while supply only rose 6.26%, with all of that increase occurring in 2003-2004. The EIA demand numbers measure the quantity of oil demanded. When the quantity demanded exceeds supply, the extra consumption must be met by draws on inventories.
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I put together a non-OPEC forecast for 2008/2009 a few months ago and I’m already prepared to revise it downward. (ASPO-USA, February 20, 2008—I was critiquing the EIA’s much more optimistic estimates.)

Flatland (graph left) does not include OPEC natural gas liquids, which is the normal accounting method. The source is the current EIA all liquids data from the beginning of 2007 through April of 2008. The scale intentionally de-emphasizes insignificant monthly differences, which are the only kind of differences there are in the last 16 months for the countries shown and non-OPEC liquids as a whole.

Russia was chosen because their production has been the primary driver of non-OPEC liquids growth in the 21st century. Russian production is flat.

China was chosen because anything they can not produce themselves puts additional pressure on the world oil markets. Chinese production is flat.

Brazil1 was chosen because this deepwater superstar is supposed to be the main driver of non-OPEC growth in 2008 and 2009. Brazilian production is flat.

We can not depend on OPEC, so we can expect only modest rises in the oil supply in 2008. Things don’t look promising so far, do they?

Energy Bulletin