Non-OPEC Crude Production
Taking a break from my country-by-country analysis, I refer to This Week in Petroleum from the EIA.
They claim that in 2008 and 2009, non-OPEC production will show big increases, led by Brazil, USA, Russia, and Azerbaijan. This will more than offset declines in the U.K., Mexico, and Norway and should lead to lower oil prices.
This makes sense. Big money was spent developing deepwater Gulf of Mexico reserves back in the early part of this millenium. Some of those big projects with names like Thunderhorse and Green Canyon are coming into full production. Russia has been consistently cranking out new production since Putin came into power. Brazil is a new and growing oil powerhouse.
On the flip side, the report strikes me as (typical for EIA) a bit optimistic. I bet production declines in some of the other OPEC nations will be much greater (i.e. Norway) than the forecast. Plus, the production numbers assume everything goes as planned without delays. Highly unlikely in the current oil patch. Furthermore, because the new U.S. production is all offshore, we're just one hurricane away from having the U.S. number be a negative instead of positive.
If this works out to be true, it is a very good thing for the economy and American political situation. We can't produce our way out of the current mess, but if we can ramp up our production by a million barrels a day or so, we can reduce OPEC's power on prices and buy ourselves some time to work on the demand side of the equation.
In a couple years, we'll find out if EIA was right, or if they were looking at Excel spreadsheets, smokin' somethin.