Deffeyes: Oil Production, Oil Price

They finally got my full attention: Last week I paid $100.96 for a tank of gasoline. It wasn’t the most expensive grade of gas; it wasn’t at the highest-price filling station in San Diego. The crisis reached into my wallet and it hurts.

In 2005, world oil production stopped growing and oil prices shot up uncontrollably. My graph of production versus price is now two weeks old and the price is already off the top of the paper. This morning, West Texas Intermediate is $130 per barrel. In Econ 101, they taught us that increasing prices would enlarge the supply. The economists may have envisioned a large inventory of oil wells, temporarily shut down because of low oil prices.


What happened? We hit “peak oil”