I'll just go ahead and answer the rhetorical question that was the title to my last post, Speculation or Supply?? It's supply. Petroleum Intelligence Weekly is reporting that internal doccuments show Kuwait's oil reserves to be only half that of the public number. This story is not being carried by CNN, Fox, ABC, CBS, or NBC. Hmmm.... Only Reuters has it burried away.
Not that this is much of a surprise. Shortly after OPEC began linking production quotas to reserve levels, all the major players miraculously doubled their oil reserves. PIW's report is the smoking gun that finally shows what has been widely understood all along: that OPEC reserves are really only about half what is claimed.
So what does this mean for our ability to produce oil? Well, the classical Hubbert peak takes place when half the oil in the ground has been produced. However, if you discount OPEC reserves by 50%, it becomes clear that we are WELL past that half-way point. So production should have already begun to decline. This suggests that, as widely feared, only the use of water injection and water flood tecniques to keep reservoir pressure artificially high have kept production rates up for the past several years. The problem with this is that when a field who's production rate has been artificially sustained beyond the half-way point finally does begin to decline, its rate of decline tends to be very, very high. 10-18% has been suggested (by Simmons and others) as the decline rate for fields that have been pressed to the limits with injection technologies. This is critical, because while Peak Oil may be a quite manageable problem at 2% depletion, 10%+ depletion means that world production will fall by half in less than 7 years. That would be absolutely catastrophic. No wonder this story isn't available on CNN.
Maybe those Mayans were on to something with their "2012" prediction?