Many will scoff at the mere mention and even more scoff at the timing of such a notion as oil prices have presently fallen about 66% from their all-time peak and the world is at present drowning in oil. In fact, seems we’ll likely soon run out of storage for all the excess. The combo of max'd out storage capacity, slipping global demand, and continued record production may push oil's price appreciably lower.
And yup, I’m still talking ‘bout peak oil…well, not exactly peak oil but more specifically global peak oil production. I know I nor the EIA are qualified to put an accurate number on future extractable oil and future technological breakthroughs so we'll only judge peak oil by its production.
So what the hell is my point? Well, a funny thing happened from 2005 ‘til now…while the price of crude ramped from around $35 barrel all the way to $147 (and hung in excess of a $100 for about 3 years before finally crapping out in late 2014). For some strange reason outside of the US / Canada, global oil production rose by only 2.8mbpd. That is an increase of about 4% for all global producers (x-US / Canada).
I'll throw out some ideas and hope for smarter folks than I to jump in. For starters, I think we can rule out a lack of technology could really be the differentiator. If Shell or any corporation knew how to profitably extract shale oil in the US, over the ensuing decade they would replicate the technology across all their known global reserves to maximize their profits.
- That existing high quality fields were retiring faster than new (typically lower quality) fields could be brought online? Or...
- Producers had capacity and known reserves but chose not to take advantage of the higher prices? This seems far-fetched that a global agreement to hold down production could be agreed upon and maintained…so I’m leaning toward the thought they didn’t produce more because they couldn’t.