February 6th, 2006

Oh yeah we're past peak...

Remember my November 13 rant, in which I mentioned the sad state of Kuwait's oil fields? Apparently they've now gotten a lot more public about it. Yup, half of Kuwait's oil reserves were imaginary, and production levels are already declining there. Guess who _else_ has inflated estimates? (Hint: everybody. Oil exploration was an arms race, and nobody wanted to admit they'd stopped finding new oil first.) On CNN I recently saw an estimate that by the end of 2007 oil could be at $100/barrel, but that depends on demand from China and India as much as anything.

You know Exxon's continuing record profits? The doubling of gas prices over the past few years isn't because oil production has fallen 50%. It's mostly just leveled off, the actual decline in daily production is only starting. No, the huge increase in prices is because China's buying billions of barrels of the stuff, so the US is receiving a smaller share of that production. Step 1: Exxon makes about the same amount of money from the US selling us fewer barrels, step 2: sell billions of barrels to China on top of that. Step 3: Record profits.