OIL WATCH….The New York Times reports on the inability of OPEC to supply more oil to a thirsty global market:
“OPEC members are already pumping at full capacity and can do nothing about prices,” Bijan Zanganeh, the oil minister of Iran, OPEC’s second-largest producer behind Saudi Arabia, said in Tehran before traveling to Vienna.
….OPEC’s enhanced bargaining power is yet another illustration of the growing global demand for oil. Demand is expected to reach 86.4 million barrels a day in the fourth quarter, the International Energy Agency said this month, translating into 1.78 million barrels a day more than last year.
….OPEC could add about 700,000 to 800,000 barrels of daily production capacity among its members by the end of the year, according to the International Energy Agency.
So….demand is expected to increase by 1.78 million barrels per day, but OPEC can increase its production by only 700,000 to 800,000 barrels per day. That means the rest of the world needs to increase its production by a million barrels a day.
That’s probably not a problem. For this year anyway. But it’s going to be a problem the year after that unless OPEC starts drilling some new wells. I guess that’s when we’ll find out if Matt Simmons is right or not.
In the meantime, OPEC is concerned they might start losing business:
Some OPEC representatives remain worried that high oil prices could encourage consumers in rich countries to start switching to other fuels as energy efficiency becomes a bigger concern. There is little evidence, however, to suggest that such a large-scale transition might be under way.
That’s too bad. It would be nice if we could make their fears come true.