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["Don Bowen" <don.bowen AT earthlink.net>]

> Reporting world oil production is a .... well .... oily proposition.

Saudi Arabia considers its oil reserve estimates a state secret.  They
routinely inflate the reported numbers as do most of OPEC.  OPEC production
quotas are based on several things and one is reported reserves.  Within a
few years after this rule change went into affect the reported OPEC oil
reserves jumped, sometimes as much as 200%.

> Recently some of the optimistic bent have reported an increase in liquid
> fuel
> production, but this is deceptive.  They include ethanol AND the diesel
> that was used
> to produce it as BOTH being part of the world fuel supply

Canada is doing this on the oil shale production.  They report not only the
oil produced but also report the oil used in production as an output.

> In the past few years the North Sea oil fields have gone into a decline
> and
> Great Britain has gone from being a net oil exporter to an oil importer.
> Saudi
> Arabia's great Ghawar field is in decline, as is the Mexico's Cantarell
> field, the third largest in the world.

Russia recently reported a decline in one of its largest and oldest oil
fields.  We are running out of oil.  Maybe not tomorrow or not in my
lifetime but certainly within my 6 year old grandson's lifetime.  Meanwhile
prices will continue to escalate.  They will go up and down as demand
fluctuates but the trend will be up and up.

The current price declines are getting politicians all a twitter while they
play infantile games and taking credit where credit is defiantly not due.
There are many reason why prices are down, demand destruction is a big one.
As prices increased people drove less and used less fuel.  Several countries
have cut back or eliminated fuel subsidies.  One analysis has it that China
is trying to clear the air for the games and has shut down coal fired plants
and used Diesel instead.  

The most recent price declines occurred within hours of announcements os
lifting of subsidies and shortly before the games began.

Here is something to ponder.  What happens as we search for oil in ever more
hostile environments when the cost of producing a barrel of oil is one
barrel of oil?

Don Bowen  KI6DIU
http://www.braingarage.com/Dons/Travels/journal/Journal.html