Well, it may seem like an odd proclamation during the most significant oil price retracement in months, but here it is:
OPEC officially abandons production quotas
"[OPEC's President and Nigerian Oil Minister Edmond] Daukoru said: There is no quota, no, either up or down."
This is a significant move away from the previous 28 million barrel per day quota. While it is largely recognized that the quota has had no meaning for some time now, its formal abandonment is significant. The same action by the Texas Railroad Commission (the Texas oil & gas regulatory body) in the early '70's is viewed, with the benefit of historical hindsight, as the turning point signifying a peak in oil production.
In my opinion, interesting times are ahead. I don't see any catastrophic collapse or similar events in the next few years, but I do think that at current prices there now is a historical buying opportunity for oil. But that's a topic for a future note on post-peak investing strategies...
2 comments:
I can't afford seatbelts someone help me plz!!
http://www.energybulletin.net/895.html
EnergyBulletin.net comments:
In 1971 the Texas Railroad Commission (TRC) lifted the quotas on
oil production in Texas. Texas was the swing producer of U.S. oil
production at that time, being given the task of matching oil
production with demand many years earlier. The suspension of the TRC
quotas was the first signal that the U.S. had peaked. After 1971,
even with Texas producing at full capacity, aggregate U.S. production
clearly had peaked in 1970-71 and was to go into permanent decline,
never reaching that production level again.
The below article quotes an unidentified source reportedly close to
OPEC (a cartel of oil exporting countries closely modeled after the
TRC) that the suspension of OPEC quotas is an option being discussed
for next weeks OPEC meeting in Beirut. The fact that OPEC officials
are even considering the lifting of quotas should raise eyebrows as
it must mean that there's very little spare capacity left.
Nobody in OPEC would seriously contemplate suspending quotas if huge
amounts of spare capacity still existed because that would most
definately result in a total price collapse which would be the last
thing the oil sales dependent, heavily indebted OPEC countries
economies would need. Because members of OPEC are the swing producers
in oil production today, and if the suspension of quotas happens in
Beirut next week, I think it would then be almost certain that WORLD
OIL PRODUCTION HAS PEAKED!!!
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