Oil production – no OPEC cut, US. growth opportunity – peak oil
One of the Only Places U.S. Oil Production Will Grow By Keith Kohl | Monday, March 16th, 2009 To cut or not to cut?At first, OPEC's decision not to cut production gave me pause. As you know, I (along with everyone else) expected to see the cartel slash output even further. Yet when the time came to pull the trigger, OPEC hesitated.The decision seemed admirable, considering another cut would have caused oil to spike again. After my initial pause, I began to picture how the market would take the news. Surely a drop in crude was on its way, right? Today the markets once again proved confusing. As expected, I watched oil prices fall as low as $43.62 per barrel this morning. By mid- afternoon I looked on as oil rebounded, threatening to move over $48 per barrel. Lowering output is still likely, however. Don't forget OPEC still has to reduce output levels by nearly a million barrels per day to meet their targeted production. Let's also remember the reason why OPEC is in the industry in the first place: Money. According to the EIA, OPEC pulled in a hefty $970 billion in net oil export revenues during 2008. Those revenues are expected to drop to $383 billion this year and $510 billion in 2010. That means the cartel's revenue could drop 60% this year. Any way you slice it, you know they're going to feel that pinch. Now add all of the political rhetoric about liberating ourselves from foreign oil. Whenever we talk about eliminating that foreign oil, we're talking about the Saudis. After all, there's not much we need to do to get rid of our Mexican oil (our third-largest source of oil). The Cantarell field's production outlook is helping us accomplish that feat all by itself. I completely agree that Mexican imports will vanish by 2015. That leaves us with our other major importers: Canada and Saudi Arabia. It begs the question, "When was the last time you heard an uproar over Canadian imports?" Naturally, there are only two ways to cut our thirst for foreign oil. Either we develop alternative energy sources to make up for the loss of energy from those imports, or we drastically boost domestic production. I'm sure Americans are all for developing those alternative sources, but we are nowhere near ready to replace the equivalent of 12.3 million barrels per day, the amount of oil we imported during the first week of March.