Sunday, May 07, 2006

Oil prices more political/psychological than economics

Has oil production peaked? Herrera: Statistics point to peak production; prices likely to go higher
Alan Bailey Petroleum News May 7, 2006 -- It’s well known that U.S. oil production has been declining for many years. And, in Alaska, oil production is well past its peak. But has worldwide oil production peaked? And what impact might worldwide oil production capacity have on already soaring oil prices?
On May 1 Petroleum News discussed these topics with Alaska oil industry consultant Roger Herrera. Herrera sees the current high oil prices as essentially a result of demand moving out of step with supply in oil markets......... I would argue that despite all the political rhetoric … that what we’re going through at the moment is purely supply and demand,” Herrera said. “… There is more demand than there is supply and I can’t really see anything geologically on the horizon which is changing that supply in any dramatically positive fashion.”
And Herrera sees the current furor over oil and gasoline prices as having more to do with politics and psychology than factual economics.
“In a way this is a huge psychological problem, rather than a real problem,” he said. “… The world is not falling apart.”....
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