OT, JDN, RE: OPEC capacity
In the oil business, fields need a certain level of investment to keep producing. Without this maintenance investment, production capacity will decrease.
For example, Venezuela's production capacity was 3.3 mm bbl/day back in 1997. Today it is 3.0 mm bbl/day. Sometimes this is due to a normal decline rate in a well, other times it is aging equipment. In any case, without capital investment, fields just do not continue to produce at a constant rate. And given the debt loads that were incurred at almost every OPEC country in the 90's, none of them have a lot of investment capital.
If OPEC increased production to just satisfy current world demand, only Saudi Arabia and the UAE would any excess capacity at all. And note that even if this increase happened tomorrow, the oil wouldn't hit the end markets for a very long time, between the time it would take to ship the crude to the US or other place and the time to have a refinery process the crude.
Note also that this does nothing to relieve the potential natural gas shortage here in the US. The only way for natural gas supply to improve is to have domestic exploration and production companies to get more gas out of the ground. |
