KUWAIT (Reuters) - OPEC's oil quota system is irrelevant and the cartel's 10 members bound by output limits will continue pumping 29.7 million barrels per day (bpd) -- virtually flat out -- through June, the OPEC president said on Monday.In Kenneth Deffeyes' book, Hubbert's Peak: The Impending World Oil Shortage, the author tells us when he first realized that Hubbert's prediction that the United States would reach peak oil production around 1970 was right:
...He said the producer group's official supply limits were obsolete for now. "I think now we are dealing with the production without the quotas," he said.
Hubbert's prediction was fully confirmed in the spring of 1971. The announcement was made publicly, but it was almost an encoded message. The San Francisco Chronicle contained this one-sentence item: "The Texas Railroad Commission announced a 100 percent allowable for next month." I went home and said, "Old Hubbert was right." It still strikes me odd that understanding the newspaper item required knowing that the Texas Railroad Commission, many years earlier, had been assigned the task of matching oil production to demand. In essence, it was a government-sanctioned cartel. Texas oil production so dominated the industry that regulating each Texas oil well to a percentage of its capacity was enough to maintain oil prices. The Organization of Petroleum Exporting Countries (OPEC) was modeled after the Texas Railroad Commission. Just substitute Saudi Arabia for Texas.Two more bits of information, in case you don't already know them: 1) The Texas Railroad Commission has never rescinded its order for 100 percent production, and American production has declined ever since. 2) Saudi Arabia is (was?) the world's only petroleum exporter with excess oil production capacity and therefore can (used to?) effectively set worldwide oil prices.
Is history repeating itself?
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