Non-OPEC oil production peaked in late 2006 above 41 Mb/day. It's unlikely we'll ever see those production levels again. It's also unlikely, if you follow oil supply data, that you'd be shocked by that revelation. That said, it's worth laying out how this happened.
From January 1, 2003 to the price highs 2008, the price of oil went from $30.00 to $150.00. Now let's take a look at non-OPEC oil production. Remember, much of non-OPEC supply is free market oil, which leverages the latest technology and benefits from the profit motive. OPEC supply is about politics, state control and kingdoms. Non-OPEC supply is about earnings per share, deepwater rigs and high-tech engineering. So let's take a trip through Econ 101, where supply always responds to higher prices.
Annual averages of non-OPEC Production in Mb/day
If you are not sobered enough by the total lack of supply response, consider this ominous fact: Russia, which is the largest producer among non-OPEC countries, was able to ratchet up production this decade. Russia would add another 2 Mb/day to non-OPEC production in the annual time series above. Astonishing.
Even though Russia, too, has now peaked, without Russia's massive increase in supply, non-OPEC supply would have fallen into the bull market in oil!
From January 1, 2003 to the price highs 2008, the price of oil went from $30.00 to $150.00. Now let's take a look at non-OPEC oil production. Remember, much of non-OPEC supply is free market oil, which leverages the latest technology and benefits from the profit motive. OPEC supply is about politics, state control and kingdoms. Non-OPEC supply is about earnings per share, deepwater rigs and high-tech engineering. So let's take a trip through Econ 101, where supply always responds to higher prices.
Annual averages of non-OPEC Production in Mb/day
- 2002 Average 39,520
- 2003 Average 40,299
- 2004 Average 40,989
- 2005 Average 40,799
- 2006 Average 40,850
- 2007 Average 40,838
- 2008 Average 40,319
If you are not sobered enough by the total lack of supply response, consider this ominous fact: Russia, which is the largest producer among non-OPEC countries, was able to ratchet up production this decade. Russia would add another 2 Mb/day to non-OPEC production in the annual time series above. Astonishing.
Even though Russia, too, has now peaked, without Russia's massive increase in supply, non-OPEC supply would have fallen into the bull market in oil!
