Armchair oil watchers got no clear signal from OPEC today, when it reportedly agreed to boost production by 500,000 barrels. The Associated Press had described an increase of that size as a "token" gesture that indicates nothing about the available supply, nor does anything real to affect the market.
"If approved, it would be a purely token increase, since the 12-nation group -- which supplies about 40 percent of the world's crude -- already is pumping at least 1 million barrels a day over its current official quota of 25.8 million barrels a day," the AP wrote earlier today.
Some analysts have been watching OPEC members -- Saudi Arabia particularly -- for signs that the cartel is tapped out. The speculation among these "Peak Oil" analysts has been that if OPEC failed to meet rising demand with more supply, it would be an indication that their oil wells were running out of the easiest, cheapest crude oil.
The peak oil theory says that the geologic formations holding the world's oil are being tapped at or near capacity, so that the yield will decrease even as demand increases. That will drive oil producers to seek to exploit more difficult and expensive deposits, such as oil shale or oil sand deposits -- leading to an increase in price and an imbalance in the market between supply and demand. OPEC's "token" increase says little about the veracity of this theory.
But the story of Peak Oil theory is littered with hazy signposts. Proponents say they add up. Critics -- including mainstream analysts for oil companies -- discount the theory. For a more in-depth analysis of this topic, see Peak Oil Now? Airing Saudi Arabia's Dirty Little Secret.
Enter your city or zip code to get your local temperature and air quality and find local green food and recycling resources near you.