All data in this piece are from, or derived from, the Energy Information Administration of the United States Government.
Exhibit 1, Oil Demand, Millions of barrels per day:
It's a fair assumption then, that production volumes have not kept pace with this growth in demand. Indeed, that's often been the supporting idea to the demand argument; as has been the view that exploiting new oil reserves in deep water is uneconomic, even at today's prices. Here's some production data:
Exhibit 2, World Oil Production & Demand, Millions of barrels per day:
*"Production" includes crude, natural gas plant liquids, other liquids and refinery processing gain
**2004 "Demand" uses Q1 data
Inventory drawdown seemed a good candidate. Unfortunately, OECD inventory has in fact risen year-over-year to May 2004. Which brings us to:
Exhibit 3, Oil Refining Capacity & Demand, Millions of barrels per day
The scribe is not an oil analyst. Nuance in the sector is usually lost on him. Nonetheless, the key to oil's rise appears to be the contraction, in world terms, of refining capacity. Refiners, it would seem, are not convinced oil price rises are sticky enough to render the capital expenditure required in plant profitable (if NIMBY/environmental interests cleared them to build in the first place, that is). And why should they? The oil price, inflation adjusted and in 2004 dollars, has averaged $35.58 since 1970.
$60, here we come.