Charles Hugh Smith: Oil Down $16 to $130, Everything Wonderful Again: Not

Full blog post here.

Frequent contributor U. Doran sent in this link from the Association for the Study of Peak Oil & Gas-USA: Peak Oil Is A Done Deal .

Bottom line: Saudi Arabia and Russia, which together pump about 23% of the world's oil, are both in depletion decline. So are Mexico, the North Sea, etc.

Simply put: every time the "Oil Bull" is declared dead, as it was in January, it rises with extraordinary alacrity to new heights. The reason is not gol-durned speculators but supply and demand--even as demand inches downward, supply is declining even faster.

Let's put "demand destruction" in the U.S. in its proper context. 300,000 barrels a day is chump-change in a nation which burns 21 million barrels a day. if supply were increasing by leaps and bounds as it was in the 80s, fine, then you could have a huge demand-supply imbalance in favor of supply. But by even the most optimistic estimates, "excess capacity" (all in heavy crude few can refine) is about 1.4 million barrels a day--a razor-thin margin.

I have predicted one last "head-fake" decline in oil prices, but it's going to take serious reduction in demand, on the order of 4-5 million barrels a day globally, to get that drop.

The House Resources Committee report on drilling in the Continental U.S. June 2008

If anybody is interested, here is a report from the Congressional House Resources Committee. It's a .pdf file:

Click here for full .pdf: The Truth About Americas Energy: Big Oil Stockpiles Supplies and Pockets Profits

It really explains in detail about what is available for drilling and how oil companies are not drilling where they can, basically. It would be worth it to spread this around in an e-mail to those who think our elected officials aren't doing anything in congress regarding drilling availability in the continental U.S. There are even places available for drilling in ANWR but no companies are drilling there. Why? There is nothing stopping the oil companies. It's not because of environmentalists, either.

I'm thinking that drilling will not make one difference in the price of gasoline. It explains this in the report.