October 29, 2014
As I’ve often noticed in the past, the WaPo apparently has difficulty getting access to government data at its location in downtown Washington, DC. If it did, it probably would not have run a Wonkblog piece by Steven Mufson touting the expansion of oil supply as the reason that oil prices have fallen sharply this year.
As I pointed out last week, the 2007 World Energy Outlook (the last projections from the Energy Information Agency before the economic collapse) projected output in 2015 of 98.5 million barrels per day (Table 1.3). The most recent projections put production at 92.7 million barrels per day, 5.8 million fewer barrels than had been projected before the slump. This means production has actually grown less rapidly than projected.
It may well be the case that potential production has grown due to large new investments, as Mufson claims, but the key story here is that demand is well below projected levels. This is due both to weaker than expected economic growth and to a lesser extent conservation measures. This drop in demand would be holding prices down even if there had not been any great breakthroughs on the supply side.
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