The only thing that could prevent another oil shock from happening before the end of 2012 would be another major economic contraction. The emerging oil data continues to tell a tale of ever-tightening supplies that will soon be exceeded by rising global demand. This time, we will not be able to blame speculators for the steep prices we experience; instead, we will have nothing to blame but geology.
The really big news is that the Wall Street Journal finally ran an oil piece (on the front page, no less) acknowledging the difficulties involved in Saudi Arabia regarding oil production and the extraordinary efforts that are now underway to boost production by unlocking their remaining heavy oil reserves.
The critical parts in this story revolve around the costs of getting this oil out of the ground (in terms of both energy and money), the decades it will take to get the oil out, and the clear implication that going after such oil tells us everything we need to know about where we are in the Peak Oil story in general (and specifically in Saudi Arabia). All the better, easier, cheaper grades are already drilled and in production.
businessinsider
