Since 2005, global oil production has plateaued at 86 million barrels a day, or just over a cubic mile per year. Demand for oil has been increasing at about 2% per year. This is why oil prices are increasing. Beginning about now, global oil production will begin the decent toward terminal depletion. As soon as production dips, gas prices will skyrocket. So these are the good old days of cheap oil. Worse, there are no real alternatives, as documented in this free, updated, and well-documented report: http://www.peakoilassociates.com/POAnalysis.html

Ah William, yes its all the evil speculator's fault. If only life was that simple! We could shoot the futures traders then everything would go back to normal, and we could keep on happily motoring into the sunset!

Unfortunately your argument is seriously ignorant of several key facts.

As cjwirth said above, production has plateaued for 3 years while demand has grown. Yes there's plenty of oil on the market, but less and less is "light sweet crude", but rather its heavy sour oil that most refineries can't handle and as a result, no-one wants.

There's new capacity supposedly about to come online, but the reality is that most of these projects are running into problems with dramatically increased costs and delays due to shortages of personnel and equipment. For instance, Khursinayeh, which you referred to, was supposed to be online in late 2007. Its still offline, despite your assertion to the contrary, and may not be in production until 2009. Brazil's Tupi oil field will not be producing for many years, and at 8 billion barrels (if it has that much) it contains only enough to fuel the world for 4 months. Do you have any idea of the difficulties involved in extracting oil from 5 km under the deep ocean? Even when they come online, its debatable whether the new oil will be enough to make up for declining production in older fields.

You say there's plenty of tankers out there, yet the real statistics show that less and less oil is being exported each year. Oil producers are consuming more themselves. Take a look at today's Wall Street Journal article on the topic:- http://royaldutchshellplc.com/2008/05/29/oil-exporters-are-unable-to-keep-up-with-demand/

Your anti peak-oil ranting does nothing to help anyone. Peak Oil or not, prices _are_ going up, they will _not_ drop down to 2006 levels despite all your wishful thinking, and we need to be taking action to wean ourselves off our oil addiction. Next time you write on oil, please take your blinkers off, do some real research, then ask what you're really trying to achieve before you put pen to paper.

hear hear cjwirth and commuter..
speculators are a nice easy target aren't they?

with an opening sentence like this one:

"A conservative calculation is that at least 60 per cent of today’s $128 per barrel price of crude oil comes from unregulated futures speculation"

I am sure the author is limit short oil futures, since they are so OBVIOUSLY overpriced, easy money eh?

And this quote takes the biscuit!

"That headline, "$200 a barrel!" became the major news story on oil for the next two days. How many gullible lemmings followed behind with their money bets?"

Anyone who bought July crude futures on May 6 got long at between $US118.83 and US$121.98 according to my chart.. even if they took another couple of days, they still got in under US$125.. so all those "gullible lemmings" you talk about are still at least a couple of bucks in the money on their oil, if they didn't take profit above $130 that is, which they had ample opportunity to do.

Maybe William Engdahl is just p*ssed off because he has been short oil for the last few months?!?

"The oil price today, unlike 20 years ago, is determined behind closed doors in the trading rooms of giant financial institutions like Goldman Sachs, Morgan Stanley, JP Morgan Chase, Citigroup, Deutsche Bank or UBS."

Probably it has to do more with demand rather than speculation.

The price of oil should go up even further to bring globalisation and the mantras of its benefit to a stop.

cjwirth

you are ignoring the fact that at 128 dollars a barrel there is a certain amount of oil which it is profitable to drill. At higher prices more oil becomes available and demand decreases as people look for other ways to provide the energy needed. There will be no dramatic reduction in oil supplies which will destroy our economies, as predcited by the nuttier peak-oil followers.

Past is no guarantee of the future and the more distant that past the less relevant. Or, to put it another way, the more recent the past the more relevant in speculations about the future.

To wit... "The price of oil climbs relentlessly higher."

Light crude hit us$134 barrel about a week ago.
Presently its at us$126. And looking decidedly precarious. But, ya never know.

Poor timing for this article.

If you think oil climbs relentlessly higher, just wait and see how unforgivingly relentless it can be on the way down (much worse). The ahem, arse, can fall out of it very quickly indeed.

The price manipulation charge is well overdone and has been the rallying cry of various commodity 'bugs' for the last decade, at least.

As for blaming the speculators, well, this article certainly isnt speculative. Not in the slightest.

Finally, if you're so concerned about being tapped out by higher oil prices, then buy some insurance, like BHP or Woodside shares. Look at your super fund and take some active responsibility in the future that you are lamenting in advance.

Otherwise, drive your car, without a seat belt on, and blame the telegraph pole when you're heading for it.