Do Texas and the North Sea foretell the future of oil production?
Oil supply optimists don’t have to think very long to find plenty of examples of government-owned oil companies that have failed to keep pace with technology, engaged in lethargic exploration and development of their oil resources, and/or purposely restricted production. The aim of OPEC, after all, is explicitly to limit production to maintain prices in the international oil market. Saudi Arabia, the largest producer in the cartel, keeps hundreds of thousands, if not millions of barrels of oil that it could produce off the market. Pemex, the Mexican national oil company, has done such a poor job in developing new capacity that its production has declined from more than 3.8 million barrels per day in 2004 to just under 3 million per day in October 2009, the latest month for which figures are available. Venezuela has deposits of heavy oil thought to rival the huge conventional deposits of Saudi Arabia. Yet the country’s overall production is down from 2.9 million barrels per day in 2004
