From January 1, 2003 to the price highs 2008, the price of oil went from $30.00 to $150.00. Now let's take a look at non-OPEC oil production. Remember, much of non-OPEC supply is free market oil, which leverages the latest technology and benefits from the profit motive. OPEC supply is about politics, state control and kingdoms. Non-OPEC supply is about earnings per share, deepwater rigs and high-tech engineering. So let's take a trip through Econ 101, where supply always responds to higher prices.
Annual averages of non-OPEC Production in Mb/day
- 2002 Average 39,520
- 2003 Average 40,299
- 2004 Average 40,989
- 2005 Average 40,799
- 2006 Average 40,850
- 2007 Average 40,838
- 2008 Average 40,319
If you are not sobered enough by the total lack of supply response, consider this ominous fact: Russia, which is the largest producer among non-OPEC countries, was able to ratchet up production this decade. Russia would add another 2 Mb/day to non-OPEC production in the annual time series above. Astonishing.
Even though Russia, too, has now peaked, without Russia's massive increase in supply, non-OPEC supply would have fallen into the bull market in oil!