The 12m bbls/day contrasts with recent statement by a Lukoil Executive which indicated that '9m bbls/day was the most he would see in his lifetime'. My own view is to treat the 12m figure with caution as Russia does not seem particularly welcoming to western investment at present and without such investment the extra would be a 'tall order'. Even with the investment, projects on this scale in remote regions take 6 to 8 years to 'first oil'.Although on the otherhand this Russian Billionaire suggests that Putins actions could raise production up to 12 million barrels per day. Maybe he is right although theres no indication of when this could happen by, and he may just be getting overexcited by the tax breaks that were announced.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aqtQRcVtmj2k
Anybody prepared to speculate as to how low the price of oil could fall back to if more data emerges that people are starting to cut back on its use?
Also will we actually see directly visible oil shortages when demand starts to exceed supply, or will the pricing mechanisms obscure this? I know that in practice it doesnt really matter whether you cant get the oil because it doesnt exist or because you cant aford it, but it will change the nature of what the masses start getting angry and protesting about, and who they blame?
I saw a post today, either in Euan's Oil Drum paper or subsequent comments that there are probably lots of potential buyers priced out at current $126/bbl who will come back in should prices fall which would tend to put some kind of floor on the price. In the meantime China is adding 20k new vehicles per day to their roads and India is ramping up production of a car retailing at around $2500 (which at that price is probably not that fuel efficient). All these extra vehicles require additional fuel (plus the embodied energy associated with their manufacture).
Euan has used the CERA figure of 4.5% global decline rate in his paper; Schlumberger uses 8% and Matt Simmons 10%. The 4.5% decline rate allows for some growth within existing fields to offset some of the steeper declines which sounds reasonable. Even 4.5% on 80m bbls/day (discounting tar sands which don't currently decline) is a big number - 3.6m bbls/day. In other words the industry has virtually to bring online a new Iran every year or a Saudi every 2-1/2 years to offset decline in mature oilfields. This factor, together with flat output in Russia and steep decline in Mexican output is going to make it hard to grow production from current levels.
With regard to consumption patterns we could stay with $126 oil and full employment or slump to $50 oil with 10% unemployment (these are only hypothetical examples). In either case there will be a sizeable number of would-be oil consumers who can't afford it - the individuals impacted will be different in each scenario but the end result for the oil market is similar i.e. enforced demand destruction.