40% of global oil supply is provided by OPEC, and 60% of global oil supply is provided by Non-OPEC oil producers. Russia is a Non-OPEC oil producer but if we take Russia out of that category, we are left with 44% of global supply. This sub-category, Non-OPEC ex Russia, is what I refer to as Free Market Oil. This is ExxonMobil, BP, Shell, Suncor, and countries like Brazil, The United States, Norway, the UK, Mexico and Australia. Most of this oil is extracted with the best technology, and with the help of Schlumberger, Baker-Hughes, Transocean, Weatherford, and National Oilwell Varco. You get the idea. So, let’s see how free market oil supply responded to the rise in price from 30.00 dollar oil to 150.00 dollar oil from late 2003 through the present:
Free Market Oil has dropped by over 2 mbpd (million barrels per day) since December of 2003. If your professor or your local economist or perhaps national newspaper is still pounding the table that supply always makes a response to price–even in natural resources–you might want to send them a link to this chart.
Graphic: Non-OPEC ex Russia, by Gregor Macdonald at www.gregor.us