Oil Supply

"The world's top oil producers are proving unable to put more barrels on thirsty world markets despite sky-high prices, a shift that defieds traditional market logic and looks set to continue. ... In all, according to the Energy Department figures, net exports by the world's top 15 suppliers, which account for 45% of all production, fell by nearly a million barrels to 38.7 million barrels a day last year. ... Last year, the regions six largest petroleum exporters,--Saudi Arabia, [UAE], Iran, Kuwait, Iraq and Qater--curbed their output by 544,000 barrels a day. At the same time, their domestic demand increased by 318,000 barrels a day, leading to a loss in net exports of 862,000 barrels a day, according to the U.S. Energy Information Adminstration. ... Saudi Arabia in particular has become a major energy consumer as the country pushes to put its oil riches to greater use. ... Analysts said there are reasons for optimism. Russia's government is scrambling to alter the tax rates that many say have put a lid on new oil development", WSJ, 29 May 2008.

"Mexico's planned opening to foreign oil companies may come too late to make up for a fall in the country's production. ... For decades, a heavy tax burden has left Pemex with scarce capital to find and develop new pools of oil", WSJ, 29 May 2008.

"XTO Energy Inc. agreed to pay $1.85 billion for drilling rights in an oil-producing area near the U.S.-Canadian border, highlighting the once-obscure field's growing importance. ... XTO said the land contains proved resrves of 68 million barrels of crude oil and natural gas, a figure it says could double easily as new technology allows greater production. ... Tom Gardner, director of research for investment banker, Simmons & Co., said that based on XTO's estimate of proved reserves, the $1.85 billion price tag only makes sense if oil stays above $100 per barrel", WSJ, 29 May 2008.

Russia apparently will lower its oil production taxes while our Congress debates a new "windfall profits tax". Crazy.

We'll see what if anything comes of Mexico's attempts to lure foreign capital back to its oil industry.

XTO is an oil bull. I wish it well. What may be its greatest challenge in developing the field is future US tax policy. We never know if Congress really will install a "windfall profits tax" and kill investments like this.