Jad Mouawad of The New York Times has a very informative story wondering why, as oil prices approach the stratosphere, producers don't just pump out more oil:
A key reason that supply is not rising to meet demand is that producers outside of the OPEC cartel—countries like Russia, Mexico and Norway—have been showing troubling signs of sluggishness. Unlike the Organization of the Petroleum Exporting Countries, whose explicit goal is to regulate supply to keep prices up, the other countries are the free traders of the international market, with every incentive to produce flat-out at a time of high prices.
But for a variety of reasons, like sharply higher drilling costs and nationalistic policies that restrict foreign investments, these countries are finding it difficult, if not impossible, to increase output. They seem stuck at about 50 million barrels of oil a day, or 60 percent of the world’s oil supplies, with few prospects for growth. ...
Analysts at Barclays Capital said last week that non-OPEC supplies were “seemingly dead in the water.” Goldman Sachs raised similar concerns last month, saying that growth in non-OPEC supplies “can no longer be taken for granted.”
Normally, OPEC would pick up the slack, but even that's not a given anymore. Saudi Arabia has signalled that it might not be able to boost production as much as people once thought. Especially as long as the violence in Iraq persists, OPEC as a whole will struggle to keep up with global demand, which keeps rising and rising, undeterred by the price spike. No wonder some analysts are predicting oil prices to top $200/barrel by 2012 or earlier, which would mean $7-per-gallon gasoline here in the United States.
P.S. An amusing catch by Andrew Leonard. At what point does the phrase "peak oil" become ubiquitous? Soon?