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Take a good long hard look at that chart. The Saudis say they can ramp up production at any time. Their peak production occurred in 2005. That’s funny. Matt Simmons said peak worldwide production would occur in 2005. When prices skyrocketed in 2008, the Saudis did not reach their previous peak production of 2005. Why? Did they not want to make billions of profits? Only a fool would pass up such riches, unless they just didn’t really have the ability to produce more.

Now Saudi production is 14% below 2008 levels.

According to the IEA:

Global oil product demand for 2010 and 2011 is revised up by an average of 320 kb/d on higher-than-expected submissions, reflecting buoyant global economic growth and cold northern hemisphere weather. Global oil demand, assessed at 87.7 mb/d in 2010 (+2.7 mb/d year-on-year), rises by 1.4 mb/d to 89.1 mb/d in 2011.

Please take a look at this chart (opens to pdf).

World oil demand in 2011 will exceed the 2007 all-time peak demand by 2.4 million barrels per day.

Why would the Saudis be producing at 14% below 2008 levels when worldwide demand in 2011 will reach an all-time high?

Peak oil is here, people. If it looks like a duck, walks like a duck, and quacks like a duck - it's probably a duck.

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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Source: Peak Oil 101: A Closer Look at Oil Production and Demand