Perhaps not, especially as the latest production data from companies not aligned with the Organisation of Petroleum Exporting Countries appears to confirm (yet again) peak oil theory.

According to The Slug’s recent reading non-OPEC oil production, and that largely means the stuff coming from companies such as ExxonMobil, Shell, BP and their friends, continues to decline.

At risk of arguing with the highly-paid pundits at Goldman, it seems to this casual observer you can’t have production from the free world’s biggest oil producers continuing to slide and tip a sliding oil price at the same time.

The economics of supply and demand have never worked like that – unless the world slips into recession.

Before visiting the R-word let’s look at the evidence. First the Goldman gurus: they were almost on the money two years ago with their $US100/bbl price tip, and might still get there.

But that was then and now is now, and what the Goldman guys can see ahead is a picture of rising oil stockpiles, especially in the months after the northern winter. They reckon OPEC and non-OPEC producers are rushing to catch the wave of high prices, and this will dampen rampant demand.

Well, if that’s the aim it seems to be falling well short of the mark. According to a survey of seven oil majors by the commodity-watching news service, Platts, there was an eye-catching output shortfall in the September quarter.

Platts reckons the seven majors it surveyed, including ExxonMobil, BP, Shell, Chevron and ConocoPhillips, posted a collective 6% fall in the September quarter oil output compared with the September quarter of 2006.

That 6% decline translates into around 664,000 fewer barrels a day reaching the world market at a time when demand (especially from China) was rising strongly, taking the oil price with it.

It’s not rocket science to see there’s a disconnection in the oil market and the situation ought to be attracting the attention of everyone in the oil game.

Unless some companies (or countries) are dragging the chain and deliberately holding back on output, the time of peak oil really is upon us thanks to a raft of factors.

Geology is the obvious feature of the oil shortfall, with all the big fields discovered and most fresh discoveries being smaller than the preceding ones. Political, military and civil unrest (Iraq, Nigeria, Venezuela…) is another issue limiting production. Soaring field development costs are also inhibiting production.

But we know all this, don’t we?

There’s nothing The Slug’s has mentioned which wasn’t known last year, or the year before.

All signs point to stagnant, or even falling, oil production at a time of rising demand.

And just to make things tougher for oil producers, many oil-rich countries are demanding higher royalties and taxes. Russia is a prime example of this, but even business-friendly North America is gouging more from petroleum producers. The United States has raised royalties for future Gulf of Mexico lease offerings and the Canadian province of Alberta has also hiked up its royalties.

How then can the Goldman guys see an oil price fall in 2008?

The only answers are that they believe a lot of the hot market conditions are caused by speculators holding back supplies – a claim made by OPEC – and that OPEC will actually deliver on its promise of increased production. Or that demand for oil will diminish.

If Slugcatcher was a betting man he would be taking a position against the Goldman forecast. He can see the points underpinning their assumptions, and acknowledges how they tipped accurately in 2005.

But this time the outlook is for the high price regime to remain intact throughout 2008, with that famous $US100 barrel not too far off. And even if we see a modest decline after the northern winter the long-term price trend is up, especially as the non-OPEC producers appear to be falling further behind by the quarter.

First published in the November 2007 issue of Petroleum magazine