Well here I go again. I don't know how many times I've been through this cycle, but every time I read this thread or talk to certain circles of people I find myself doubting my supply demand concerns so I go and do more research, but then I always end up right back where I started. This has to be supply, it absolutely has to be.
1: It's not going to be coincidental that world production levels off and prices rise.
2: There is plenty of evidence that Saudi production is in decline.
This is pretty thorough.
http://www.theoildrum.com/node/2429
The thing I think average joe wonders is "Okay if the Saudis are lying about their oil reserves, why? Why do they say they have more than they do?" Well I think the answer to that is historical. Opec members in 1988 agreed that oil production would be based on each countries oil reserves, so the more you had the more you were allowed to sell on the world market. Mysteriously every Opec member nations reported reserves had massive increases that year. Wow, that's funny!
Saudi in 1987 said they had 165Gb of reserves, but in 1988 right after Opec established their new guidelines Saudi claimed to have 255Gb with no major new discoveries! How convenient of them.
Anyway, ass you can see in the above link every known Saudi field has appeared to be in decline for awhile now, or at least it's production has been, the Saudis say they're doing it on purpose though and it's not a real peak. Well oddly enough if you decide to peg their 'peak' at the beginning of their production decline in 2006 and assume at that point they were at 50% depletion, then that would put their figure of exploitable reserves in 1987 very close to the 165Gb they claimed to have that year, lending further support to the idea that the Saudis peaked in 2006-2007 and are in a rate of decline right now, which further means the planet is probably also in a decline.