The latest Peak Oil Review reports that, while global oil production so far in 2008 has been higher than ever, global oil production is now falling. The July record for crude oil production could turn out to be the all-time peak:

“So far in 2008, world production has been averaging 86.9 million b/d as compared to 85.4 in 2007.

“The EIA released figures for crude oil production in July showing an increase of 840,000 b/d to 75.1 million b/d over June’s production. Considering world economic developments in the last three months, the July record for crude production could well turn out to be the all-time peak.”

We’ve been on a bumpy plateau for over 3 years. Production in August and September has been down since the July high point.

OPEC at its Oct. 23 meeting decided to cut its oil production by 1.5 million b/d and allocated the cuts among its members. The final cut was a compromise between the conservative Gulf producers who were arguing for a cut less than 750,000 b/d and the price hawks who wanted a cut of 2 or more million b/d.

The markets have not been impressed by OPEC’s production cut. Prices fell more that $4 a barrel to $64 after it was announced. Futures have since touched $61.30, the lowest since May 9, 2007. Prices, which have tumbled 56 percent since reaching a record $147.27 on July 11, are down 30% from a year ago.

Investment in new oil production projects is being delayed, postponed or canceled due to a combination of falling oil prices, declining demand, the unavailability of loans, and fears of a global economic meltdown. This bodes ill for future supplies, as existing wells continue to deplete:

“The slowdown in new oil production projects will obviously have a profound effect on rates of oil production in coming years. The world is still producing about 85 million b/d which will drop by 3-4 million b/d each year unless an equivalent amount of new production offsets the decline.”

The same factors are also impacting investment in alternative energy – for example, wind projects in northern Europe. Efforts to curb carbon emissions are also suffering. The price of a carbon permit under Europe’s emissions-trading scheme has dropped 15% in the last two weeks to reach an 8-month low. Cheaper permits means less progress in actually cutting emissions.

The US Department of Transportation’s report for August 2008 shows Americans drove 15 billion fewer miles, or 5.6% less, than they did in August 2007 – the largest year-to-year decline ever recorded in a single month. Now that’s “demand destruction”.

A report by the Centre for Global Energy Studies says global oil demand may decline for the first time in 15 years in 2008 and stagnate next year. Other analysis’ projections concur that demand will slacken, perhaps to as low as 83.4 mbd in 2009.