Global oil (all liquids) production appears to have exceeded levels reached in July 2008 and reached a new all-time high in 2011, according to both OPEC and the IEA.  This chart is posted at Early Warning.

Despite record production and faltering western economies, oil prices remain stubbornly high. The global benchmark Brent crude is trading above $112 today (September 15); and WTI, which has seemingly become disconnected from global markets, is trading above $89. Again, Early Warning posts a revealing chart.

The IEA blames high crude prices on “fundamental market tightness”, reporting demand has been outpacing supply since the middle of 2010, leading to a depletion of stocks. Despite the drops in demand in western countries, global consumption continues to outpace supply.

Tom Whipple at the Falls Church News-Press observes we are seeing  “a three way race among OECD demand, which is large but falling by roughly 3-4 percent from last year; the non-OECD world where demand is rising at a rate of about 4 percent over last year; and global production which for now is rising slowly[.]”

If demand growth continues at its present or even somewhat reduced pace, demand should be pushing up against 92 million b/d by the end of next year. The world will soon see whether it’s possible to push global production to that level.

Regardless, the economic consequences of pushing up against the limits of global oil production are not going to be pretty, as we are already seeing. Ronald White at the L.A. Times reports U.S. motorists are on pace to spend $491 billion for gasoline this year, the most ever. Drivers have shelled out more for fuel this year than in 2008 because prices rose faster this time and have stayed high longer. The 2008 average U.S. price was about $3.25 a gallon. This year, the average price has been about $3.66 a gallon. Fuel prices have remained high despite weak demand: Energy Department statistics show that gasoline demand in the U.S. is running 157,000 barrels a day below 2010 levels.

High fuel prices are resulting in less driving. In 2011, cumulative travel on U.S. roads is down from 2010. Truck traffic – an indicator of economic activity -  is down, too. Truck traffic never recovered from the recessionary levels of 2008, as seen in this chart showing real-time diesel fuel consumption, posted at Calculated Risk.

In the U.S., people are not only driving less – they’re buying fewer cars. When the 2008 recession hit, sales of new cars crashed as people hung on to their old cars in an unprecedented fashion.

The fleet turnover rate remains at historically high levels, while new car sales remain in the doldrums.

Goldman Sachs is forecasting Brent crude oil to reach $120 a barrel by the end of 2011, $130 in 12 months, and $140 by the end of 2012. If oil prices continue to rise, hopes for any economic recovery are doomed to disappointment, regardless of any stimulus, regulatory relaxation, or unleashing of the so-called “job creators”.

Tom Bowerman recently sent me this chart showing that real gas prices are now back where they were at the beginning of the oil age.

Cheap oil made the oil age possible. It’s looking like high gas prices will prove to be the bookends of the oil age.