Beware the V-shaped forecast, when the bottom of the V is “today”.
Consider the red curve, production. The EIA’s forecast has us reversing 40 years of decline, returning to the 1970 level of liquids production in just 25 years.
How is this possible? you might ask. The EIA would answer that it’s a combination of deepwater Gulf of Mexico oil, along with growth in biofuels. More about that later.
In the meantime, the Obama Administration plans to do just about everything it can to discourage and punish domestic oil production. Interior Secretary Salazar has yet to proceed with the Five-Year Outer Continental Shelf Leasing Program. ANWR and the Eastern Gulf of Mexico will remain off limits to drilling. Proposed tax law changes will make capital formation harder than ever.
But at least we have … switchgrass!
Source: EIA Annual Energy Outlook 2010