An interesting scatterplot of oil price vs production points

[phantom power]

http://europe.theoildrum.com/node/4179

[GliderGuider]

1. Something seems to be ... wrong ... with that graph.

A supply elasticity of 0? Whatever could cause something like that?

[Terry in Austin]

2. Those little points

It's worth noting that the percentages on the right hand vertical scale are percent of world GDP.

Deffeyes was using it to raise the question of how much the world economy could afford to pay for its oil before it, well, tanked. His guess is that "it cannot go above 15 percent. If we see oil at $300 per barrel, we will be looking out over the smoldering ruins of the world's economy." The graph shows that it's well above 5 percent right now.

He notes that "In Econ 101, they taught us that increasing prices would enlarge the supply." In reality, not any more. Oil production is stuck at 85 mbpd, even with steadily rising demand.

Here's another graph: (warning: graphic!)