Demand Destruction

Watching gas prices rise in the last few months from under 3 dollars a gallon to a nation average of around 4.10 a gallon, I keep expecting a drop in price as a result of demand destruction here in the United States. Reading articles lately has left me with the idea that even though demand destruction will occur here in the US and throughout the world, that oil prices will not dip much, and certainly not to the extent that they did during the 1980s oil glut.

The reason can be summed up by the export land model, which states that a nation's oil exports will drop faster than their production rates because the nation will use more of its own oil and therefore have less available for sale on the world market.

Thus Mexico (for example), who is experiencing fast declines of oil production, is also experiencing economic growth which is using an increasing amount of its oil domestically. I read an article here that hypothesized that Mexico will have NO oil left for export, given current trends, by the year 2010.

Mexico, the sixth largest producer of oil in the world (as of 2007) at 3.71 million barrels per day, currently accounts for imports of 1.116 million barrels per day to the United States, currently third behind Canada and Saudi Arabia. ^[citation]

Between 2006-2007, while Mexico's production was essentially flat, its exports decreased by 15%.^[citation]

Thus, we will have to make other arrangements. And fast. Every single energy producer/exporter is going through this process and chances are that we may hit peak exports before we hit peak oil. Either way the energy available on the world market will be less and less, and perhaps much more quickly than peak oil production.