Instead of ramping up production to over 2 million barrels per day as once dreamed by the Departments of the Interior and Energy, Gulf of Mexico production is likely to fall to a low of a million barrels per day by 2013—a third lower than the region’s production prior to the 2005 storm season.
The real problem is that thanks to hurricanes, the Gulf of Mexico will never live up to its promise as a mother lode of U.S. domestic oil production, leaving the country even more vulnerable to imports. Then the question becomes—imports from where?
That’s the argument laid out in a new report from Jeff Rubin at Canadian investment bank CIBC World Markets, the guys who earlier this year projected $200 oil. Three years after Hurricane Katrina, the Gulf still hasn’t recovered its pre-2005 production levels, CIBC notes. Thanks to rapid production declines at existing fields and huge delays getting new fields operational, official U.S. government forecasts for the Gulf’s role in U.S. oil production are wildly overblown, Mr. Rubin says:
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