The whole article is great, but this particular section caught my attention:

Sleepwalking toward the oil precipice
by Dave Cohen

It's Worse Than You Think

Although the foregoing paints a bleak picture, the situation is actually worse than you might think. OPEC's reference case may now be viewed as overly optimistic. Some points to consider are listed below. Things get a bit complicated in #1 and #3, so please be patient.

1. OPEC's average monthly production in 2008 (from the IEA's April Oil Market Report ) is 32.28 mmb/d, so you might say "Well! OPEC is producing more to ease the tight world market." OPEC is mostly adding to its total average monthly output by acquisition, not greater production in the core "OPEC 11". Angola joined the cartel in early January, 2007. Ecuador joined in November, 2007. There are now 13 countries in OPEC. Average monthly crude output was 29.71 mmb/d in 2006, and 30.66 mmb/d in 2007 adding in Angola's 1.61 mmb/d (= 29.05 mmb/d for the "OPEC 11"). Take the 2008 output number of 32.28 and subtract the total for Angola and Ecuador, which now adds up to 2.4 mmb/d. The total for the "OPEC 11" is 29.88 mmb/d. This number has hardly moved over the last 27 months.

The adjusted OPEC reference case total of 30.7 mmb/d in 2010 implies production of 28.30 mmb/d from the core "OPEC 11" if we assume current output levels for Angola and Ecuador. This is actually a decrease of 1.41 mmb/d from the 2006 level before either country joined the cartel.

Summing up, total output from the usual suspects—Saudi Arabia, the UAE, Kuwait, Iran, Iraq, Nigeria, Algeria, Venezuela and the others—is assumed to be below the 2006 level in 2010 in OPEC's 2007 reference case. OPEC's Table 1.5 shows that the call on its crude is actually lower in 2010 than it was in 2005.

2. How much of this OPEC production will be available for export? Less than there used to be according to CIBC's OPEC's Growing Call on Itself. Consumption is rising in the Persian Gulf countries and elsewhere. Read the CIBC report and The Sierra Club Solution for a discussion of the export trends (ASPO-USA, January 30, 2008).

3. Recent Saudi statements seem to indicate an official change in policy that further confirms the Paradigm Shift position (ASPO-USA, June 20, 2007). This argument states that the Saudis and other oil exporters will not produce their oil in an unconstrained way to meet world demand. King Abdullah told us that "I keep no secret from you that when there were some new finds, I told them, 'no, leave it in the ground, with grace from god, our children need it'." Saudi Oil Minister al-Naimi validated the King's remarks in the Arab News (April 20, 2008).
Top oil exporter Saudi Arabia has no plans to embark on further capacity expansion as long-term oil demand forecasts fall and alternative fuel supplies rise, the Saudi oil minister told industry newsletter Petroleum Argus.

The holder of the world’s largest oil reserves sees no need to go beyond its 2009 capacity target of 12.5 million barrels per day “at least up to 2020,” Minister of Petroleum and Mineral Resources Ali Al-Naimi said.

Long-term future energy demand forecasts have fallen sharply, he said in the interview given to the weekly on April 11, casting doubt on the need for more Saudi oil.

Demand forecasts have fallen as low as 106 million bpd in 2030, down from previous estimates as high as 130 million bpd. The world currently consumes around 86 million bpd.
This development adds a new wrinkle to what we already knew about Saudi intentions. See The Saudis Are Blowing Smoke Again, ASPO-USA, March 12, 2008. Saudi Arabia's (i.e. OPEC's) low demand projections could be called "a self-fulfilling prophecy" in so far as lower OPEC output after 2010 will price many consumers out of the oil markets. Worse yet, PFC's projection (graph left) shows that even unconstrained OPEC production would only boost world production to less than 100 million barrels per day by 2015 in any case! That's it, that's all there can be and ever will be based on PFC's depletion estimates for OPEC as a whole. (Look through their presentation.)

PFC's low growth case exceeds OPEC's reference case after 2009. But without substantial new contributions from the Saudis over the next decade—we have now been told there won't be any—the reference case itself now appears to be too generous. Oil minister al-Naimi is now asking us to look at OPEC's "low growth" scenario instead of the reference case as shown in Table 4.2 of their 2007 World Oil Outlook (graph left). Take the adjusted shortfalls calculated above for OPEC's reference case for each year and then add the negative number given in Table 4.2. The OPEC crude shortfalls with respect to PFC's low 1.1% growth case are now as follows: 3.6 mmb/d in 2010; 6.1 mmb/d in 2015; 13.5 mmb/d in 2020.

We have moved further into negative territory regarding OPEC's response to PFC's call in the low growth scenario. If this isn't bad news, I don't know what is.

4. If the foregoing isn't alarming enough, consider that substantial increase in OPEC production in the coming decade would require major contributions from Iraq, Nigeria and Venezuela, now that we know that a 12.5 mmb/d production capacity from the Saudis is all we're going to get. (All links are to past ASPO-USA columns.) Prospects for large production increases from these three countries is unlikely for reasons peculiar to each.

We have now set realistic expectations about OPEC's future contributions. They will not produce enough crude oil in the next 12 years to meet even a minimal growth scenario. Few subjects are more important than the potential contribution of OPEC crude to world production as we move toward 2020.

http://www.energybulletin.net/43472.html

Am I reading that right? If non-OPEC is peaking and OPEC is short 3.6 mmb/d in 2010, does that not translate to shortages in two years? Or will ethanol and other non-conventional liquids production make up the difference so that we don't have 70's style lines at the pump?