This has a lot to do with the unrest in Nigeria, but also with the production loss after the hurricanes in the Gulf of Mexico, the decline in Iraq since the 2003 war, and the decline in Venezuelan output since 2002.

The Russians are turning east to the Chinese - to the Europeans' surprise. It always seemed to me that the relationship between Russia and China would shift from being based in Marx and Lenin to being based in oil and gas.

The North Sea was supposed to run out in the 1980s. Then in the 1990s. And now production is still on-line.

The bulk of extra supplies that could be put into the market come from two places. One, they come from other Persian Gulf suppliers, of which Saudi Arabia is at the top of the list.

In a couple of years, the Chinese will be seen as regular participants in international industry. Their companies have to report to shareholders as well as to the Chinese authorities. They need to make money, they have to be efficient.

According to one study by the United States Geological survey, 86 percent of oil reserves in the United States are the result not of what is estimated at the time of discovery but of the revisions and additions that come with further development.

I think the producers, for the most part, don't want to see prices skyrocket because that will only create problems for them down the road and would also be a, you know, would be a very serious shock for a world economy that can't afford serious shocks right now.