July 11, 2008 was an unforgettable day for the oil industry. The price of West Texas Intermediate — a grade of crude oil used as a benchmark in oil pricing — hit an all-time high of $147 per barrel in New York. So, 10 years later, what has changed? There have been a few major developments in the oil industry, but as far as the way OPEC works, little has altered. First, OPEC is still producing the same amount of crude. In July 2008, OPEC’s crude oil production was 32.6 million barrels per day (bpd), compared with 32.3 million bpd in June 2018, taking into account the end of voluntary restraints on oil output by some OPEC countries and that the size of OPEC is now larger than in 2008. Second, the US is still blaming OPEC for the increase in oil prices. In 2008, when speculative activities in the future market of oil pushed prices up to unprecedented levels, the US government and other oil consumers asked OPEC to increase supply at the Jeddah Energy Meeting. Saudi Arabia responded to these claims with a counter-argument. At the meeting, the late King Abdullah blamed speculation for the increase, while his Minister of Petroleum, Ali Al-Naimi, noted that oil prices did not reflect physical market fundamentals. Al-Naimi said in his address to the 35 energy ministers at the meeting that supply was not the issue as it had grown by 400,000 barrels at least above demand growth level. He also pointed to the fact that oil stocks were ample and at levels within their normal range. There have been a few major developments in the oil industry, but as far as the way OPEC works, little has altered over the last 10 years. Wael Mahdi The-then US Energy Secretary Samuel Bodman told reporters that there was no evidence that speculation was behind the sharp increase in prices and asked the Saudis to produce more. However, Barack Obama, a Democrat senator at the time, called for a crackdown on oil market speculators, whom he also blamed for the price escalation of 2008. Today, it seems that this blame behavior is central to the Republican approach as President Donald Trump is looking through the same lenses that his Republican predecessors used. There is nothing new in Trump pushing OPEC to increase production to calm prices despite the fact that the organization, as in 2008, is not responsible for the increases. This time around, oil prices are up because of geopolitical factors and fears over supply disruptions. US sanctions against oil producers, such as Venezuela and Iran, are the main reason for the current price environment. Turning to another similarity, the world’s spare production capacity of oil today is no better than it was 10 years ago. Despite the fact that shale oil producers in the US are a major force shaping the market, there are limits to what they can produce in 2018, and this cap is also a factor in high prices. The world is still facing a lack of sufficient investment in oil and gas production, which will lead to a tightness in the market in the next two to three years. US politicians, however, are occupied with short-term price movements — as this will shape the upcoming local elections — instead of trying to solve long-term problems in the industry. Fourth, Saudi Arabia is still the country with the most idle spare capacity. However, it will no longer carry the burden alone. In 2008, Saudi Arabia did not complete its maximum capacity expansion program to 12.5 million bpd, yet it pledged to increase production that year to 9.7 million bpd to calm the market. Even if the Kingdom wanted to carry the burden alone, it would not be easy as global oil demand has risen by 15 million bpd since 2008. Also, there are fewer huge increments left in Saudi Arabia to raise production capacity substantially compared with 2008. And this will require larger investments than before. In 2008, Al-Naimi announced that the Kingdom had identified a series of future crude oil mega-increments totaling another 2.5 million bpd that could be built “if and when crude oil demand levels warrant their development.” Among these prospective increments are 900,000 bpd in Zuluf, 700,000 bpd in Safaniyah, 300,000 bpd in Berri, 300,000 bpd in Khurais and 250,000 bpd in Shaybah. Aramco has already used Khurais and Shyabah increments to maintain the current 12.5 million bpd capacity, and soon will use another 300,000 bpd in Marjan for the same purpose, and in the near future the Berri increment will be tapped as well. For Saudi Arabia to consider a 15 million bpd scenario again, some security of demand and a supportive oil price environment need to be in place. However, current political thinking in many consuming nations is not supportive of fossil fuel, so politicians should not be surprised to see another structural supply crunch that will push prices to new highs. The $147 that the world saw in 2008 is still possible again. Wael Mahdi is an energy reporter specializing on OPEC and a co-author of “OPEC in a Shale Oil World: Where to Next?” He can be reached on Twitter @waelmahdi Disclaimer: Views expressed by writers in this section are their own and do not necessarily reflect Arab News" point-of-view