As I write this, there appear to be indications that -- even though you may currently be snowbound -- spring may arrive early this year in the nation's northern climes. So if the past continues to be prelude, energy prices could head downward, perhaps significantly.

Forget about the mounting evidence that Iran is playing a significant role in the Iraq war. Forget about the civil war in Nigeria, and Hugo Chavez's efforts to nationalize key industries in Venezuela, and Russia's increasing saber-rattling, and threats of an energy workers' strike in Norway, and growing concerns in the West about an inter-OPEC rift between the nations that are largely populated by Shiite and those that are predominantly Sunni. The ups and downs of energy prices seem to have become simply a reflection of weather in Boston, or New York, or Chicago, or perhaps Cleveland.

I'm not trying to cast aspersions on the cities of the north -- I spent a number of wonderful years in New York and New England -- but rather I'm endeavoring to point out that the price of crude oil in particular should be largely a function of longer-term global events and conditions. By rising and falling appreciably on the presence or absence of cold fronts or on the weekly inventories of crude oil, or natural gas, or refined products, the energy markets seem to be effectively whistling past the graveyard of potential major supply disruptions.

The shaky OPEC lineup
Consider first the group of nations that comprise the OPEC cartel. In order of production levels, from top to bottom, there's Saudi Arabia, Iran, Kuwait and the United Arab Emirates (tied), Venezuela, Nigeria, Iraq, Libya, Angola (which became a card-carrying member of the group last month), Algeria, Indonesia, and Qatar. In total, this august group produces just shy of 34.3 million barrels a day of the nearly 85 million barrels the world uses. At the extremes, the Saudis produce about 8.8 million barrels a day, while Qatar adds about 810,000 barrels.

For the sake of perspective, we in the U.S. produce approximately 6.8 million barrels each day, but we consume about 20.5 million barrels, so we're responsible for just under a fourth of the world's total usage. And for even more perspective, the Russian Federation, which is looming progressively larger in the world's energy picture, produces about 9.5 million barrels a day, but consumes just more than 2.7 million barrels a day, or less than 30% of its own production.

All this is fine, you're saying, but why should we care about the plethora of numbers I've just thrown at you? In response, I'd urge you to look closely at the array of nations that constitute OPEC -- after, that is, you've digested the fact that we in the U.S. consume more than three times as much oil every day as we can produce. And then make note of some other important facts:

  • With the world's total production today running in the range of 84 million to 85 million barrels, most forecasters, including ExxonMobil (NYSE:XOM) and the Energy Information Administration arm of the U.S. government, forecast a need for about 120 million barrels by 2030.
  • U.S.-proved oil reserves -- the oil we've discovered that we judge can be produced with reasonable economics -- have declined about 20% in the past 20 years.
  • Not since the mid-1980s has the world found more oil in any one year than we have produced.
  • China's daily oil consumption has more than doubled just since 1995, and India's is up nearly 60% in the same period.

The bad actors
Am I getting your attention? OK, let's keep going. Let's look for a minute at some potential cracks in the cartel's output levels. First off, there's Iran, which is the second-largest producer in OPEC, at about 3.7 million barrels a day. Iran should be interesting to us for a host of reasons, not the least of which is the contention -- which has intensified during the past week -- that many of the roadside bombs being used in Iraq may be being manufactured in Iran. And then there is the sobering specter of what we used to call Persia and its questionable leadership moving into the nuclear community.

Further, don't be surprised if you hear more and more about a theory that the Saudis are quietly doing what they can -- and they still can do a lot -- to put downward pressure on crude prices. Their reason: To do so benefits their Sunni-based government by keeping predominately Shiite Iran effectively under their thumb, or at least less capable of fomenting mischief. It appears that Iran becomes breakeven from an energy perspective when crude prices move into the low $50s.

And Iran's President Mahmoud Ahmadinejad -- a talented Fool is one who can say that three times fast -- is a buddy of Venezuela's President Hugo Chavez, who is in the process of nationalizing everything in his country from telephone services to the energy production in the Orinoco River basin. That production heretofore has been under the auspices of ExxonMobil, Chevron (NYSE:CVX), and ConocoPhillips (NYSE:COP). Last week White House press secretary Tony Snow opined that, "Nationalization has a long and inglorious history of failure around the world." With its daily crude production approaching 2.5 million barrels per day, and much of it coming from the Orinoco, a failure that resulted in reduced crude production in Venezuela would not be without consequences.

In Nigeria, where much of that nation's 2.3 million barrels of daily oil production comes from the Niger Delta or from nearby offshore platforms, local tribesmen have been effectively precluded from the energy jobs that typically go with production in an area. Instead, those jobs have gone to members of more influential inland tribes. The result has been increasing levels of armed conflict, as the local tribesman have sought to gain influence by disrupting oil and gas production in the delta. And as National Geographic magazine noted in an excellent article this month on the nation's strife: "National elections in April could exacerbate the violence, especially if politicians resort to the practice of hiring youth gangs to deliver votes at gunpoint."

You'll notice I've said little, if anything, about the potential effects from a resumption this summer of hurricane movement into the Gulf of Mexico or from a threatened summer strike by energy workers in Norway, with its 3.0 million barrels per day of non-OPEC crude oil production. Nor have I discussed either the increasing evidence of a Russian military buildup or that country's close ties to some of the world's rogue nations, including Iran.

What, no energy stocks?
I believe that the key for Fools is not to be excessively fearful of the obviously precarious nature of the world's oil production. Rather, they should be daunted by an absence of energy representation in their portfolios. As I have said in the past, my preference lies with the large international players, including ExxonMobil and Chevron on the exploration and production side. In the service sector, I like the size and geographic spread of Schlumberger (NYSE:SLB) and Baker Hughes (NYSE:BHI), along with deepwater drillers Transocean (NYSE:RIG) and Diamond Offshore (NYSE:DO).

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Fool contributor David Lee Smith does own shares in Schlumberger but not in the other companies mentioned. He welcomes your comments or questions. The Fool has a disclosure policy.