How ironic that what could turn out to be the seminal OPEC meeting of all time should be scheduled for September 11. Depending on the outcome, the oil age might continue merrily along for another few years or might undergo radical change before the year is out.

Let’s review the bidding. Last summer, the specter of more hurricanes and the possibility the fighting in Lebanon would turn into a major Mid-East war sent oil prices beyond $75 a barrel. While this did not particularly bother the rich countries who could make or borrow enough money to pay the price, it cut into oil purchases by poorer countries that simply could no longer afford the higher costs.

Later in the summer when the threat of hurricanes and wider fighting went away, oil prices began to fall and stockpiles began to build. Oil consumption in China, India, Russia, and the Persian Gulf oil states was growing rapidly. Oil consumption in the US and OECD (rich) countries was growing modestly. World oil production was flat. Therefore, a drop in oil consumption by the poor countries, which is not well reported, was larger than the increase in consumption by the well-off states. World stockpiles began to rise.

This situation obviously bothered OPEC members, particularly the Saudis, who had visions of oil prices sliding back to $20 or $30 a barrel as they had in previous oil price cycles.

The obvious answer was to do something about OPEC production which in two meetings last fall was officially cut by 1.7 million barrels a day. Now OPEC, like so many other groups, is divided into the rich and the poor. Poor oil exporters like Iraq, Iran, Nigeria and Venezuela that, for one reason or another are having trouble keeping up production, need every last dollar they can earn. Very rich OPEC nations like those of the Saudi peninsula can afford it.

Thus, it was production cuts largely by Saudi Arabia and the other Gulf oil states that resulted in an effective 1 million barrel cut in OPEC production.

OPEC’s 1 million barrel a day cut, coupled with slippages in several new non-OPEC production projects, has meant, for the last six months, there has been no growth in world oil production at a time when demand, especially by China, has continued to grow relentlessly. As the poor have already given up as much consumption as they are going to at $70 a barrel, the difference has been made up out of world stockpiles which have been falling. According to the Centre for Global Energy Studies, since 1999, world inventories of oil have grown by an average of 840,000 barrels a day in the second quarter. This year they fell by 140,000 barrels a day.

The key issue facing the industrialized and industrializing world is what will happen to OPEC production in the 2nd half of the year 2007 and in 2008. For now, all the major forecasters are projecting modest to robust world economic growth which will increase the demand for oil by 2.2 million barrels a day in the next year or so.

At the moment it looks as if the only place this sort of increase can come from is Saudi Arabia with a little help from Kuwait, Qatar, and the UAE. Although Iraq, Nigeria, and Venezuela have some theoretical spare capacity, their production is more likely to go down rather than up.

Saudi Arabia is clearly the crux. In June of 2007 the Saudis produced 8.6 million barrels a day down from 9.5 million barrels a day last summer. Riyadh claims they will have ability to sustain 10.9 million barrels a day of oil production by the end of this year. Many independent observers, however, are skeptical of this claim. They note the major Saudi oil fields have been in production for 60 years and, despite heavy investment in efforts to sustain production, they are just about due to peak and decline. There is suspicion last year’s production cut of 900,000 barrels a day was not altogether voluntary.

Thus far, the atmospherics leading up to the September meeting are signaling no increase in production. Oil minister after oil minister has been quoted as saying the “market is well supplied” and that no changes are necessary at this time. OPEC’s Secretary General, however, did opine that the organization might be a tad uncomfortable should oil prices go above $80 per barrel.

On the importer side of the equation, officials are not so sanguine. Last week, U.S. Secretary of Energy Bodman asked OPEC to increase production immediately, warning that $80 oil would threaten the US economic.

Last month, in a carefully reasoned analysis, the International Energy Agency argued that worldwide demand is outstripping any likely increase in world oil production so that serious problems are likely to be only a few years away. Sounds a lot like what the peak oil folks have been saying for some time now.

So there you have it. OPEC, read the Saudis, will be under heavy pressure from most of the world to lift production caps at the September meeting by at least a million and preferably 2 million barrels a day— if they can.

Outcomes of the meeting range from “no increase,” through various token increases; to “surprise ye skeptics” we Saudis really can produce over 10 million barrels a day.

If the Saudis do increase production significantly in September, then the world can breathe a sigh of relief as the problems that will come from peak oil will be put off a while longer. If however, the Saudis hold their output to 8.6 million barrels a day, then some mighty big changes are in store for all of us, for the numbers suggest we will either reduce our consumption or we will start eating through a 50-day cushion of world reserves. Should this happen, prices will quickly rise to undreamed-of levels with undreamed of economic consequences.

Someday the historians might conclude that the second 9/11 was far more significant than the first.