tagged w/ oil reserves
One of the quickest ways to bring down the U.S. economy would be to dramatically increase the price of oil. Oil is the lifeblood of our economic system. Without it, our entire economy would come to a grinding halt. Almost every type of economic activity in this country depends on oil, and even a small rise in the price of oil can have a dramatic impact on economic growth. That is why so many economists are incredibly alarmed about what is happening in the Middle East right now. The revolution in Libya caused the price of WTI crude to soar more than 7 dollars on Tuesday alone. It closed at $93.57 on Tuesday and Brent crude actually hit $108.57 a barrel before settling back to $105.78 at the end of the day. Some analysts are warning that we could even see 5 dollar gas in the United States by the end of the year if rioting spreads to other oil producing nations such as Saudi Arabia. With the Middle East in such a state of chaos right now it is hard to know exactly what is going to happen, but almost everyone agrees that if oil prices continue to rise at a rapid pace over the next several months it is going to have a devastating impact on economic growth all over the globe.
Right now the eyes of the world are on Libya. Libya is the 17th largest oil producer on the globe and it has the biggest proven oil reserves on the continent of Africa.
Libya only produces 2 percent of the oil in the world, but with global supplies so tight at the moment even a minor production disruption can have a dramatic impact on the price of oil.
Before this crisis, Libya was producing approximately 1.6 million barrels of oil per day. Now the rest of the world is wondering what may happen if revolution spreads to other major oil producing nations such as Kuwait (2.5 million barrels of oil per day) or Saudi Arabia.
Saudi Arabia produces 8.4 million barrels of oil a day. It produces more oil than anyone else in OPEC.
If revolution strikes in Saudi Arabia and a major production disruption happens it could be catastrophic for the global economy.
David Rosenberg, the chief economist at Gluskin Sheff & Associates, is warning that if there is major civil unrest in Saudi Arabia we could end up seeing oil go up to $200 a barrel….
“If Libya can spark a $10-a-barrel response, imagine what a similar uprising in Saudi Arabia could unleash. Do the math: we’d be talking about $200 oil.”
200 dollar oil?
Don’t laugh – it could happen.
In fact, if it does happen the global economy would probably go into cardiac arrest.
The truth is that if the flow of oil from Saudi Arabia gets disrupted there is not enough spare capacity from the rest of the globe to make up for it.
Paul Horsnell, the head of oil research at Barclays Capital, recently said that the world does not currently have enough spare capacity to be able to guarantee that an oil “price shock” will not happen….
“The world has only 4.5m barrels-per-day (bpd) of spare capacity, which is not comfortable.”
Horsnell also said that even in the midst of potential supply problems, the global demand for oil continues to grow at a very robust pace….
“In just two years, the world has grown so fast as to consume additional volume equal to the output of Iraq and Kuwait combined.”
For now, Saudi officials are saying all the right things. They say that there will be no revolution in Saudi Arabia and that there are not going to be any supply problems.
For example, Saudi Arabian Oil Minister Ali al-Naimi recently announcedthat the rest of the world should not worry because his country is definitely going to be able to make up for any shortage in the global supply of oil….
“What I would like you to convey to the market: right now there is absolutely no shortage of supply.”
But what happens if revolution comes to Saudi Arabia?
Suddenly the whole game would change.
But even with a peaceful Saudi Arabia the price of gasoline in the United States is already rising to alarming levels.
The average price of gasoline in the United States reached $3.14 a gallonlast week. This closely mirrors what happened back in 2008. Three years ago at this time the average price of gasoline was right around $3.13 a gallon.
Let’s certainly hope that we don’t see a repeat of what happened to oil prices back in mid-2008. The price of oil reached an all-time record of $147 a barrel and gas prices in the United States absolutely skyrocketed.
So how high will the price of gas in the U.S. go in 2011?
We haven’t even come close to 4 dollar gas yet, but a large number of analysts believe that it is coming this summer.
Is there even a possibility that we could see 5 dollar gas in America at some point in the next couple of years?
Well, there are some in the oil industry that are convinced that it could actually happen. Just consider the following quotes….
Darin Newsom, senior analyst at energy tracker DTN….
“If this thing escalates and there’s a good chance that there’d be a shift in supplies, $5 gas isn’t out of the question.”
Peter Beutel, president of energy adviser Cameron Hanover….
“If you are looking at the disruption of movement and production in countries such as Saudi Arabia and the UAE, you’re easily talking $5 gas.”
John Hofmeister, the former president of Shell Oil, on his belief that we could see 5 dollar gas by 2012….
“I’m predicting actually the worst outcome over the next two years which takes us to 2012 with higher gasoline prices.”
So why is everyone so concerned about gas prices?
Well, because it affects the price of almost everything else in the economy.
David Wyss, the chief economist at Standard & Poor’s, says that every extra dollar that is spent on gasoline is a dollar that will not be spent somewhere else….
“The money that you spend filling up your car is money you don’t have to spend at the shopping mall.”
Not only that, but when gasoline costs more it has a negative effect on economic growth. Almost all economic activities involve the use of oil in one form or another. When the price of oil starts getting really high it motivates people to start cutting back on many of those activities.
The truth is that our whole economic system is based on the ability to use massive amounts of very cheap oil. Now that the price of oil is rapidly rising again, many economists are becoming very alarmed.
FULL STORY HERE:
http://www.prisonplanet.com/5-dollar-gas-get-ready-to-pay-an-arm-and-a-leg-for-gasoline.htmlOne of the quickest ways to bring down the U.S. economy would be to dramatically... more
The US fears that Saudi Arabia, the world's largest crude oil exporter, may not have enough reserves to prevent oil prices escalating, confidential cables from its embassy in Riyadh show.
The cables, released by WikiLeaks, urge Washington to take seriously a warning from a senior Saudi government oil executive that the kingdom's crude oil reserves may have been overstated by as much as 300bn barrels – nearly 40%.
The revelation comes as the oil price has soared in recent weeks to more than $100 a barrel on global demand and tensions in the Middle East. Many analysts expect that the Saudis and their Opec cartel partners would pump more oil if rising prices threatened to choke off demand.
However, Sadad al-Husseini, a geologist and former head of exploration at the Saudi oil monopoly Aramco, met the US consul general in Riyadh in November 2007 and told the US diplomat that Aramco's 12.5m barrel-a-day capacity needed to keep a lid on prices could not be reached.
According to the cables, which date between 2007-09, Husseini said Saudi Arabia might reach an output of 12m barrels a day in 10 years but before then – possibly as early as 2012 – global oil production would have hit its highest point. This crunch point is known as "peak oil".
Husseini said that at that point Aramco would not be able to stop the rise of global oil prices because the Saudi energy industry had overstated its recoverable reserves to spur foreign investment. He argued that Aramco had badly underestimated the time needed to bring new oil on tap.
One cable said: "According to al-Husseini, the crux of the issue is twofold. First, it is possible that Saudi reserves are not as bountiful as sometimes described, and the timeline for their production not as unrestrained as Aramco and energy optimists would like to portray."
It went on: "In a presentation, Abdallah al-Saif, current Aramco senior vice-president for exploration, reported that Aramco has 716bn barrels of total reserves, of which 51% are recoverable, and that in 20 years Aramco will have 900bn barrels of reserves.
"Al-Husseini disagrees with this analysis, believing Aramco's reserves are overstated by as much as 300bn barrels. In his view once 50% of original proven reserves has been reached … a steady output in decline will ensue and no amount of effort will be able to stop it. He believes that what will result is a plateau in total output that will last approximately 15 years followed by decreasing output."
The US consul then told Washington: "While al-Husseini fundamentally contradicts the Aramco company line, he is no doomsday theorist. His pedigree, experience and outlook demand that his predictions be thoughtfully considered."
Seven months later, the US embassy in Riyadh went further in two more cables. "Our mission now questions how much the Saudis can now substantively influence the crude markets over the long term. Clearly they can drive prices up, but we question whether they any longer have the power to drive prices down for a prolonged period."
A fourth cable, in October 2009, claimed that escalating electricity demand by Saudi Arabia may further constrain Saudi oil exports. "Demand [for electricity] is expected to grow 10% a year over the next decade as a result of population and economic growth. As a result it will need to double its generation capacity to 68,000MW in 2018," it said.
It also reported major project delays and accidents as "evidence that the Saudi Aramco is having to run harder to stay in place – to replace the decline in existing production." While fears of premature "peak oil" and Saudi production problems had been expressed before, no US official has come close to saying this in public.
In the last two years, other senior energy analysts have backed Husseini. Fatih Birol, chief economist to the International Energy Agency, told the Guardian last year that conventional crude output could plateau in 2020, a development that was "not good news" for a world still heavily dependent on petroleum.
Jeremy Leggett, convenor of the UK Industry Taskforce on Peak Oil and Energy Security, said: "We are asleep at the wheel here: choosing to ignore a threat to the global economy that is quite as bad as the credit crunch, quite possibly worse."
http://www.guardian.co.uk/business/2011/feb/08/saudi-oil-reserves-overstated-wikileaksThe US fears that Saudi Arabia, the world's largest crude oil exporter, may not... more
World oil reserves are far lower than officially reported, the situation far more serious than publicly admitted, and we're already past peak oil. That's the word from two anonymous IEA whistleblowers, The Guardian reports. To add insult to industry, the figures were deliberately massaged, at least in part, to appease the United States:
Apparently the IEA was concerned that reporting the true reserve numbers -- and keep in mind that determining oil reserves is as much art as science -- it would trigger a buying panic.
The US enters the picture encouraging the IEA to underplay the rate at which oil fields are being depleted -- something which the IEA has admitted in recent months is occurring more quickly than previously acknowledged -- while at the same time overplaying the possibility of new large discoveries.
Indeed, when one does the math on how much recent new oil finds, touted as 'huge', actually add to world reserves, the result is usually in days or weeks of additional world supply, not months, still less years.
more at link...
http://www.alternet.org/environment/143888/whistleblowers_say_oil_reserve_numbers_deliberately_inflated_to_avoid_panic%2C_appease_the_usWorld oil reserves are far lower than officially reported, the situation far more... more
When we in the USA invaded Iraq (unaware of the occupation-like vendetta in mind of the Bush Administration) an oil deal was in the works between Iraq, and China. The deal, worth 1.2 *billion* dollars, was canceled, as soon as President Numbnuts made it news. On my birthday no less.
It seems he did something right, but now, it's turned into a collection of our fun loving, distant neighbors, both seeking to profit from this arrangement.
The Ahdab oil field is south of Baghdad, and is known to be a much plentiful oil reserve. With the deal struck by these two nations, what can we expect but a most interesting reaction from our deciders in chief?
OPEC, eat your heart out.When we in the USA invaded Iraq (unaware of the occupation-like vendetta in mind of... more
In a reversal, Barack Obama is proposing the government sell 70 million barrels of oil from its strategic petroleum stockpiles.
The Democratic presidential candidate says that move could help in the short-run to drive down gasoline prices that now top $4 a gallon. The proposal came in a major energy speech Obama has delivered Monday in Lansing, Mich. Previously, Obama opposed tapping into the reserves, located in caverns in Texas and Louisiana.
The Illinois Democrat says releases from the reserve in the past have lowered gas prices within two weeks.
Obama said U.S. politicians have failed for three decades to deal with the energy crisis, and he said his GOP rival John McCain has been part of that failure.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
CHICAGO (AP) — In a reversal, Barack Obama is proposing tapping the nation's strategic oil reserves to help drive down gasoline prices, his campaign said Monday.
Obama supports releasing light oil from the emergency oil stockpile now and replacing it later with heavier crude more suited to the country's long-term needs, according to a campaign fact sheet. Light crude oil is easier to refine into gasoline than heavier oil.
Also on Monday, the Obama campaign unveiled a television ad that criticizes Republican John McCain's energy policies.
"After one president in the pocket of big oil we can't afford another," says the ad, referring to President Bush's previous work in the oil industry.
Obama is emphasizing energy and the economy in campaign stops this week in Michigan, Ohio and Indiana, beginning with a speech Monday in Lansing, Mich. Gas prices over $4 a gallon have become a top issue in the presidential contest.
In the past, Obama has not advocated tapping the oil reserve, but campaign spokeswoman Heather Zichal said he has reconsidered. "He recognizes that Americans are suffering," she said.
The nation's strategic petroleum reserve contains 707.2 million barrels in salt caverns in Texas and Louisiana. It was last tapped shortly after Hurricane Katrina. Otherwise, President Bush has refused to use the reserves, saying they need to be left intact as an emergency stockpile. However, in the face of strong congressional pressure, Bush in June stopped filling the reserve until oil prices decline.
Obama's call for using the government reserve mirrors a proposal that has been pushed by congressional Democrats, but opposed by Republican leaders and the White House.
House Speaker Nancy Pelosi, D-Calif., for weeks has called for Bush to withdraw a "small amount" of oil from the government reserve to add to supplies and try to force down prices.
Both candidates have energy proposals to reduce U.S. dependence on oil. Obama's was first, and its centerpiece is a 10-year, $150 billion spending plan focusing on clean coal technology, further development of plug-in hybrid cars, commercialization of wind and solar power and other measures.
McCain's, which is called the Lexington Project, includes building 45 new nuclear power plants; offering a $300 million prize for major advancement of low-cost, plug-in hybrid or electric car technology; and "encouraging the market" in wind, hydroelectric and solar power. Both he and Obama would cut use of fossil fuels to combat climate change.
The Strategic Petroleum Reserve is capable of releasing about 4 million barrels a day. It's unclear what impact such release might have on global oil prices, or costs of gasoline at the pump. But a clear signal by the United States to use its emergency reserve to a significant extent could put downward pressure on oil markets at least for a time, energy experts say.
In a reversal, Barack Obama is proposing the government sell 70 million barrels of... more
The UAE's oil reserves of 97.8 billion barrels, which make 7.9 per cent of the world's total stocks, would last 92 years at current production levels, according to a report.
The UAE's crude oil output on an average rose 1.53 per cent to 2.66 million barrels per day (bdp) for the quarter ended June as compared to the January-March quarter, latest data by the International Energy Agency (IEA) shows.
The Middle East's oil reserves stood at 755 billion barrels, or 61 per cent of the world's total, while the global oil reserves amounted to 1.24 trillion barrels, said the data.
The UAE's oil consumption rose 7.7 per cent to 450,000 barrels per day in 2007, registering the highest growth rates in the Middle East.
The UAE's proven oil reserves of 97.8 billion barrels make 7.9 per cent of the world's total reserves, said the 2008 BP Statistical Review of World Energy.
The UAE's oil reserves of 97.8 billion barrels, which make 7.9 per cent of the... more