Leaked Cables Reveal US Thinks Saudi Oil Reserves May Be Overstated 385
Mr.Intel writes with this excerpt from a UPI report which may interest those of you with cars, electricity, items made of plastic, etc: "Estimates of oil reserves in Saudi Arabia are overstated, meaning crude output could peak within the next decade, leaked US diplomatic cables reveal. Washington fears Saudi Arabia overestimated its oil reserves by as much as 40 percent and the kingdom can't keep enough oil flowing to control prices, US diplomatic cables obtained by WikiLeaks and published by The Guardian newspaper in London reveal."
Re:US Thinks Saudi Oil Reserves May Be Overstated (Score:5, Informative)
The origin of this information is a former saudi oil company exec. The leak just quotes it and tells us, that US diplomats think he's believable.
Not quite (Score:5, Informative)
"The bulk of the funds for Iraq's reconstruction will come from Iraqis -- from oil revenues, recovered assets, international trade, direct foreign investment -- as well as some contributions we've already received and hope to receive from the international community." -Donald Rumsfeld, 2003
Re:Thank goodness for Canada (Score:1, Informative)
Hadn't thought about where the cost of the war was going. Does anyone have hard data on that? I'd be interested to see.
You know the handful of defense contractors and consultancies that had close ties to top Bush administration officials? Yeah, the ones who had the most to gain from an invasion of Iraq? A large chunk of it went to them in one way or another.
Re:US Thinks Saudi Oil Reserves May Be Overstated (Score:5, Informative)
Wouldn't it be in the best interest of the Saudi's to give the opposite impression (IE, tell everyone there's lower supply than there really is to hike up prices)?
No. It's because of the way OPEC is structured. OPEC's goal is to restrict supply to increase prices. They set the limit for each country as a percentage of that country's oil reserves. So the larger a country's reserves, the more oil it is allowed to sell under OPEC rules. The problem is that OPEC doesn't use independent evaluations of oil reserves, they use each country's official numbers. So there is plenty of incentive for each country to overstate the size of their reserves so as to sell more oil.
Re:US Thinks Saudi Oil Reserves May Be Overstated (Score:5, Informative)
The origin of this information is a former saudi oil company exec. The leak just quotes it and tells us, that US diplomats think he's believable.
This has been an "open secret [theoildrum.com] for some time. It's pretty clear from various analyses that the Saudis (and everybody else) are just flat out lying when it comes to their reserves.
On a semi related note, the Oil Drum as a collection of the best articles of the past 6 years [theoildrum.com]. Anyone moderately interested in reasonably coherent discussion of Peak Oil and related subjects should read most of those articles.
Its been thought for decades... (Score:4, Informative)
Re:Why would they lie? (Score:5, Informative)
Because OPEC members production is capped at a ratio of their reserves. So the higher they claim their reserves are the more oil they are allowed to sell.
Re:Your pessimism is misplaced (Score:5, Informative)
Drilling service companies have injected at least 32 million gallons of diesel fuel underground as part of a controversial drilling technique, a Democratic congressional investigation has found.
Injecting diesel as part of "hydraulic fracturing" is supposed to be regulated by U.S. EPA. But an agency official told congressional investigators that EPA had assumed that the use of diesel had stopped seven years ago.
"The industry has been saying they stopped injecting toxic diesel fuel into wells," said Rep. Henry Waxman (D-Calif.), the ranking member on the House Energy and Commerce Committee, who led the inquiry. "But our investigation showed this practice has been continuing in secret and in apparent violation of the [Safe Drinking Water Act]."
But heh, don't let oil/gas companies poisoning US citizens for profit keep you awake at night.
http://www.nytimes.com/gwire/2011/01/31/31greenwire-fracking-companies-injected-32m-gallons-of-die-24135.html [nytimes.com]
Not running out of oil, just cheap oil (Score:4, Informative)
As others have stated it's not so much as running out of oil, but rather the cheap, easy to extract oil.
In other parts of the world oil companies have developed technology to drill for deeper and harder to extract sources. Wells that at one time would not have been tried are today being developed. Part of this is due to the rising price of crude that has made the more expensive deeper sources worth going after. However the better technology available today also makes it less expensive than it would have been years ago. Still, there are increased risks and problems with these deeper wells (as BP has found out). If solar, wind, and other renewable energy sources can replace some dependence on oil demand will be lower and price will depend more on the cost of delivery rather than mostly on supply vs demand.
wrong on several points (Score:5, Informative)
> But the Saudi's have a lot of heavy oil that at 60 or 70 bucks a barrel wouldn't be economically viable, but at 100 bucks a barrel, with bangladeshi slave.. I'm sorry, foreign worker, labour becomes reasonably profitable.
Not necessarily. Not if extracting that oil results in a net energy loss.
See, we extract oil to get energy out of it (well, among other things, but let's simplify here). But the extraction process itself takes energy. If you spend more energy than you get out of it, then the process will never be profitable. You talk about certain oil reserves being profitable at 100/barrel. But you are assuming today's energy prices. As the energy prices increase, the break-even point for those reserves will also increase. Some reserves will become profitable but some will be forever too expensive to bother.
Let me give you a practical example. Canada has 1/3 of the world's oil reserves. Unfortunately, the vast majority of those reserves are in the form of tar sands. You can't just pump the oil out of tar sands. You need to use steam extraction.
Here is how it works. First they strip the top layer of vegetation to get to the tar sands. Then they use natural gas to boil water and then use the steam to extract oil out of tar sands. The contaminated oily water is then dumped into massive reservoirs called tailings ponds, where it continuously kills wildlife.
To extract 3 barrels of oil out of tar sands you need to spend the equivalent of 2 barrels worth of energy. Oh and you also have to contaminate 15 barrels of fresh water. So the process is energy-positive, but the environmental damage is enormous.
> If they're lying by 40%, then they're lying about a problem that will manifest in the late 2070's or 2080's. That's a long time to hold onto a lie for relatively little gain, since shit will hit the fan either way.
Actually, huge gain. OPEC quotas for each country are limited by the amount of proven oil reserves (i.e. the more oil reserves a country has, the more oil it can export, according to OPEC rules). Therefore, it is in each OPEC country's interest to overstate their reserves to artificially increase their quota. The fact that Saudis, as well as every other OPEC country, has been overstating their reserves has been an open secret for the past couple decades. In the case of Saudis, it matters more because their reserves are (still) the largest.
Peak oil is already here. Two of the predictions came to pass:
1. Peak discovery, i.e. fewer new oil reserves are discovered than existing ones put in production. Happened in the 70's.
2. Peak production. Despite growing demand, production of existing fields cannot be increased. Happened in 2008.
3. Long tail of falling production and rising prices. We were "saved" from this by the economic downturn. For now. Once world economies start to pick up, oil prices will go through the roof.