Saturday, February 12, 2011


Video - Men in Black; People

Decline of the Empire | To those in the peak oil business, Sadad al-Husseini's views on Saudi reserves and production are Old News. Many people, including ASPO-USA co-founders Steve Andrews and Randy Udall, interviewed al-Husseini, wrote about al-Husseini, and tried to convince policy-makers to take his well-informed assessment seriously. I often mentioned al-Husseini's views during the time I was writing a weekly column for the ASPO-USA website.

What is news is that American diplomats urged those in the government to do the same thing—take al-Husseini's assessment seriously. Needless to say, that didn't happen. Do you remember this exchange between Will Smith (Edwards) and Tommy Lee Jones (Kay) in Men In Black?
Edwards — Why the big secret? People are smart. They can handle it.

Kay — A person is smart. People are dumb, panicky dangerous animals and you know it. Fifteen hundred years ago everybody knew the Earth was the center of the universe. Five hundred years ago, everybody knew the Earth was flat, and fifteen minutes ago, you knew that humans were alone on this planet. Imagine what you'll know tomorrow.
I laughed outloud the first time I heard that because it was so true! And if people (in groups) are dumb, panicky dangerous animals, what does that make CNBC market shills, Republicans, Democrats and Government Institutions? And aside from Governments in general being dumber than dumb, other terms come to mind as well, words or phrases like corruption, malfeasance, dereliction of duty, dishonesty, criminal negligence and impervious (as in "impervious to reason").
It's all Saudi lies and American stupidity. I covered the OPEC (and Saudi) reserves issues in OPEC Will Never Run Out Of Oil. I recommend you read it if you care about the our oil future.
There was simply no way that big shots in our Government were going to listen to the diplomats sending these now leaked cables, let alone listen to Steve Andrews, Randy Udall—who actually has two close family members in the Senate—or a nobody like Dave Cohen about the very probable correctness of Sadad al-Husseini's analysis.

Now, people like Andrews, Udall and I are mostly out of the peak oil business. Speaking for myself, I simply gave up, and oil certainly wasn't the only insurmountable problem we were facing. Folks like Mother Jones' Kevin Drum have now taken up the peak oil cause. Others who I know, like Tom Whipple or the folks at the The Oil Drum, keep plugging away. Kevin Drum recently alluded to an important article that appeared some years ago in Business Week called Saudi Oil: A Crude Awakening On Supply?

Way back In July, 2008, when the oil price was over $140 per barrel, I wrote an ASPO-USA column called Peak Oil Is A Done Deal, and took this (slightly marked up) graph from that Business Week article.

future Saudi capacityGhawar is the world's biggest oil field, producing about 5 million barrels per day. The data above hint at the beginning of it's inevitable decline in a relatively short time-frame.

The data in this table, which looks plausible based on what we know and knew back in 2008, comes from a leaked internal Saudi document, and purports to show their own estimates of their actual production capacity through 2013. If you knew anything about Saudi oil production this was (and still is) a scary graphic.

And now we find out courtesy of Julian Assange that American diplomats thought the Saudis may be lying about exaggerating their recoverable reserves! This is shocking to say the least. I don't know about you, but I am sitting on the edge of my seat waiting for future revelations about this latest oil scandal. As Kay said in Men In Black, just imagine what we'll know tomorrow.


Uglyblackjohn said...

It costs more to refine Heavy oil than it does Light Sweet.
As they replace what is being exported with Heavy - prices will rise even more.

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