As Oil Approaches $100, is Saudi Arabia Waging Resource Aggression Against the American People and the World Economy?!
Imagine waking up to the following nightmare headline "Canada Interdicts the Head Waters of the Missouri and Mississippi Rivers and All Water Flows From Its Territory Into the Great Lakes." One's reaction would not be passive nor that of our government to such a blatant act of resource aggression. And if you permit a glib interjection, any argumentation that , "well its water on their side of the border" would hold no water whatsoever. The deterioration of relations between the United States and Canada would be immediate, grave, and threatening.
Yet in degree, this is the current status of our resource relationship with the Saudis. Consider the following. On March 5, 2007 in a first page article "Oil Innovations Pump New Life Into Old Wells", the New York Times reported that Nansen G. Saleri, the head of reservoir management at the state owned Saudi Aramco reported that Saudi Arabia's total reserves were almost three times higher than the kingdom's officially published figure of 260 billion barrels. He estimated the kingdom's resources at 716 billion barrels. Mr. Saleri continued that he wouldn't be surprised if ultimate reserves of Saudi Arabia reached a trillion, (1,000,000,000,000) barrels!
This amazing revelation coming from the reservoir manager of Aramco underlines the degree to which the Saudis have perverted the current world oil market. The Saudis are the putative leaders of OPEC and their capabilities and objectives determine OPEC's policy goals. It is clear as the International Energy Agency phrased it in their recent report, "The greater the increase in the call of oil and gas...the more likely it will be that they will seek a higher rent from their exports and to impose higher prices ... by deferring investment and constraining production."
Saudi Arabia, given its enormous reserves, could readily produce significant additional quantities of oil in order to abate the steep run up of oil prices. At these price levels the fact they and OPEC are maintaining the major portion of their production cuts made at the beginning of this year (OPEC's production cut of 1.7 million barrels/day altered by a production increase of only 500,000 barrels/day starting this month) is smoking gun evidence of their extortionist intent. By holding oil off the market, oil which they clearly have in ample supply, they are gouging the world's economies, pricing their product at levels that have no market rationale whatsoever. They are preying on the world's need for oil. It is an act of resource aggression against the world's consumers much as Canada's hypothetical interference with the headwaters of our major river ways would be an act of aggression against the United States.
Please note in my title I referred to waging resource aggression against the American people. The government was not mentioned because in this imbroglio our administration is in effect Saudi Arabia's, as well as OPEC's and the oil patch's greatest ally. In the near seven years of its Presidency, virtually nothing has been done to constrain Saudi Arabia's policies. On the contrary our President and Vice President are so wedded to the oil industry's interests that the enormous increase in oil prices during their tenure can well be ascribed to willful lack of any forceful policies to counter the Saudi extortion. This has manifested itself in many ways.
Let me just cite a few:
- In the near seven years of the Bush presidency, virtually no serious steps have been taken to significantly abate demand for fossil fuels;
- The nations Strategic Petroleum Reserve has been used to underpin escalating prices by continuing purchases even as prices exploded, thereby signaling the governments acceptance and approval of these price levels, and worse by declaring the doubling of the Reserve just as crude oil prices were retreating to $50/bbl earlier this year.
- Neither through "friendly persuasion" nor as a Dutch Uncle, making Saudi Arabia understand its price and production policies are intolerable. This even though we are in essence the guarantors of last resort of Saudi Arabia's independence as evidenced by the some $100 million dollars a day being expended from this nation's treasury on our naval flotilla stationed off the Saudi Coast in the Arabian Gulf- thereby serving as a bulwark against Shia Iran that without our presence would have designs and capabilities against Sunni Saudi Arabia;
- By the fawning obsequiousness our high government officials have shown toward Saudi officialdom, (see "The Price of Oil, OPEC and Our Laws and Now Welcome to Vichy" 5.4.06) or be it Price Bandar's open access to the Oval Office while he was Ambassador in Washington and thereafter.
- Or as exemplified by the symbolic holding of then Price Abdullah's hand at the Crawford Ranch meeting (see "Cheney in Saudi Land, Don't Hold Abdullah's Hand" 01.16.06; and "President Bush's Most Respectful Letter to King Abdullah on Energy Cooperation" 06.22.06 ) whose coziness resulted in an almost immediate upward ratcheting of oil prices.
The administration's oil industry buddies are ecstatic at the windfall the entire oil sector has reaped by the quadrupling of oil prices to levels undreamed of before the advent of this Presidency, while many of the nations citizens are having their household budgets ripped to shreds in order to meet their home heating bills this coming winter. Rarely if ever in the history of the Republic has there been such a divergence between the nation's interests and those of the vested interests that formed this administration.
Raymond J. Learsy is the author of the newly updated Over a Barrel: Breaking Oil's Grip on Our Future
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By the By, Saudi Arabia practically begged us to stay out of Iraq.
Ridiculous -- tons of oil and gas in North American. What about Latin America? Get off this Arab hack crap and please return to reality. Would make for a better world.
Every week I post on Mr. Learsy's column about Peak Oil and every week Huffington Post censors the comment. If these are truly open forums why can't we discuss Peak Oil which is only the biggest economic disaster to face this nation. It's a huge issue and Mr. Learsy does the public a huge disservice in not addressing the issue or explaining why he doesn't believe that it is true.
Bah.
Saudi Arabia's Reserve "Depletion Rates" provide Strong Evidence to Support Total Reserves of 175 Gb with only 65 Gb Remaining
Posted by Khebab on April 20, 2007 - 10:05am
Topic: Supply/Production
Tags: saudi arabia
http://www
Raymond J. Learsy is a former commodities trader and writes for the National Review. I haven't had the chance to review his writings there, but given the slant of that journal, I'm sure that his musings amount to "we're entitled, they're primitives (or Islamofascists). The progress of civilization cannot be ground to a halt just because the resources belong to someone else." We have heard this argument since the McKinley Administration. It's time for something else.
To tax the vehicles who don't meet the 25 mpg is ludicrous. Why should we the consumer have to pay for Bush's idiocy when he mandated only 1.8 mpgs increase in fuel efficiency rather than implement the 45 mpgs like they do in Europe! Not everyone can move. They also have
the engine that gets 100 mpgs and they had that for a very long time. Ask yourself who is behind it all, who is keeping it from the markets? All the supply side is being manipulated, ergo capitalism at its best!
Someone else may have already pointed this out, but I couldn't even read past your first sentence.
Imagine waking up to the following nightmare headline "Canada Interdicts the Head Waters of the Missouri and Mississippi Rivers and All Water Flows From Its Territory Into the Great Lakes."
I'm not really sure what your reaction would be, but mine would essentially be, "Well, when did Canada invade and conquer Minnesota, Montana and Wyoming?" The "head waters" of the Mississippi and Missouri Rivers originate in those three states, NOT in Canadian territory. Further, none of the waters from either river flow into the Great Lakes (that river-system, along with the Ohio-Tennessee system, flows south into the Gulf of Mexico).
Now, if you want to reimagine a headline that makes your point more rational, I might be able to finish your posting. As it currently stands, I can't get past that first sentence, and I'm surprised anyone else was able to.
I offer a short sanity check: For all those who think that gasoline prices are too high, travel to Europe and check there. The much higher gas prices there are beneficial to alternative energy sources.
Here is for all those think that economic forces should determine oil prices, don't complain, prices are defined through the market place.
Here is for those who voted for Bush: How did you not know that Bush and his cronies are enriching themselves more through high oil prices.
For those remaining: The US Dollar has lost 40% of its value compared to the Euro and Yen. The Saudis would be bad business people if they let that go by unanswered.
You can bash Arabs and oil producing nations all you want. That's such "feel good" approach. The reality is the US is to blame. The US allowed it's dollar to devalue severely during this decade. Why should oil be cheap? It's a commodity and inflation drives up the price of commodities like anything else. The American people obviously don't care how weak their dollar is. They don't the care about the ravages of a badly devalued dollar on the American economy. Instead Americans find easier to blame Arabs and everyone else for their own failures. What sheep!
Let's see.. after 9/11, which was carried out by a largely Saudi suicide team, Bush removed all the US troops from Saudi Arabia. He allowed the Saudi Bin Laden to escape to Waziristan. He invaded Iraq and deposed Saddam, an old enemy of Saudi Arabia. Now he threatens Iran, Saudi Arabia's other enemy... and oil has quadrupled in price, making the Saudis, as well as Chavez, Putin, and the Oil Companies VERY very rich.
A complex story, no doubt, of which we hear only fragments.
This flies in the face of the most recent report by the International Energy Agency. Here's a recap of their October report.
Global oil demand remains unchanged at 85.9 mb/d in 2007 (+1.5% over 2006) and 88.0 mb/d in 2008 (+2.4%). Downward OECD revisions in North America and the Pacific offset upward adjustments in the FSU. Economic growth assumptions are trimmed slightly ahead of IMF and OECD assessments of recent financial market volatility.
World oil supply increased by 415 kb/d in September to 85.1 mb/d, as rising output from North America, China and OPEC offset Caspian maintenance. Production through to the year end should be bolstered by higher OPEC supply, the end of seasonal maintenance and ebbing hurricane risks. However, project delays remain a key forecasting risk.
Higher Iraqi output helped lift OPEC crude supply by 245 kb/d in September to 30.7 mb/d, leaving OPEC spare capacity little changed at 2.7 mb/d. OPEC-10 plan to raise supply by 500 kb/d from 1 November. The midpoint of the ‘call on OPEC crude and stock change’ is lowered by 0.4 mb/d in 3Q07 to 31.2 mb/d, but is seen rising to 32.5 mb/d in 4Q.
Global crude refinery throughput is seen falling to a seasonal low of 73.0 mb/d in October, 1.9 mb/d below the August peak as maintenance takes place in the OECD, China, the Middle East and the FSU. However, global crude runs are projected to rebound to 75.5 mb/d by the end of the quarter.
The more expensive oil gets, the more attractive alternatives to it become. They're doing us a favor by encouraging energy diversity.
Also, the Saudis are not our leading oil source.
Mr. Learsy, as always you have my agreement and sympathies. You're right, the Saudis are extorting us. But what can people do?
I'm tired of having the same short-term debate in the public sphere about "getting tough" with the Saudis. The fundamental problem is NOT a short-term one -- it's long-term and systemic, as you note in this sentence:
"In the near seven years of the Bush presidency, virtually no serious steps have been taken to significantly abate demand for fossil fuels."
The Petroleum Mafia has never had better political friends than Bush/Cheney. Still, I think it's only fair to note that America has not had a serious conversation about energy policy since the Carter Presidency. Your general point taken, let's move on.
In other energy news: solar energy stocks have risen thirty percent this month. I expect similar gains for companies which produce high-capacity batteries, manufacturers of bio-fuels, and manufacturers of smaller, more fuel-efficient vehicles.
But those gains will only be sustained if Americans actually decide to INVEST in their ENERGY FUTURE for once. The Federal government will NOT get serious about this issue for at least several years. Note that all three of the "leading" Democratic Party Presidential contenders cannot promise an exit from Iraq until their second term, at least!
People must act. They should take what subsidies exist now, spend some cash or take a home-improvement mortgage, and restructure their lives a bit. Skip the boat or mobile home, use the money for something meaningful.
I got solar power three years ago. All middle-class homeowners who live in the Sun Belt should do the same. That same year I traded my 14 year-old Mercury Tracer (35 MPG) for a Toyota Prius (50 MPG). I upgraded our home to double-pane windows.
Before I bought these big-ticket items, I went for cheaper conservation measures -- living close to work, compact fluorescent lights, Energy Star appliances.
Do it. Show that you care.
1.Slap 50% LUXURY TAX on private use vehicles with less than 25 MPG.
2. Ban large-size SUV sales.
3. Invest in public transport.
4.Expand railway system.
5. Stop the urban sprawl. Build up sustainable communities.
6.Expand hydro power, solar power, wind power.
7. Take two- month equivalent of Iraq war appropriation and fund serious alternative fuel researchers all over the world--Every year.
8.Subsidiz
9. Ban use of incandescent light bulbs.
Then watch Saudis shake in their dishdashas.
Typical American fashion: all talk, no action.
America, wake up and smell the coffee.
The price of oil has gone up steadily over the past decade due to the increased demand.
However, today's prices in US dollars reflect an American dollar that has been drastically devalued in the past year. In fact, in real terms the true price of a barrel of oil is considerably less than nearly $100 US. We are paying the price of an utterly incompetent, self-serving, dishonest leadership. China, Saudi Arabia, Iran, Russia and other countries are preparing to abandon the dollar in favor of a stable currency, perhaps the Euro.
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