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Purpose: to function as a clearinghouse of useful information, as well as an incubator of provocative and innovative ideas. I have done this by trying to break down some of the complexities associated with the overlapping issues of energy, culture, politics, and economics. I cover a range of political, social, and scientific perspectives here. Although global in focus, there is a slight regional slant toward the western American state of California. The physical layout of this site is basically divided into two vertical halves: the left-hand side, and the right-hand side.

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Across the Bottom (information section, mostly reference material on energy consumption):
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Friday, February 18, 2011

WikiLeaks cables: Saudi Arabia cannot pump enough oil to keep a lid on prices (Guardian UK)



To students in my University of Redlands course, SOAN 265-01 ("The Political-Economy of Energy Resources--Oil in the Global Economy"):  This recent information from Wikileaks, if true, bears out what many in the Peak Oil community have surmised / suspected / concluded from long ago.  Saudi Arabia, in the early years of the 21st century, and as the world's "swing producer," was very close to or at its inflection point in oil extraction.  Or, as the late Matt Simmons liked to put it:  "Once Saudi Arabia has peaked, then the world has effectively peaked."   This article points to a clear Saudi peak.  Furthermore, the US Gov't, operating in conjunction with several other governments and organizations, has actively tried to keep this information away from close public scrutiny for the past several years--presumably for fear of what it could do to markets.  Well, guess what?!   The cat is now out of the bag.  Only time will tell how the international community ultimately responds to all of this.  


While much of the world has been focused on events in Egypt recently (also important, to be sure), we should keep an eye on how the circulation this information might affect global energy markets, as well as political and economic policy-making (forming additional feedback loops to global energy markets, etc.).    


Special Note on Oil Price monitoring: At the very bottom of this web page, you can also find real-time prices for two different baskets / markets for oil--"Brent" (from the North Sea, off the coast of northern Europe), and "WTI" (West Texas Intermediate, from the Gulf Coast of the USA; and also the benchmark oil price used on NYMEX).  These are permanent apps located on this site, and they are constantly being updated.  

The link to the Guardian article is here: 


Please click on the above link, and read this article, and be prepared to discuss its possible implications in class.  Those interested in further reading on this subject may wish to check out the Matt Simmons book, Twilight in the Desert.  

Blaine D. Pope

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FULL TEXT OF ARTICLE HERE ALSO (formatting may vary slightly from original)

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WikiLeaks cables: Saudi Arabia cannot pump enough oil to keep a lid on prices



US diplomat convinced by Saudi expert that reserves of world's biggest oil exporter have been overstated by nearly 40%

WikiLeaks cables suggest the amount of oil that can be retrieved has been overestimated.

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."

END OF ARTICLE

http://www.guardian.co.uk/business/2011/feb/08/saudi-oil-reserves-overstated-wikileaks


 Those interested in further reading on this subject may wish to check out the Matt Simmons book, Twilight in the Desert.





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Why design a site on "Culture and the Political-Economy of Energy Resources?"

Overview: A New Way for a New Era

The overall purpose of this site is to function as a clearinghouse of useful information, as well as an incubator of provocative and innovative ideas. Emphasis will be on the social implications of our heavy reliance on petroleum and related products. All of this is being discussed—either implicitly or explicitly—in the overarching / overlapping context(s) of Peak Oil and Climate Change.

The site contains a collection of useful links, original articles, re-posts from other distinguished organizations, individual writers and bloggers.

I hope that you will find this site both useful and enjoyable (and I welcome your feedback). It’s not easy to make something so serious so fun. This comes about as a result of reviewing a lot of material in the past which, although very informative, could also be quite depressing and downright discouraging at times. So, I’ve decided to take a slightly different path, in bringing you information that you will possibly find important or helpful.

Finally, know that you are not alone in all of this—far from it. These are issues we are all facing, in one way or another. So let’s find our courage and face them together.


Aerial View of Downtown Los Angeles. This city typifies the triumph of the petroleum-based industrial system of the 20th century.

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Blaine Pope

"In the beginning is energy, all else flows therefrom." -- Cheikh Anta Diop (1974)

"In the beginning is energy, all else flows therefrom." -- Cheikh Anta Diop (1974)

About Me

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A college professor and independent management consultant, focusing on general program design and administration, sustainable development, and the political-economy of energy and the environment. Faculty member at Goddard College (Plainfield, VT). Previously worked at the following academic institutions: Sociology and Anthropology Department, University of Redlands (Redlands, CA); Media and Social Change Program, jointly taught between the School of Psychology at Fielding Graduate University (Santa Barbara, CA) and the University of California at Los Angeles Extension (UCLAx) Program; Research Assistant Professor, Center for Sustainable Cities at the University of Southern California (Los Angeles, CA); Global Studies Program, University of California at Santa Barbara (UCSB); MPA Program in Environmental Science and Policy, The Earth Institute and the School of International and Public Affairs (SIPA) at Columbia University (New York, NY); and, Swahili Language Program, Council on African Studies, Yale University (New Haven, CT). -- Additional working experience in emergency relief and development in 10 countries in Africa and the Middle East.

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