Oil supplies declining...demand increasing...oil prices already above $100...food and commodities prices skyrocketing...the global economy unraveling...

~ WikiLeaks cables: Saudi Arabia cannot pump enough oil to keep a lid on prices
~ World oil demand to rise in 2011
~ Brent crude stays above $100

...there can be no economic "recovery" back to business as usual without more abundant cheap oil.

By the way, in the peak energy and climate change report,  I wrote about Sadad al-Husseini's admission (see Wikileaks article below) that Saudi Arabia's oil reserve and production estimates were inflated and that they have reached peak production. It seems that Wikileaks is a bit slow to to release the news...


World oil demand to rise in 2011

Global oil demand rose more strongly than previously thought last year, with the world consuming an extra 2.8m barrels a day, 3.3 per cent more than in 2009, according to the International Energy Agency.

The latest oil market report, released by the IEA on Thursday, reinforced the picture of a powerful recovery in demand, forecasting a further increase of 1.5m b/d in 2011. For the third month in a row, earlier estimates were revised up, with the IEA adding another 120,000 b/d to its figures for total oil product demand in 2010 and 2011.


complete articles:

World oil demand to rise in 2011

02.10.2011

http://www.irishtimes.com/newspaper/breaking/2011/0210/breaking14.html


Rise in oil demand beats expectations

02.10.2011

http://www.ft.com/cms/s/2c4f1bc8-353e-11e0-aa6c-00144feabdc0,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F2c4f1bc8-353e-11e0-aa6c-00144feabdc0.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fintl%2Fworld



Brent crude stays above $100

...possible or ongoing tension especially in the Middle East will cause oil prices to escalate. Investors remained concerned that the unrest in Tunisia and Egypt could ignite similar protests in bigger oil producers such as Libya - or even Saudi Arabia.

02.10.2011

http://www.irishtimes.com/newspaper/breaking/2011/0210/breaking20.html



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%


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.

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.

"Al-Husseini is no doomsday theorist," the cable concludes. "His pedigree, experience and outlook demand that his predictions be thoughtfully considered."

He told the Americans plainly that the Saudis will not be able to ride to the rescue: the Saudi oil industry was overstating its recoverable reserves so as to spur foreign investment, he alleged, at the same time as it was badly underestimating the time needed for bringing new oil on tap.

No US government official has come close to saying this in public. It is a conclusion of profound significance for the world economy, if correct.

The June 2008 cable reports 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."


complete article:

02.08.2011

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

 


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    Oil Prices


    In mid-2004, oil prices increased from the range of $20 - $40 per barrel to $60 - $80+ per barrel. The current global economic crisis was triggered in part by the oil price shock starting in 2007 and culminating in the summer of 2008. When prices increased from around $80 per barrel to $141 per barrel by the summer of 2008. The global economy crashed within months in the autumn of 2008. This economic crisis will likely accelerate and become more volatile once oil prices exceed around $85 per barrel for an extended time. Demand destruction for oil may be somewhere above $80 per barrel and below $141 per barrel. Economic recovery (i.e., business as usual) will likely exacerbate the global recession by driving up oil prices.

    Author

    Tariel Mórrígan earned his B.A. in Physics from the University of California at Santa Barbara. He received his Master in Environmental Science and Management (MESM) from the Donald Bren School of Environmental Science and Management at UC Santa Barbara, where he specialized in climate change, conservation, and political economics. Mórrígan is currently the principal research associate of Global Climate Change, Human Security & Democracy (GCCHSD) and a member of its Global Academic Board. His most recent publication is Peak Energy, Climate Change, and the Collapse of Global Civilization: The Current Peak Oil Crisis.

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