OPEC oil output slips lower, Saudi Arabia misses target

Saudi Arabia is in the business of charity. To expect them to increase production to bring down the price of oil is stupidity. However the Kings all over the world know that their days are numbered. I personally feel that the Saudi Kings will be overthrown within 6 months to 2 years. This is the only reason for them to incease production. Cash the chips before the casino refuses to pay.

Sorry friends. The first sentence should have read “Saudi Arabia is not in the business of charity”.

“US diplomat convinced by Saudi expert that reserves of world’s biggest oil exporter have been overstated by nearly 40 percent…!

The US fears that Saudi Arabia 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.”

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Saudi Arabia HAVE NOT the ability to bridge the oil shortage gap and world oil demand is now higher than producers can muster up, period.

Yahoo! has their short story on the Wikileaks about oil here:

http://news.yahoo.com/s/yblog_thelookout/20110209/ts_yblog_thelookout/wikileaks-saudis-running-out-of-oil

The article is just a short summary . . . . but the reader comments are amazing. The ignorance and conspiracy theories are frightening. It is no wonder we can’t act logically on big issues like this . . . those people are voters. Apparently, the whole story is a sham, the Saudis leaked that story to get higher prices, we just need to drill more and all our problems will be solved, and it will be great when that place runs out of oil because those bad saudis will all starve. Wow . . . the ignorance, conspiracy theories, and hatred are so sad and depressing.

According to the Brits Financial times:

“Opec, the oil producers’ cartel, will reap $1,000bn in export revenues this year for the first time if crude prices remain above $100 a barrel, according to the International Energy Agency.

The cartel has been one of the main beneficiaries of high oil prices, which have soared in recent weeks amid the civil uprisings in the Middle East and north Africa.

“It would be the first time in the history of Opec that oil revenues have reached a trillion dollars. It’s mainly because of higher prices and higher production,” Mr Birol said in a Financial Times interview. “However, Saudi Arabia has made substantial efforts to calm down the oil markets by increasing production and hinder prices from going higher.”

The estimate, based on total Opec production including natural gas liquids, does not take inflation into account. “Depending on your choice of specific inflation adjustment, the 2008 number may be slightly higher [in real terms],” Mr Birol said.

Many of Opec’s biggest producers are using the price gains to increase public spending, partly to guard against popular unrest. Saudi Arabia announced a multiyear spending package of $129bn and is expected to spend about $35bn in 2011.”

There is no conspiracy regarding Peak Oil. It is geological science, not a hypothesis, not really a theory. It is a proven fact.

A common misconception about peak oil is that it is a supply or reserve issue. It’s not. Let’s assume for the sake of argument that no reserves are overstated by anyone. For now, we will let those who have created the derivatives and loaned the money on the alleged overstatements of reserves worry about that.

We will say that we have only used half of the recoverable oil in the world. That’s great news! The glass is half full. Except, the oil is a little thicker at the bottom, not as nice as the good stuff at the top that was easy to get. Put dirty oil in a glass container and watch how it settles if you need a visual.

As a result, the oil flows more slowly from the ground. It’s harder to refine. We actually have to burn a considerable amount of energy just to get to some of this oil. If you want another visual, take a look at U.S. oil production. It peaked around 1970-71. We probably have four to five times as many drills in the ground today. Drilling more does no good.

From the study of individual oil wells to the production of entire countries, we know that there is a peak to production. The International Energy Agency, Boone Pickens, and many other experts agree that the world has already reached peak production. We will never pull more than 85,000,000 barrels a day out of the ground on any consistent basis.

The volatility in prices that we have seen since the peak which hit between 2006 and 2008 is evidence that we are on the rocky plateau at the top. Once we begin the inevitable decline, we can expect a 2% to 4% decline in production every year.

I just read an article on MSNBC the other week that said world demand was going to reach 88,000,000 barrels a day this year. Somebody is already going to come up a few million barrels a day short, and it will probably be the people with the least amount of money to bid. Didn’t we ourselves recently lose the bid to the Chinese on the futures to the 2,000,000 barrels a day we get from the Canadian Tar Sands? There’s 10% of our daily consumption right there that we will have to pay more for somewhere else.

Wait until the demand is 90,000,000+ barrels a day, and we can’t even produce 80,000,000. Of course, that’s assuming that the economy is able to keep getting up each time we bounce of the ceiling of high oil prices.

Wake up. This is why it was so important to go to Irag. This is the reason we print money to send our soldiers into countries rich in natural resources. It isn’t a matter of greed. It is the simple fact that our American way of life as we know it is impossible without a cheap energy supply. We have never known anything else, and we have planned for nothing else.

If the world is at peak production and the Saudi Arabia sits on 20% of the world’s oil, it only follows that the Ghawar has peaked. The Saudi’s are simply struggling to get the oil out of their aging fields.