Sunday, August 21, 2005

All the oil news that's fit to print

The New York Times Magazine has a long piece on oil supplies which mentions peak oil. Two keys things which have been noted here and in many other places in the peak oil community are worth mentioning.

First, the piece mentions that Saudi Arabia is considered the key to raising oil production to meet world demand. It then outlines energy investment banker Matthew Simmons' contention that Saudia Arabia is near or at peak production and will not fulfill its expected role. Simmons provided a detailed analysis of the problem in his recently released book, "Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy." Saudi oil officials, of course, dismiss Simmons' claims. In the Times piece Simmons makes a sensible response, one that he has reiterated several times in the last few months:
"If they want to satisfy people, they should issue field-by-field production reports and reserve data and have it audited,'' he told [the reporter]. ''It would then take anybody less than a week to say, 'Gosh, Matt is totally wrong,' or 'Matt actually might be too optimistic.'''

So, what is the response of the Saudi national oil company? "Either you believe us or you don't." The Saudis have the power to resolve all doubts within a few weeks, but they refuse any field-by-field accounting of their oil and they refuse any external, independent audit. Is this how people who are telling the truth behave?

The second critical issue concerning supply projections is somewhat buried in the article. Again and again, people have pointed out that supply projections provided by the U. S. Energy Information Administration are based not on reasonable, well-documented evidence of future supply, but rather on demand projections. You read that right! The EIA figures out what it believes future demand will be and then simply assumes that the supply will be there to meet it. Recently, even Saudi Arabia warned that it will not be able to live up to the EIA projections for increased supply.

Nearly all of the ground covered in the Times piece is not new. What's new is that the Times is covering it. Is anyone in America's circles of power capable of listening?

1 comment:

Anonymous said...

With the approach of the 150th Anniversary of the Canadian Petroleum Industry this year (1858-2008), I was reminded of an issue that has been on my mind for some time which has not been addressed.

It has to do with Daniel Yergin's best selling book "The Prize". This book is considered to be the most authoritative book on the Petroleum Industry.

Even though I found this book to be very informative and interesting, I was upset by the fact that so little was written in it regarding the Canadian Oil

This is upsetting because for many years, Canada has been one of the biggest exporters of crude oil to the United States over some other countries whose oil industries have been well written about in this book.

The following chart found on this link shows how Canadian oil exports to the U.S. compare to others.