The oil era reaches its desperate endgame

[T.Ruth2power]

The oil era reaches its desperate endgame

http://www.trendlines.ca/hubbert%201974%20urr2Tb%20peak1995%20natgeographic%20Oil,%20the%20Dwindling%20Treasuregraph400.jpg

Monday, 16 June 2008

Saudi Arabia appears ready to cave in to demands from Western governments for the kingdom to make special efforts to increase its production of oil. Analysts forecast that the world's largest producer will shortly raise its output by half a million barrels a day. The United Nations Secretary-General, Ban Ki-Moon, confirmed this impression at the weekend after emerging from talks with the Saudi monarch, King Abdullah.

But there are also indications that the Saudis will make their own counter-demands when oil producers and consumers meet at an emergency energy summit next weekend. One such requirement might be for Western governments to play their part in adapting to the higher prices by relaxing their domestic taxes on fuel. This represents a considerable shift from Saudi Arabia. Up until now, the country's rulers have blamed the soaring oil price on speculation in Western financial markets – a phenomenon driven, they say, by a false perception of a shortage of global capacity. There is little doubt that speculation is playing some part in pushing up the price of oil to an unprecedented $140 a barrel. Yet the fact that inventories have been at normal levels suggests this is not the driving force behind price rises.

Growing demand is the far more likely culprit. It is often asserted that Saudis still have vast oil reserves. But there is no independently verified proof of this. We have no choice but to rely on what they choose to tell us. If the kingdom really thinks the present price is the result of a speculative bubble driven by misinformation about its reserves, it ought to open up its oilfields to independent inspection to dispel the doubts. Of course it will not do this. But, for now at least, it looks ready to increase production.

An increase in Saudi oil pumping might well have the desired effect of bringing down the price somewhat. But what if it does not fall low enough to ease the pain of the world economy? How long before our political leaders return to Saudi and its Opec allies to plead for more? And what will be the political price extracted for this? What we are seeing in this desperate horse-trading is the endgame of the oil age. Even if we have not yet reached the inevitable moment of "peak oil", when production begins its inexorable decline, it is abundantly clear that the age of cheap fuel is over. The economic leaps forward by China and India represent a step-change in energy demand. The rate of discovery of new oilfields has failed to keep pace with the speed at which nations are joining the global economy. That means the price of oil will remain considerably above the level to which we have historically been accustomed.

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http://www.independent.co.uk/opinion/leading-articles/leading-article-the-oil-era-reaches-its-desperate-endgame-847898.html

[Trajan]

1. Fuck that ....

Let's see: The Saudi's 'Boys' in Washington do their absolute BEST to increase the price of a barrel of oil, and the Oil Industry's Saudi 'friends' now carry water for the RIGHT WING to reduce taxes ....

Go figure ....