The invasion of Iraq cost the world $6 TRILLION in higher energy prices alone

[robertpaulsen]

The future price of oil? Pick a number
June 21, 2008

The invasion of Iraq cost the world $6 trillion in higher energy prices alone. Geoffrey Lean reports.


Mamdouh Salameh believes the oil price would now be no more than $US40 a barrel, less than a third of the current price, if not for the Iraq war.

An oil economist adviser to the World Bank and the UN Industrial Development Organisation, Dr Salameh says that among the world's biggest oil producers, Iraq alone has enough reserves to increase flow substantially. Production in eight others - the United States, Canada, Iran, Indonesia, Russia, Britain, Norway and Mexico - has peaked, he says, while China and Saudia Arabia, the remaining two, are nearing the point of decline. Before the war, Saddam Hussein's regime pumped 3.5 million barrels of oil a day, but this has fallen to just 2 million barrels.

Salameh told a British parliamentary committee last month that Iraq had offered the US a deal, three years before the war, that would have opened 10 new giant oil fields on "generous" terms, in return for lifting sanctions. "This would certainly have prevented the steep rise of the oil price," he said. "But the US had a different idea. It planned to occupy Iraq and annex its oil."

snip

So what will happen next?

At nearly 86 million barrels a day, global oil production has stagnated since 2005, despite soaring demand, suggesting production already has reached the geological limit of "peak oil".

http://www.smh.com.au/news/world/the-future-price-of-oil-pick-a-number/2008/06/20/1213770924692.html

[robertpaulsen]

1. Skrebowski, quoted in the article above, has done lots of research on this.

And some serious analysts have also made the mental journey from dissenters to peak-oil prophets.

"I've been on that journey," says Chris Skrebowski, who spent half his career in the oil industry and now edits the UK oil industry's publication of record, Petroleum Review. He admits to having been dismissive of the idea that the world's wells were running dry. It was a visit from Campbell in 1996 that made him change his mind. "I didn't quite believe him, but I didn't think he was the average nutter," he says.

Skrebowski began to take a look at the issue himself. The numbers told a clear story. "You can just about struggle through to 2011, if everything goes to plan - which, of course, it won't - but after that, the numbers don't add up. And that's taking a reasonably conservative rate of decline. If you wind it up to a 5 or 6 percent annual decline, then you are at this peak or plateau now."

http://www.int.iol.co.za/index.php?set_id=1&click_id=143&art_id=vn20080615092652402C618751

[leveymg]

2. Oil prices are about perceived risk-value, not supply and demand.

It's more the constant threat of supply interruptions due to wars and political instability that are behind the spike in futures prices, not so much objective shortages.