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June 02, 2004

$2/gal- Just a Taste of Coming Oil Crash

Read this article and be afraid-- and then get angry at the lies being told to the public.

The bottom line of the article is that global energy use is skyrocketing while little new oil is being discovered:

new sources of oil are becoming increasingly difficult to find and more expensive to develop. Global discovery peaked in 1964 and has declined ever since. In 2000, there were 16 discoveries of oil "mega-fields." In 2001, we found eight, and in 2002 only three such discoveries were made. Today, we consume about six barrels of oil for every one new barrel discovered.
And the numbers you hear out there on available oil are probably lies. The Saudis are lying to us about how much oil they have. The Big Oil companies are lying. And the government is lying.

Take the Saudis:

A second major problem is the fact that the Saudis will not allow any independent third-party observer to examine their reserves, operations and books. It's off-limits and "totally opaque"... Analysts can't even know for sure exactly how much oil the Saudis produce each day.

During the 80s, estimates of OPEC's total reserves magically jumped from 353 to 643 billion barrels, despite the lack of new oil fields or significant improvements in drilling technologies. The Saudis themselves jacked up their stated reserves from 170 to 257 billion barrels.

Matt Simmons has personally pored over 40 years' worth of Saudi petroleum reservoir engineering reports. "I do data analysis," Simmons says. "And the data analysis is getting increasingly scary. We have clearly grossly overstated proved reserves."

As for the big oil companies, when Royal Dutch Shell admitted four months ago that it had been lying to shareholders about how much oil they owned, it was treated as a financial scandal.

But the Shell lies about having more oil than they actually do could just be the tip of the iceberg:

"Most of us can't believe Shell is the only one," says [one analyst]. "Traditionally, they've been very good and conservative in their accounting practices. A bunch of us suspect they are probably just the first to come clean."
What this means is that remaining oil will become increasingly valuable. But it also means the politics of cheap oil will inevitably end. The military costs of protecting oil production, as terrorists increasingly target remaining sites, will just increase the real costs.

We are unlikely to get a real debate on the need to increase energy efficiency across the economy, expand mass transit, and begin reshaping our communities to decrease energy use over the coming decades.

But we desperately need it.

Posted by Nathan at June 2, 2004 05:34 PM