The Saudi oil shock is here!
Midwest Voices contributing columnist: Robert Anderson
OPEC Oil Exports Fall 2% as Saudi Shipments Decline
Take note that these are December production figures. So its from a time frame before this Mideast turmoil began.
“OPEC’s oil exports fell 2 percent in December from a month earlier as Saudi Arabia, the world’s largest exporter, reported a decrease of 4.9 percent. Total exports by the Organization of Petroleum Exporting Countries, excluding Algeria and theUnited Arab Emirates, fell by 387,000 barrels a day to 19.4 million barrels a day, the Joint Data Initiative website, which compiles data supplied by governments in an attempt to improve transparency, showed today. Saudi Arabia’s exports fell to 6.05 million barrels a day in December from 6.36 million in November even as Saudi production rose to a two-year high of 8.37 million barrels a day, JODI said.”
December is the start of the northern hemisphere winter and the strongest seasonal demand time frame for oil. So OPEC and the Saudis were dropping output in spite of a strong economic incentive to produce more.
One of 2 things are at play:
1) Matt Simmons, energy investment banker and author of Twilight in the Desert. The Coming Saudi Oil Shock and the World Economy, was right and geologic depletion is starting to bite hard in Saudi Arabia. They can’t pump more. Five giant Saudi oilfields account for over 90% of their output. Their average age is 55 years! Their last major oilfield discovery was 1989. According to Matt Simmons, ‘No one audits Saudi claims. We’re depending on an illusion.’ So with Saudi exports down to only 6 million barrels a day the prolific Saudi oil production potential is finally being disclosed as a fraud. We read it on Wikileaks. We’re seeing it now!
2) Saudi King Abdullah has been quoted as saying they aren’t going to max out oil output for the west. They are going to save some of this precious resource for future generations. Why max out output for a fiat currency to the detriment of reservoir longevity so Americans can drive their gashog SUVs?
With either case, we have an economy disrupting calamity on our oil soaked hands. Oil prices are headed higher. This economy can’t take it. Too bad we didn’t learn anything from the 1970s oil shocks. To bad we listened to those high falutin economists, oil execs and politicians who said we couldn’t afford prudent energy policy, and the free market would take care of things. Yeah, it will. It’ll take very good care of Mideast oil producers, al-qaeda, and major oil company bonus pools.