The Saudi oil shock is here part II

Midwest Voices contributing columnist: Robert Anderson

The mainstream media is missing it again. Everyone is touting Mideast unrest and export disruptions in Libya for this current oil spiral, that’s probably only begun its blast off mode. But as I pointed out in Saudi Oil Shock Part I, OPEC exports dropped 387,000 bls/day in December BEFOREAlgeria, Egypt or any of this Mideast unrest even started.Its 2008 all over again. But you’d think we would have learned something from this energy dry hole we’ve descended into. I’m reading press reports from nearly everywhere that reassures them public that OPEC has spare production capacity of ‘4.65 million barrels a day, or about triple Libya’s production.’ Over ninety percent of this is supposed to be in Saudi Arabia.Saudi Arabia is a closed society. No one audits or verifies thier claims. If you are an objective journalist you don’t get a visa to enter. If you speak out against that regime, it gets much worse.

What’s becoming increasingly apparent- not just through Wikileaks- but through actual oil production stats is the Saudis aren’t credible with their claims. Aren’t journalists supposed to verify such important contentions that are pivotal to the health of the entire western economy? Oh, that’s right. They can’t. Only the Saudis and ARAMCO (the Saudi national oil company) know. OK. If you can’t verify at least quit parroting the disinformation.

Its becoming increasingly evident that the Saudis can’t produce more. There’s no spare capacity. For decades, they’ve claimed they can produce 15 ,20, 25 million barrels/day. Our Department of Energy EIA division would always regurgitate these false claims. They’re totally bogus. We’ve been duped by Mideast oil producers and major oil. Can you believe it? You’d better. Too bad its too late to rectify.

To support this scary contention let’s go back to 2008, the last time oil prices moved up past $100 / barrel. We got the same false reassurances from the Saudis that there’s no problem and plenty of spare capacity. In truth, it was their 1 million barrel / day drop in exports 2005 – 2007 that helped spawn the crisis. Of course, our crisis is their windfall. And we now know via Wikileaks that a Saudi windfall is also a al-Qaeda and Taliban windfall.

Now that 2008 is behind us, lets go back and see what actually happened with Saudi output since its déjà vu all over again. Saudi Arabia oil output peaked in 2005, and although there’s been a few fits and starts, the trend is downward.

Saudi oil output and projections

And that Bloomberg report that came out Saturday which indicated Saudi December exports (not output) dropped down to 6 million bls / day lends loads of credibility to the future downslope projections on the chart above.

If you want to read more on the source of this chart, including peer review assessmernts of this dire Saudi oil depletion situation, here’s the link:

Saudi Arabia’s Crude Oil Production Peaked in 2005

Batten down the hatches. We’ve been duped. And the overstatement of oil production potential was willfull, deliberate and duplicitous.

Read more:


About OilisNotWell

I'm a proud, happy 4th generation Kansas Citian. I've been employed in downstream petroleum and biofuels for over 30 years. After eight years as a Refinery Rep and Midcontinent Marketing Manager at Wichita-based Koch Refining, I subsequently set up shop at the KC Board of Trade just off the Country Club Plaza. Back in the old pre-internet days, I actually launched the first faxed newsletter on oil markets in the world. It was highly regarded with 350 subscribers who were oil distributors, traders and oil industry executives. Subscription cost was $760/ year. I also worked for the Hermes Group which was the first Russian company to buy a seat on a U.S. commodity exchange (NYMEX). I wrote their international business expansion plan and traveled extensively throughout Russia, Ukraine and Eastern Europe. I've also literally worked for dozens of ethanol and biodiesel firms in the U.S. I enjoy spending our winters in Uruguay and Argentina when I can swing it.

Posted on February 22, 2011, in Uncategorized. Bookmark the permalink. Leave a comment.

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