Its April 1. We’re the fools.
KC Star Midwest Voices April 1, 2011
by Robert Anderson
Over the last two months we’ve seen turmoil erupt in several Mideast autocratic regimes: Algeria, Egypt, Yemen, Bahrain and Syria. But where has NATO and the Obama administration chosen to intercede? Why the big oil exporter, Libya, of course. We’ve got no apparent problems in sub-Saharan Africa or a nuclear North Korea, but if there’s a oil producer with disgruntled masses, its ‘green means go’ on no fly zones and cruise missile attacks. Just like in Iraq, where we moved in and immediately started building a $1 billion Baghdad fortress embassy, permanent airstrips and military bases, oil is fueling the western interventions.
We probably don’t need bases in Libya, due to an already extensive network of ‘em in the Mediterranean, but we sure as heck need that oil!
Let’s revisit six weeks ago when the Libyan disruptions started. U.S. oil futures markets were hovering around $95/ barrel.
The Saudi/U.S. PR machines shifted into action. The contention was made that OPEC has 4.65 million barrels a day of spare capacity. The Saudis were supposed to have over 90% of this.
‘Don’t worry. Be happy! The Saudis have it covered. There’s no such thing as geologic depletion in Saudi Arabia. They have more than 4 million barrels a day of spare capacity. All they probably need to do is flip some oil spigot switch. We really don’t know how it works there.’
‘But didn’t they tell us this in 2008 when oil prices zoomed up past $140 / barrel? They said they had lots of spare capacity but additional output failed to flow. In fact, Saudi oil output actually dropped by 1 million barrels a day from 2004 to 2008. That was a big cause of the price escalation.’
‘No, don’t look back to that. The Saudis are our allies. Even our own U.S. Department of Energy EIA (Energy Information Administration) has confirmed this Saudi spare capacity figure.’
‘But where does the EIA get this info?’
‘The Saudis tell ‘em’
‘But surely there’s some type of external independent verification. Journalist check this out, right?
‘Nope. The Saudis are a closed society. They don’t like Westerners snooping around. They’re our allies. We believe ‘em.’
‘So here we are 6 weeks later with North Sea Brent prices over $117 / barrel. The Libyan situation has spiraled down into a stalemate. We’ve lost 1 million barrels a /day of sweet crude capacity from there. It’s a good thing the Saudis have cranked up their output and delivered some of this +4 million barrels/ day of spare capacity, right?’
‘Well not exactly. Its actually about like what happened in 2008. March OPEC figures are out. The Saudis have increased output by about 300,000 bls / day since Feburary. They’re up to 9 million! They can still take it up past 12! But unfortunately, their internal consumption is way up so their net exports have actually dropped since the start of the year. But the good news is they’re making a ton of money. With these oil prices over $100/ barrel OPEC will make over $1 trillion dollars of annual revenues this year. That’s going to be a record- even higher than their 2008! Wow, they sure like post-peak oil economics! The Saudis will have plenty of money now to take capacity up to 15 or 20 million barrels a day! There’s no such thing as geologic depletion. There aren’t any limits to economic growth. The economists have told us these high prices are going to bring on more energy supply! Keep driving those SUVs, Americans! And keep shipping your military might and societal wealth over to us. There’s no such thing as peak oil. Global oil reserves are extensive. The major oil companies and the Saudis have you covered.
‘Its April Fools Day today, isn’t it?’