WikiLeaks peak oil bombshell: Saudi Arabian reserves overstated by 40%, global production plateau immiment

The US fears that Saudi Arabia, the world’s largest crude oil exporter, may not have enough reserves to prevent oil prices escalating, confidential cables from its embassy in Riyadh show.

The cables, released by WikiLeaks, urge Washington to take seriously a warning from a senior Saudi government oil executive that the kingdom’s crude oil reserves may have been overstated by as much as 300bn barrels – nearly 40%.

That we are close to a peak in global oil production should not be a surprise to anyone (see World’s top energy economist warns peak oil threatens recovery, urges immediate action: “We have to leave oil before oil leaves us” and German military study warns of peak oil crisis and Peak oil production coming sooner than expected).

The bombshell is that the U.S. Embassy in Riyadh understands this and that it “now questions how much the Saudis can now substantively influence the crude markets over the long term.”  Who persuaded them of this is equally remarkable — Sadad al-Husseini, “a geologist and former head of exploration at the Saudi oil monopoly Aramco,” who says he isn’t in the peak oil camp but sounds on awful lot like those of us who are.

Consider the first cable, from December 2007:

On November 20, 2007, CG and Econoff met with Dr. Sadad al-Husseini, former Executive Vice President for Exploration and Production at Saudi Aramco. Al-Husseini, who maintains close ties to Aramco executives, believes that the Saudi oil company has oversold its ability to increase production and will be unable to reach the stated goal of 12.5 million b/d of sustainable capacity by 2009. While stating that he does not subscribe to the theory of “peak oil,” the former Aramco board member does believe that a global output plateau will be reached in the next 5 to 10 years and will last some 15 years, until world oil production begins to decline. Additionally, al-Husseini expressed the view that the recent surge in oil prices reflects the underlying reality that global demand has met supply, and is not due to artificial market distortions.

Triple wow.

First off, the guy who was in charge of exploration at Sauid Aramco says they have oversold their sustainable peak capacity.  Second, while he said he doesn’t believe in peak oil, and he lays out a peak oil scenario.  Third, he believes it wasn’t speculators but market realities that drove up prices.

Here are more details on his underlying rationale:

First, it is possible that Saudi reserves are not as bountiful as sometimes described and the timeline for their production not as unrestrained as Aramco executives and energy optimists would like to portray. In a December 1 presentation at an Aramco Drilling Symposium, Abdallah al-Saif, current Aramco Senior Vice President for Exploration and Production, reported that Aramco has 716 billion barrels (bbls) of total reserves, of which 51 percent are recoverable. He then offered the promising forecast — based on historical trends — that in 20 years, Aramco will have over 900 billion barrels of total reserves, and future technology will allow for 70 percent recovery.

4. (C) Al-Husseini disagrees with this analysis, as he believes that Aramco’s reserves are overstated by as much as 300 billion bbls of “speculative resources.” He instead focuses on original proven reserves, oil that has already been produced or which is available for exploitation based on current technology. All parties estimate this amount to be approximately 360 billion bbls. In al-Husseini’s view, once 50 percent depletion of original proven reserves has been reached and the 180 billion bbls threshold crossed, a slow but steady output decline will ensue and no amount of effort will be able to stop it. By al-Husseini’s calculations, approximately 116 billion barrels of oil have been produced by Saudi Arabia, meaning only 64 billion barrels remain before reaching this crucial point of inflection. At 12 million b/d production, this inflection point will arrive in 14 years. Thus, while Aramco will likely be able to surpass 12 million b/d in the next decade, soon after reaching that threshold the company will have to expend maximum effort to simply fend off impending output declines. Al-Husseini believes that what will result is a plateau in total output that will last approximately 15 years, followed by decreasing output.

Of course, many people believe that the peak will come somewhat sooner, but whether we are peaking now or in the decade matters little to our urgent need to get off of oil if we are to avert severe economic dislocation.

The supply and demand trends are inexorable:


7. (C) Considering the rapidly growing global demand for energy – led by China, India and internal growth in oil-exporting countries – and in light of the above mentioned constraints on expanding current capacity, al-Husseini believes that the recent oil price increases are not market distortions but instead reflect the underlying reality that demand has met supply (global energy supply having remained relatively stagnant over the past years at approximately 85 million barrels/day). He estimates that the current floor price of oil, removing all geopolitical instability and financial speculation, is approximately 70 – 75 USD/barrel. Due to the longer-term constraints on expanding global output, al-Husseini judges that demand will continue to outpace supply and that for every million b/d shortfall that exists between demand and supply, the floor price of oil will increase 12 USD. Al-Husseini added that new oil discoveries are insufficient relative to the decline of the super-fields, such as Ghawar, that have long been the lynchpin of the global market…..

He stated that the IEA’s expectation that Saudi Arabia and the Middle East will lead the market in reaching global output levels of over 100 million barrels/day is unrealistic, and it is incumbent upon political leaders to begin understanding and preparing for this “inconvenient truth.”

Ah, I would love to have been in the room when al-Husseini used that phrase.

I will add that I have talked to other leading experts on the international oil market and they are exceedingly dubious that we can get to 100 million barrels a day.  Indeed, some think going much past 90 million barrels a day would be difficult.

Al-Husseini was clear to add that he does not view himself as part of the “peak oil camp,” and does not agree with analysts such as Matthew Simmons. He considers himself optimistic about the future of energy, but pragmatic with regards to what resources are available and what level of production is possible. While he fundamentally contradicts the Aramco company line, al-Husseini is no doomsday theorist. His pedigree, experience and outlook demand that his predictions be thoughtfully considered.

Somehow I doubt the Bush administration thoughtfully considered any of this.

The Guardian notes that “seven months later, the US embassy in Riyadh went further in two more cables“:

Our mission now questions how much the Saudis can now substantively influence the crude markets over the long term. Clearly they can drive prices up, but we question whether they any longer have the power to drive prices down for a prolonged period.

The consequences of the multi-decade effort by conservatives to block a sensible U.S. energy policy are nigh.

Note:  The Guardian also writes:

A fourth cable, in October 2009, claimed that escalating electricity demand by Saudi Arabia may further constrain Saudi oil exports. “Demand [for electricity] is expected to grow 10% a year over the next decade as a result of population and economic growth. As a result it will need to double its generation capacity to 68,000MW in 2018,” it said.

But I don’t see that quote in that cable.

UPDATE:  Oil Drum has supporting analysis here, with this great figure:

Exports, in green, are down because Saudi Arabia is consuming more and more of its own oil, so there is less available for others

64 Responses to WikiLeaks peak oil bombshell: Saudi Arabian reserves overstated by 40%, global production plateau immiment

  1. Rob Honeycutt says:

    Fasten your seat belts ladies and gentlemen. We are expecting to encounter some turbulence ahead.

  2. BR says:

    The problem I’d like to hear folks here address is that reports such as the 2005 Hirsch report indicate that we’d need at least 20 years advance notice to adapt to a post-peak energy situation. At this point we have maybe 5 years.

    As much as I support and hope for a transition to renewables, I have serious doubts that it can be done at any reasonable scale in the time we have. More likely we need to rapidly downscale our economy and our lifestyle, and use renewables to power a few remaining essentials.

  3. Wit's End says:

    “…whether we are peaking now or in the decade matters little to our urgent need to get off of oil if we are to avert severe economic dislocation.”

    I would just add that, since industrial agriculture is wholly dependent upon petroleum – for essential fertilizers, pesticides, plowing, harvesting, and transport – a good deal more than economic location is imminent.

    We should stop polluting and let the air clear, and then rapidly transition to local, organic gardening before everything is dead, including our friendly pollinators, the bees.

    I think a large-scale effort to construct energy-efficient greenhouses and composting centers that can withstand hurricanes and other extreme weather would also be an excellent undertaking.

  4. Wit's End says:

    BR, I think you are correct. The need to downscale energy consumption (for a host of reasons) is what is so unpalatable to deniers, and the reluctance on the part of environmental and climate activists to plainly state the obvious – that we should reserve burning fuel for only the most essential purposes – undermines their credibility and makes deniers understandably suspicious.

  5. Prokaryotes says:

    The propaganda driven by saudi arabia’s oil interest though for exampel their fox ownership, resembles a threat. Because they prevent the US from preparing for the time when there is no more fossil energy at an acceptable rate. Ofc you can keep stocking up the 600 billion on annual oil subsidies worldwide to further accelerate this economic death trap.

    And natural gas or liquid natural gas is no alternative, because it is unreliable, highly explosive, expensive and contaminates ground and drinking waters. Natural gas exploration releases uranium in shale formations – it is a high potential health threat.

  6. Our oil powered economy will not survive.
    I’m hoping there will be something to take its place, but have not seen anything proposed that would maintain civilization as we know it.

  7. Robert says:

    The sooner it runs out the better. Why are people alarmed at the prospect of peak oil when clearly it has to peak some time and the later that time comes, the more dire the consequences?

    Anyone who has followed the peak oil / climate change saga for a while will have come to the conclusion that the world will not address either issue until they get to a critical stage, and unfortunately we have a way to run on oil before that happens. There are huge dirty unconventional sources, coal to liquids, the untapped arctic, unexplored areas in Siberia, gas to liquids, improved vehicle efficiency and so on. Oil will not become super-critical until there is insufficent to keep agriculture running and we can no longer produce food in the industrial quantities we need.

  8. Rod says:

    Ahh…amongst all the other crushing issues like the global economic depression that we’re in the early stages of and the global food crisis that’s here right now too (not in some “due in 2050” halfwit politicians future scenario) we also have good old Peak Oil. The downhill slide has begun and in reality began years ago when the peak was reached. The dear old Saudis have said for years they can ramp up production, but what that means in reality is that they’re just pumping out what’s left of their dwindling reserves faster, and at the same time refusing to allow anyone to asess their reserves for fear of the truth being discovered. Too late – we all know now.
    As mentioned by BR above (and also said by Scientific American years ago now) mankind does not have one single viable alternative to oil (given all its uses), nor is there anything on the horizon. Add to that the fact that if there were such an alternative it would take over twenty years to distribute it and integrate it into the global systems that currently use oil. Bottom line – human society will crash. There’s no alternative in the time left!
    So… 2011 is shaping up to be the beginning of an existence resembling hell on Earth and I’m grateful I’m in the latter part of my life and won’t be around in 10 years to see the nighmare that unfolds.
    Be prepared people, and do it NOW.

  9. PeterW says:

    I can just imagine Alberta Tar Sands developers will be licking their lips at this news. I would think the coal industry will drag out their coal gasification projects as well.

  10. Lou Grinzo says:

    People primarily focused on the climate issue (which would include most readers of this site, I’d guess), might not understand that the inherent timing issue for peak oil is nearly as bad as that for climate change. In climate change we have too incredibly nasty issues — the time to change a large portion of an immense infrastructure plus the very long atmospheric lifetime of CO2. (Throw in the minuscule, by comparison, lifetime of aerosols from coal plants, which provide a large measure of cooling effect, and which we’re now reducing worldwide in an effort to combat acid rain, and it gets even more perverse.)

    In peak oil you don’t have the lingering CO2 effect — when you reduce oil consumption you don’t have to keep buying extra because you used to use more — but you still have to deal with essentially the same infrastructure problem. (We do still have to live with our international arrangements and “situations”, of course. We can’t unravel those instantly.)

    There’s also the fact that when oil gets expensive the price shocks are impossible to avoid in a modern post-industrial economy like the US. Everything we eat or wear or otherwise use is made with or transported with considerable amounts of oil. If you want to strangle humanity in the long run, bet on climate change; if you want to strangle economies in the short run, bet on peak oil.

    But don’t worry — we’ll still be able to fuel up our Belchfire 9000 SUVs thanks to coal liquefaction and tar sands, even if they do emit far more CO2 per mile driven than conventional oil.

  11. BR says:

    Wit’s End – that’s a good point. One thing I’m often reminded of is that the embodied energy – the energy required in mining, production, shipping, etc. of a product – often is greater than the energy it consumes in its lifetime. (This is certainly true for many electronics.) Buying a new “green” doodad that uses 10% less electricity from the wall isn’t going to be how we downscale our society – using less things, reusing the things that have been built already, fixing old junk, etc. – that’s how we might make it.

  12. Helen says:

    Interesting, and a bombshell indeed, but I’m not sure I’m sold on the whole story – definitely credible that Saudis have overstated reserves, and also very plausible that they’ve been bullish on technological advances. But to predict *no* improvement in technology at all? When it’s bound to be so very worth their while, as prices soar? That just doesn’t match recent experience. Would be good to see some more realistic scenarios modelled out.

  13. Alteredstory says:

    We need to use what oil we have left to power a fast overhaul of the system – use oil, gas, and coal to build their replacements, do it fast, and once we have our 21st century system, don’t look back.

  14. From Peru says:

    Global production plateau imminent?

    So far, the plateau seem to have been reacheed in 2005… FIVE YEARS AGO!

    Giant oil field decline rates and their influence on world oil production


    “In roughly mid 2004, total world oil production ceased to expand. Instead, new production has only succeeded in keeping world oil production relatively flat (Figure 1)”

    “The overall production from giant fields is declining, because a majority of the largest giant fields are over 50 years old, and fewer and fewer new giants have been discovered since the decade of the 1960s (Figure 3)”

    “our average total decline rate for post-plateau giant fields of 6.5% and CERA’s overall 6.3% are in good agreement, and our 5.5% production-weighted giant field decline rate compares reasonably with IEA’s 6.5% and CERA’s 5.8% (Table 10). Offshore fields decline faster than land fields, and OPEC fields decline slower than non-OPEC fields”

    Giant field production does not show the typical “gaussian shape” of the classic peak oil graph, but instead it first enter a plateau and after some time going slightly up and down (within a range of roughly 4%) the plateau phase ends and an exponential decline begin.

    The decline rates range varies from -3% to -9% (is that % per year? That is huge!)

    If the global oil production behaves like a super-giant oil field, we expect to first see a plateau that may last some decades and then a crash with decline over 5%.

    Indeed, data suggest that the plateau phase was reached five years ago, in 2005. If this situation persist, people will laugh (or cry) at the IEA forecasts. And prices will go up (as they have done) and (absent any major recession) never get back down.

  15. Rob Honeycutt says:

    I have a hard time buying the complete fall of society story, as laid out by Rod @ 9. Oil is not going to dry up over night. It’s actually going to take decades or more before that happens. In the meantime we’re going to experience a series of price shocks. People will cut back, then more oil will be on the market, prices will fall… then another price shock. This is the next twenty years. This is also going to fuel a great deal of development in new energy sources. If you’re the guy who can create cheap clean power you are the next Bill Gates.

    But it’s going to be a bumpy road, for sure.

  16. James Kornell says:

    Nice loop: oil-based disruption of food production; and we can have food-based disruption of oil production. If it wasn’t horrible it would be kind of elegant.

  17. Bullwinkle says:

    This all assumes a stable Saudi government. The Saudi government will fall long before any of this.

  18. Rob Honeycutt says:

    Bullwinkle @ 18… I don’t know about that. Price shocks have a way of making producers quite wealthy. If you own a scarce commodity you’re in the driver’s seat.

  19. mike roddy says:

    The notion that we need 20 years to develop alternatives to oil is an urban legend. Solar and wind are here now, but so are fossil subsidies- including wars in the Middle East.

  20. catman306 says:

    The stomach will prove to be the only reality inducing organ for deniers and avoiders. Only when a sufficient number of people have been stricken by reality will the political time be right for the drastic changes that are necessary. A quick famine may be our friend by alerting the masses.

  21. It’s long been known that OPEC countries were overstating total reserve amounts. By claiming they had more reserves they could in turn push more onto the market.

  22. Mike#22 says:

    Robert @ #8, I am alarmed. “The sooner it runs out the better. Why are people alarmed at the prospect of peak oil”?

    History shows me that at the crunch times–wars, famines, economic hiccups–it is the poor, the young, the old, that get hurt.

  23. Prokaryotes says:


    Saudi oil reserves ‘overstated’

    The United States fears Saudi Arabia may not have enough oil reserves to prevent world prices rising sharply, according to cables from its embassy in Riyadh.

    The cables, obtained by WikiLeaks, urge Washington to take heed of a warning from a former Saudi government oil executive that the kingdom’s crude oil reserves may have been overstated by as much as 40 per cent.

    US diplomats reported that Sadad al Husseini, the ex-head of exploration at Saudi oil monopoly Aramco, “disagreed” with Aramco’s analysis that it had reserves of 716bn barrels and that would rise to 900bn barrels in 20 years.

    The claims about the world’s largest crude oil exporter, published in The Guardian newspaper on Wednesday, come as the price of oil has soared in recent weeks to more than $100 a barrel amid tensions in the Middle East and global demand.

  24. Prokaryotes says:

    And now plot these … PRE LEAK MESSAGING

    Even Saudi Arabia is Turning to Renewable Energy

    When a country that doesn’t have much oil reserves turns to renewable energy, it can be considered as a normal thing to do. However, when a country which is labeled as an oil giant with reserves of around 270 billion barrels announces that it is exploring alternative ways of generating electricity, it is surprising (but clever).

    Although Saudi Arabia, if they would keep producing the same amounts of oil as now has reserves which could last for around 80 years, they are concerned about their own, domestic energy consumption. It is significantly increasing and could eventually limit the country’s export. The country currently needs around forty gigawatts to satisfy its demands, while it is estimated that in 20 years that number will rise to one hundred and twenty gigawatts.
    “We have started to take the required steps to utilize solar and nuclear energy,” said Ali al-Naimi, the oil minister. He also noted that the saying “energy derived from fossil fuels is different than that from renewable sources” doesn’t hold water anymore, and that the world needs all the energy they can get.

    Government’s representatives said that their basic goal is to meet the demands of the domestic market from renewable sources, thus leaving them more oil for export.

    Oil giant Saudi Arabia looks to alternative energy

    RIYADH — With vast oil reserves that are far from exhausted, Saudi Arabia, facing rising domestic energy demand that could cut into its oil exports, has decided to explore nuclear and renewable energy, Oil Minister Ali al-Naimi has said.
    “We have started to take the required steps to utilise several energy sources locally, in particular solar and nuclear energy,” he told a conference in Riyadh.
    The kingdom has massive proven reserves. In November, Naimi put the figure at 264 billion barrels, and said Saudi Arabia was capable of supplying crude for the next 80 years at current production levels “even if we never found another barrel.”

    That is clearly biased reporting from AFP: “With vast oil reserves that are far from exhausted”

  25. Prokaryotes says:


    The Middle East Shifts Away from Oil Exports

    The Gulf Shifts away from Oil Production… and onto Bigger and Better Things

    Credit Suisse pointed especially to Saudi Arabia. During the peak of the 2009 summer heat wave, the country burned nearly one million barrels of oil per day just to keep its air conditioners humming.
    Saudi Arabia sits on a quarter of the world’s oil reserves. But its lack of rivers and lakes makes it hard to keep up with rising energy demand, as well as desalinated water for home and industrial use.
    Demand for electricity there is expected to rise 8% annually in the years ahead. By 2032, it should triple to 121,000 megawatts.
    Senior Saudi official, Hashim Yamani, president of the King Abdullah Atomic and Renewable Energy City, says the nation burns a total of 3.2 million barrels of oil a day. And at the current rate of growth, he warns, the world’s largest oil exporter will need 8 million barrels of oil by 2028… just for itself.
    Since that roughly equals its current production, large oil consumers like the U.S. will suffer. They’ll have to find some other place to buy oil from, as the Middle East consumes most of their own.

    Now look what the republican party does – forget a minute about climate change – not advancing and becoming independent from unreliable sources would create a very bad situation. Now look at the current economic situation and the outlook … The future is about: “You have to go green in order to survive”. Because fossil resources run out for several reasons AND because of transport problems (see Queensland flood impact).

    Just more reason to switch asap to solar & wind to create the next industrial revolution 2.0 and to become energy secure.

  26. Bobby says:

    In 15 years solar energy will provide all the energy this world could ever need and therefore I am not at all worried about this.

  27. Jeff Huggins says:

    Ah Memories

    I remember back, to 1980-81, when we would all sit in the commons of the Chemistry Building (Latimer Hall, I think it was called?) at U.C. Berkeley, and all of us Chem E’s would talk about the fact that the best offers by far, money-wise, were to join ARAMCO and move to Saudi Arabia. They were paying very sizable premiums over the other (still attractive) offers here in the U.S. You had to move to Saudi Arabia and live in an ARAMCO camp, as I understood it. I had a girlfriend, so it wasn’t interesting to me. I joined Chevron in Richmond instead.

    Ah, if only I had stayed in the oil industry, it seems I would probably be really raking it in these days (though I’d have to shut my eyes, ears, and mouth in order to ignore the immense problems associated with our oil addiction).

    Reflecting back on history, it’s a bit interesting how things happen. I had an offer from Shell — to join them in New Orleans. That was, of course, a couple decades before Katrina. And I had an offer from Exxon (they were just Exxon at the time) to join their group that did designs for Prudhoe Bay, although the group itself was located in LA at the time, I think it was actually “Century City”. I seem to have — through luck, and nothing else — managed to avoid at least those two unfortunate messes.

    After two years at Chevron, I “passed” on a career in the oil industry, not because of any knowledge on my part of global warming — I had none, and nobody at the time in the industry seemed to be talking about it, at least not with us newcomers. But the senior-most execs must have known! In April 1980, Walter Cronkite himself introduced a remarkable new segment on global warming on the CBS Evening News — April 3, 1980. (Get a copy and watch it: it’s quite remarkable.) So, the senior oil execs must have had some knowledge of the problem-in-process. When I was at Chevron, the Chairman and CEO for most of the time was George Keller — the father of The New York Times’ Bill Keller, no less.

    It’s likely that I will not live to see the far backside of the post-plateau of oil supply. But I am living now, and I can see daily how the oil companies are confusing matters and mucking things up — and it doesn’t make me happy. In fact, it’s hard to even comprehend or imagine.

    And did you see the end of the Super Bowl ceremonies, when Terry Bradshaw presented the MVP award to the (former Cal quarterback: Go Bears!)? Well, the gift was a Camero, if I remember right, and Bradshaw could not hide his vibrant enthusiasm for the hundreds of horsepower under that Camero’s hood: Indeed, he mentioned the precise number! Just what we need: a celebration of high-horsepower cars, the gift that you get when you’ve demonstrated excellence as the winning quarterback in the Super Bowl. How many children around the country now want to win a Camero “just like that one”?

    Would we be wise to place any trust whatsoever in most of the people who are telling us how much oil they claim to have left, if they are within the industry and if they are trying to convince us that there is “no problem, people”? “Just stick with us, as prices increase!” No way. A politician cannot be considered sane or responsible, these days, if she or he just wants us to adopt policies that enable and prolong our oil addiction. We need to get off the stuff, quick, for more reasons than one.

    Anyhow, Be Well,


  28. Bob Lang says:

    Can’t wait for $10/gallon gas. Then all those bozos using trucks and minivans for personal transportation will get it right were it hurts: the wallet.

    [JR: $10 is a ways off.]

  29. Robert says:

    Mike #23

    Maybe it sounded flippant to suggest people shouldn’t be alarmed at the prospect of peak oil, but to be alarmed you first need to be unaware that peak oil is an issue, and to be unaware of it is the most extreme form of denial. Anyone who has stopped to consider oil (and other fossil fuels) for even a moment must realise that reserves are finite, therefore must run out at some point.

    All we are arguing about is when. Are we saying that people feel safe about oil if they think they will die of old age before it runs out? If so then it is not denial, just extreme selfishness with regard to future generations.

    I want to see people get alarmed. It’s not before time.

  30. Davos says:

    Wouldn’t this actually be ‘great news’?

    This would mean that within at least 15 years (if not sooner) the non-artificially inflated/subsidized price of oil in the marketplace will become competitively inferior. Whereas I agree this might put more people in the ‘we need to find our own sources of oil’ camp, the simple price alone will make alternative fuels more naturally viable.

    Isn’t this what is desired to happen? And to occur within 15-years? Seems like a dual-benefit scenario where we get people off foreign sources of energy and reduce carbon emissions sooner rather than later.

    Of course…maybe it takes more than 15 years to get the infrastructure litigation and zoning what-not accomplished (something the Chinese don’t have to worry about)…In that case, we’ll still be behind when the other shoe drops.

  31. Steve O says:

    Just FYI for perspective. Peak per capita oil occurred in 1979. Current worldwide per capita oil production is about 0.44 gals per day. That’s enough to drive your F-150 about 8-9 miles or your Prius 20.

  32. Prokaryotes says:

    Note, The 4th cable is consistent with my last post, regarding the credit suisse energy consumption assessment.

  33. K. Nockels says:

    At the last meeting of OPEC when the Saudis let Iran’s leader crow on about winning the vote to not increase production as a personal victory, I knew, the Saudis can no longer increase prodution and to keep that fact under wraps from the rest of OPEC they were willing to let Iran rant and feel important. With the Saudis no longer in the position of swing producer, it remains to be seen if they can keep
    Iran and the rest of OPEC member countries from cutting production in reaction to sanctions for other miss deeds.

  34. Steve Wicke says:

    There are several different sources of peak oil occuring in the next several years. Now is the time for adaptation of a post oil society. Some communities are already preparing. I think this means that the auto industry and airline industry will be in for a wild ride in addition to the transportation of basic food. Some of us might want to start learning how to grow our own food and buy a walking stick.

  35. Rod says:

    ‘Rob Honeycutt says:
    February 9, 2011 at 6:29 pm
    I have a hard time buying the complete fall of society story, as laid out by Rod @ 9. Oil is not going to dry up over night.”

    Note that I didn’t say it would dry up overnight or that society would fall just as quickly. It will be like the bell curve shown,but we’re on the downhill side now not at the peak as shown. Yes, depletion will take 4-5 decades but that’s not the point. You and others might want to read “The oil age is over” by Matt Savinar sometime. I read it 5 years ago now. Or see his site at
    My point is simply that mankind has no alternatives to oil especially in non-fuel applications. Given the rate of decline of existing oil fields, the astronomical costs of tapping the (increasingly deeper) offshore deposits, the uncontrolled rate of human population rise (and so consumption of resources, predominately oil based of one form or another), the rapidly emerging economies who want to live like westerners with all the massive drain on oil that such lifestyles would require, the lack of arable land on the planet to produce biofuels (ignoring land for food issues), the fact that demand for oil has no end in sight, means that the laws of supply and demand kick in. Oil will simply go into orbit pricewise and it doesn’t take Einstein to see what that does to the cost of manufacture, the cost of transport, the cost of ANYTHING. Demand crashes, industries collapse, unemployment increases sorta like the USA at the moment. Hint. Human society is controlled by economic constraints. ie it’s a FIAT money system which is fundamentally unsound since its inception which is why the world’s in the mess it is. It won’t take much at all to trigger a massive and immediate collapse and peak oil is a prime candidate.
    I know it sounds far fetched to some, but then so did the thought of the Titanic sinking or the world being round.
    The facts back the arguments so reality cannot be ignored.

  36. Joan Savage says:

    Rolling down through the thoughtful remarks, I hate to admit it but I’d really like a sweat shirt with that yellow curve and the labels.

  37. tst says:

    I just ran through the comments and pretty much everyone here is missing a third of the equation. Peak oil (or peak energy) is huge, as is climate change. But the first big punch is going to come on the financial end. We’re all part of a global economy predicated on two factors – growth and debt. The only way we can afford to repay our debts is to grow. That’s true for individuals, businesses and countries, and it’s why so many people in the current administration, and at the Fed, are focused on restarting economic growth.

    So here’s the $20 Trillion question. What happens when it becomes obvious to the general public that peak oil will eventually eliminate the possibility of further growth? How will Wall Street react? What about pension funds? What will the U.S. Government do when it becomes obvious that it can never repay its outstanding debt? What’s going to happen to our economy when the unthinkable becomes reality; when growth stops and we can’t repay our creditors?

    I’m not sure anybody knows the answers to these questions. But it’s hard to see how we tackle issues like climate change when our financial system is imploding and people who thought they had wealth and security suddenly find out they have neither. Our economy only functions for as long as we believe it’s viable. And it isn’t viable unless we have steady growth.

    By the way, if you don’t know the details of how our financial system functions, swing over to and watch the Crash Course. It’s free, and it’s a real eye opener.

    There’s a reason our government never addresses Peak Oil. It’s because the financial implications are too big. If Obama ever stood up and said that we’ve maxed out on our energy reserves, Wall Street would explode and the whole house of cards would come crashing down. And they can’t allow that to happen.

    By the way, I’d love for someone to prove me wrong. I just don’t think it’s likely.

  38. tst says:

    In mid-2008 I attended a Responsible Energy Development symposium in Jackson Hole and had lunch with one of Governor (and former Energy Secretary) Bill Richardson’s top aides. Toward the end of our conversation, I asked her when the Governor was going to go public about Peak Oil. Obama had the nomination wrapped up at that point and I, rather naively I might add, thought that Richardson might step up to the plate and address what was obviously an important issue.

    She looked at me as if I she couldn’t believe I would ask such a stupid question – I hadn’t thought through all the financial implications at that point, so it really was an incredibly stupid question – and said, “Maybe after the elections.”

    We’ll continue to hear Obama talk about innovation and renewables and new sources of energy, but he’ll never, ever utter the words “Peak Oil.” The economic risks are just too great.

  39. OregonStream says:

    Regardless of whether this pans out as society crashing into a brick wall at high speed, or an increasingly strong squeeze on the cost of living, financial strength is going to erode, and particularly for people who can least afford it/have little to put at risk in commodity-based investments. I just hope the populace wises up before we see round 2 of middle class decline (and thus decline in much of the economy).

  40. Lewis C says:

    For those who see PO as some degree of problem 5, 10 or 15 years hence, I’d suggest reading Joe’s excellent post on the issue last spring.

    Peak oil production coming sooner than expected – May 15th, 2010

    Its focus was the finding of a graph released by the US DOE showing global oil supply falling short of demand in late 2012 and, set against normal global growth, opening a supply shortfall of around 12% or 10 million-barrels-per-day (Mbbls/d) within a few years. The DOE’s information on the issue will be second to none, given its intelligence resources over decades, and the issue’s critical relevance for the USA.

    Robert Hersch, an analyst of great renown, lead a team on a prolonged study (for the US DOD) of the period required for sufficient mitigation to avoid economic destabilization. His report in 2005 stated that a crash program of developing and deploying alternatives launched 20 years before the peak was reached would avoid the worst of the consequences.

    We have just over 20 months until the end of 2012, (at which point the AWOL POTUS will be facing an election).

    Those who put their faith in solar and wind are in my view missing the point. The coming unaffordability of oil precludes economic growth, eviscerates investor confidence, and thus hamstrings Non-Fossil Energy deployment in wealthy countries. In poor countries, the pressure for home grown affordable NFEs (as distinct from wealthy nations’ exports) will be very great, but who will fund them ?

    Those who dread the massive expansion of unconventional fossil energies are in my view missing a helpful factor – Those filth-options will face the same highly disruptive impacts of PO as the NFEs, and even their advocates don’t claim a significant level of output by 2020. For instance, the Tar Sands’ shills even at the most rosy with massive investment and no obstructions project only 3.0 Mbbls/d by then, while global consumption is now around 85 Mbbls/d. A decline rate of less than 4% wipes out the Tar Sands’ relevance as a solution within a single year.

    PO’s impact on food production, in tandem with the assaults of climate destabilization, seems the most grievous likely outcome in the near term. This is not about tractor fuel – which Govts. will subsidize (the UK is already doing so) but about the cost of fertilizer, without which much of the soil now abused by agribusiness cerials isn’t worth planting. Back in 2008, with natural gas prices having followed an oil price heading for $147/bbl, its role as the global feedstock for fertilizers pushed their price out of reach of many of my neighbours here in Wales. At those prices it just wasn’t worth buying, and the hay crops were markedly reduced and so more costly.

    Making artificial fertilizers unaffordable at the same time as ultra-extreme weather events multiply and the cost of insuring a crop goes skyward – seems a sure-fire recipe for the onset of the serial famines that US climate and energy policies have long been facilitating. (In this context an item to watch is the drought in the heart of China’s grain lands, which will be classified as a 200-year event if there aren’t substantial rains by the end of the month).

    And as for the AWOL POTUS, who’s had all this information and more for years, would any of his apologists care to explain his tolerance of Wall Street speculation on global food prices ? Or his encouragement of over a quarter of US corn being diverted from food supplies to ethanol ? Or his drop-dead take-it-or-leave-it non-offer snub to China at Copenhagen of how an American should have three times the pollution rights of a Chinese in 40 years time ?

    It is easy of course to view Peak Oil from a nationalist perspective, just like Climate Destabilization, – to assume that because America is so wealthy it will be best off – but PO is just as global in its consequences as CD – Consider, the great majority of America’s wealth flows in from the licensing of patents and the supply of cheap goods and commodities from abroad, transported by cheap bunkers fuels. These income streams are entirely vulnerable to PO and geo-economic destabilization. Thus Americans are liable to find their nation increasingly impoverished, and lacking the manufacturing capacity, the cohesion, the skills, and the work-ethic for the labour of turning itself around.

    The sooner Obama is faced with an ultimatum, that the US must cease playing the bully and realize that building serious co-operation at the UN for urgent collective global action is vital to US interests, the better will be all our prospects.



  41. Andrew DeWit says:

    It’s great to be having this debate about the intersection between peak oil and climate change. But I wonder why the German success with feed-in tariffs is so often ignored when attention turns to how fast we can diffuse renewables. Germany got 17% of its electricity from renewables last year, largely thanks to the feed-in tariff. The Germans also came out net winners when you compare the costs of supporting renewable power versus the benefits of new jobs, avoided emissions, reduced fossil-fuel imports, and etc. If encouraging renewables is an economy-killer, as the proponents of the unsustainable status quo insist, then surely we have to ask why Germany is experiencing such robust growth. The German-style feed-in tariff is also spreading globally, since about 85 countries and states/provinces have already introduced it. It’s been deemed the single most effective policy for supporting renewables by the IEA, the World Bank, the UN Environmental Program, Deutsche Bank Climate Change Advisors, IRENA, etc. It can also be engineered to make the energy transition an equitable one, spreading opportunity among households, small business, farmers, coops, and the like, rather than reproducing the inequity and vested interests that underlie denialism and other contemporary ills. Paul Gipe’s site is probably the single best source on the policy and how it’s being implemented:

  42. Leif says:

    It is clear that the fossil industries understands the knowledge about limited oil. They have also expended obvious efforts deceiving the public and spent considerable money spreading deceptive information to enhance their personal well being above the will being of the public and even the life supports systems of earth itself. I would think that a clear case of “insider trading” could be brought against the fossil industry. At the very least false advertising. In essence ALL the PROFITS of the fossil industry have been achieved thru highly dubious “honest efforts”. I say conscript their money and give it to the Military and a CCC effort to Green the economy. In the end, if successful, the Rich get to start all over with a functioning earth and life support systems. Capitalism and the Rich have waged a successful ~300 year campaign to get all the money and having done so by trashing the earth, feel that they get to keep all the money and the trashed earth is our, (taxpayers), problem not theirs. I would like to say this about that. Re-boot, New rules…

  43. paulm says:

    ” What’s going to happen to our economy when the unthinkable becomes reality; when growth stops and we can’t repay our creditors?”

    Everyone defaults and we start again…..

  44. Barry says:

    OMG. Don’t people realize how much frikken oil is wasted on nonsense every single day. The western world is a pantheon of oil guzzling doohickies. I can’t wait to see them idled and their oversized climate spew toned down.

    Yeah some people won’t get to jet set twice a year to India. Boo hoo. And SUVs will have to be used for lawn ornaments while people, gasp, carpool and, yikes, take public transit.

    All I can say is the sooner we shut down all these status-burnishing, 2-tonne bling things and their climate crushing wasteful stupidity the better.

    The reason we don’t use oil responsibly is because it is too dang cheap. In EU it is more than double the price already for gas and they somehow manage to still waste it by the bucketful before breakfast.

    A minivan literally uses 84 tons of gasoline to push its usual one passenger wrapped in thousands of pounds of steel to the mall and back. Eighty four tons. Hello.

    A pickup truck owner buys between 100 to 150 tons of liquid super-energy to shove their beast around.

    I’m sorry. I have a very hard time getting end-of-the-worldish about $200 oil. Or $400 oil. Heck most of the world pays much more than that already in relative terms to what they make.

    The entire climate problem comes from fossil energy being too cheap and too plentiful to treat with anything but silly and wasteful abandon. And our climate is spinning out of whack as a result.

  45. Barry says:

    The oil companies just love peak oil.

    Let’s see you get to charge double for your product and you don’t have produce as much. Perfect.

    Just check out the profits of the oil majors in relationship to the price of oil. We are talking printing money by the super-tanker load.

    While Obama is trying to squeeze out $35b for the entire USA to get off fossil fuels, Exxon is handing $100b in we-just-got-too-much-dang-profit to their shareholders.

    The diamond cartel figured it our years ago. Scarcity = max prices = swimming pools of money. Don’t look for honest alarm bells from that quarter anytime soon.

    The answer to peak oil is the same as for climate: just say no to fossil fuels. Get them out of your life as fast as you can. Who wants to be anymore a part of that dirty, dangerous and dead world than they absolutely have to anymore.

    The devil definitely has good bling but has some harsh collection methods at the end of the day.

    Get the behind me fossil.

  46. Mulga Mumblebrain says:

    tst #37 makes a vital point. While multiple ecological crises exacerbate each other, and resource depletion ie Peak Oil, Peak Gas, Peak Coal, Peak Phosphate, Peak Groundwater, Peak Top-soil etc, all make the impending collapse all the more ineluctable, we’d be mad to forget Peak Debt. When the Sumerians invented compound interest they soon realised that it quickly became unrepayable. So they invented jubilees, periodic, say every 25 or 50 years, debt forgivenesses. In modern times default has been the preferred method, although in Greece, Ireland, Iceland and Latvia they are reprising the IMF and World Bank imposed ‘Structural Adjustment Plans’ of the 1980s and 1990s and crucifying their populations to protect the insatiably greedy banksters. I hope they are watching the Egyptians carefully in Dublin, Riga, Athens and Reykjavik.
    The necessity to grow profits to repay accumulating debt is one of the central driving forces of economic growth. We are destroying our home to pay money to parasites who never lift a finger and who each control more wealth than millions of the poor. It’s certainly a morally insane and evil system, but it is also essentially and unavoidably suicidal. The proof is all around us. The favela dwellers in Brazil, drowned in mud, know it, the tribesman in Kenya watching all his cattle die knows it, the Pakistani peasant living in the detritus of his flood ravaged village knows it, but apparently the rich and powerful cannot, or refuse to, get it. They continue to live by the maxim of the cancer cell ‘I must grow forever, or I die’.

  47. Prokaryotes says:

    Oil transport today

    Supertanker with crude oil cargo worth $214m hijacked off Oman
    The last supertanker to be hijacked was the Samho Dream in April, according to the London-based International Maritime Bureau (IMB).$214m-hijacked-off-Oman

  48. Prokaryotes says:

    Regarding Chris Martenson, yes he is right. Though in order to keep the economy in full swing, the world requires an enhancement, i believe exponential growth is possible.

    I call this a universal law, BUT this requires to play by the RULES – of nature. Though you can grow and we have to grow to survive on larger time scale as a species. Look at Asimove’s Foundation series, look at upcoming space colonization for that matter.

    Regardless of that fundamental way of spreading out into space one day, we here on every day reality earth can have growth too! Even now while we start to feel the waving impacts of Peak Oil.

    We need something “right now” to REPLACE oil and something which no longer interferce with our habitat, the good old environment. Though we have to apply to clean energy solutions. Solar, geothermal, wave, wind all have the potential to create the next generation “clean” industrial revolution, 2.0.

    And it doesn’t stops there with just providing new forms of energy generation. The electric vehicle revolution goes hand in hand, the we recycle everything from now on – because so far we are unable to harvest resources from other planets, because resources in what we inhabit are very limited and can only be freed while paying a price – i.e. biodiversity & environmental loose -> health impact -> less enjoyable life experience.

    So EVERYBODY can haz now economical growth when investing into more reliable, sustainable forms of energy. At the same time everybody will gain and prosper from this more natural way of life, because it will be one day in harmony-balance with mother earth.

    Let’s jumpstart the industrial revolution 2.0 today. Exchange your stocks, sell oil shares now, buy an electric car, see that your community starts to recycle every bit of precious waste, renovate with applying more energy efficiency standards. Buy more healthy foods, which use natural fertilizer and pesticides.

    All these actions are characteristic for the industrial revolution 2.0 and will bring growth for several years to come!

  49. Ray Duray says:

    Everything important that was in the recently released cables from the US Embassy in Riyahd via Wikileaks was written up in great detail in Matt Simmons’ “Twilight In the Desert” which was published in 2006:

    Essentially, Saudi Arabia is pumping as much of its high quality light sweet crude as is available (about 8 MMBPD). The “new” reserves that Saudi Aramco likes to tout are a distinctly inferior “sour” grade of crude. Essentially, there is no market for this heavy crude, though the Chinese are attempting to build new refining capacity to deal with the newer, inferior oil stocks that will be replacing the sweet Saudi Ghawars, WTIs and Brents of this world.

    I was surprised when I learned that there are about 200 separate grades of crude oil on the market these days, each of which has differing refining requirements. So the crux for world oil end use product supply will not actually be our ability to extract oil from the earth, but rather our ability to create refining capacity.

    Those who have an interest in getting further under the hood of the energy industry might wish to avail themselves of the BP Statistical Review:

  50. Robert says:

    Unfortunately the UK has found a solution to the problem of zero growth – inflate your way out of it. Base rate has been 0.5% for nearly 2 years which means that savers with sizable deposits are being robbed blind. Cash deposits and regular savings accounts offer virtually no interest and the best 5 year bonds offer interest rates which are lower than the inflation rate. Deduct the tax on the interest and the inflation adjusted return is strongly negative.

    Meanwhile life goes on. The economy doesn’t look as if it’s about to terminally collapse, but many of us are just having to get used to the idea of getting steadily poorer.

    It is no coincidence that the UK boomed when North Sea oil came on stream. It peaked in 2000 and now is in double digit decline.

  51. robin Rutherford says:

    A committment to economic growth is a committment to death because in nature, everything that grows, eventually for one reason or another slows down and dies. And history shows exactly the same. Societies that go for protection rather than exploitation of assets survive the longest.

  52. Rick Covert says:

    With this report Matt Simmons has been vindicated. Oh if he were alive to see this. It brings tears to my eyes.

  53. BR says:

    Prokaryotes and others – please don’t rely upon Chris Martenson for anything, especially facts. He’s someone who doesn’t know much but has latched onto things that are true and well known and then he just repeats them with a heavy helping of his own BS thrown in. While I admit that his video is good for introducing new people to these challenges, that’s as far as it goes.

    I could give a long list of situations where he’s just made up stuff in interviews – stuff that is factually wrong but that his novice interviewer / audience didn’t know to call him on.

  54. paul morozzo says:

    Here’s a question that may have important ramifications. Middle east oil consumption is going up in part because petrol prices are subsidised so there’s no insentive to improve efficiency, in part due to population growth and as hinted at in this article becasue increasing amounts of oil are burnt to generate electrity. At a £100 doallars a barrel surley this makes no sense. If the oil was sold and the money spent on PV generation wouldn’t that generate more electricity over time than burning the oil directly in ineffcient thermal plant?

  55. Barry says:

    SteveO (#35): “Just FYI for perspective. Peak per capita oil occurred in 1979. “

    Yes, and that is exactly why peak oil is NOT economic doom.

    Humans have been living with less and less oil for 30 years and civilization is still standing.

    What the peak-oil-is-collapse folks miss is that most of our worst problems are caused by oil being too cheap. More expensive oil will help us:

    — stop wasting oil
    — reduce our climate thrashing
    — reduce our obesity, heart disease, diabetes, etc
    — eat real, nutritious, tasty food again
    — fund clean alternatives
    — stop the sprawl
    — clean our air

  56. Roger B. says:

    Barry (#56),

    Based upon data I found on the Internet, there are approximately 1.7 billion people now that live in what is termed absolute poverty. In 1979, there were approximately 0.6 billion living in absolute poverty. We have a lot more people who don’t consume much petroleum.

    In the wealthy world, we use petroleum more efficiently than in 1979 but I expect to see considerable problems when global oil production goes into decline.

    Roger Blanchard
    Sault Ste. Marie, MI

  57. tst says:


    A few years back I asked some very bright folks with extremely impressive finance/ economics backgrounds to poke holes in Martenson’s Crash Course. No one could come up with anything, much less anything substantive. And you seem to be saying the same thing when you write – “I admit that his video is good for introducing new people to these challenges…”

    If I shouldn’t be referring people to Martenson or his work, I’d like to know why. I’d appreciate if you’d spell out exactly why people shouldn’t listen to him. Please include your long list of the factual mistakes he’s made in interviews, etc.


  58. kermit says:

    It seems like this is a perfect opportunity for the Koch brothers.

    Peak oil? We’ll just patch up the old coal-powered power plants and build some new ones, too. Are the liberals pitching energy independence? Hell, the coal is all grown right here in the US of A. SUV owners can learn to love the new electric road flagships, and feel patriotic to boot.

    All they have to do is keep denying climate change is anthropogenic and a problem.

    The liberal-science conspiracy will tell people they have to do without. The Koch brothers will tell them that they can keep all their toys. For the thinking-in-soundbites-only crowd, the choice is clear.

    This is our chance to transition to sustainable technology (however late). But if we in the US move to a coal response, we’ll have all lost.

  59. Tony says:

    Not sure if anyone else noted this in the comments, yet, but the IEA’s World Energy Outlook 2010 (WEO2010) admitted that global peak crude oil was in 2006. The reason it wasn’t global peak *total* oil is that they include natural gas liquids, tar sands, oil shale, and ultra-heavy Venezuelan oil as part of the equation.

    As many of you know, the net energy of those “other oils”, is much less than that of crude. Tar sands in particular take tremendous amounts of natural gas (and water) to refine into something usable. So, even if peak “oil” hasn’t occurred, yet, peak net energy probably has.

    I also refer you to Slide 8 of the IEA’s “Presentation to the Press” of their WEO2010 ( A casual glance indicates that the graphic is total fantasy. They show “total crude oil” as a flat line extending out ad infinitum. Crude oil from “currently producing fields” is already in decline. To get back to that flat line, they postulate the existence of “Crude oil — fields yet to be developed or found”, which somehow will exactly make up the difference between declining currently producing fields and present production — to produce that flat line. Well, we know what a flat line means — it means we’re dead (sorry, that metaphor was too good to ignore).

    Peak oil is here, folks. Prepare for a wild ride.

  60. Dean says:

    Prokaryotes @ #49:

    Normally, your posts make sense, but this time I have to wonder…

    Are you forgetting this basic fact?: Exponential growth on a finite planet is an impossibility.

    Sooner or later, the carrying capacity of the planet is exceeded…not enough fuel, water, food…

    No alternative energy source has the energy density of oil. We cannot replace it. There are some that believe the growth of human civilization has marched in lock step with the bell curve of fossil fuel production. Logic would dictate that now that we’re on the backside of that curve, all of the excess people who are on the planet since the dawn of the Industrial Age of Fossil Fuels are now surplus…some 5 billion individuals.

    The next 20 years are going to be very interesting…

  61. Lewis C says:

    Prok –

    the best explanation of why you’re mistaken is the Hersch Report 2005, written for the DOD. Its focus was the period required for alternative liquid fuel supply to be developed sufficiently to avoid the worst outcomes of PO. The report finds that a crash program started 20 years before the peak would be long enough to avoid the worst outcomes.

    It appears that, according to the DOE, we have little more than 20 months, with the ‘leadership’ of a US president apparently intent on raising ‘plausible incompetence’ to an art-form.

    85 Mbbls/d of oil at conventional affordable prices is a vital, indispensable component of global economic activity. If less than 85 M are affordable, or, within a few years, are simply not available, economic decline will replace economic growth.

    There is no prospect whatsoever of bringing alternative supplies on line to keep up with the decline rate in oil production, let alone the decline rate in oil traded internationally. Thus we are heading for economic decline.

    Without economic growth, the investor loses confidence of making profits from his investment. For instance, if people are getting poorer, and will be unlikely to afford so much energy, why would he invest in additional energy plants ? On top of which, escalating oil prices heavily inflate the costs of mining, processing, manufacture and transport, so the entire economics of new build will have to be reviewed.

    But for the political assassination of President Carter, the alternative energies might by now have be able to mitigate PO effectively. As we stand, PO will massively disrupt US investment in those alternatives, unless, of course, the US produced another FDR willing and able to run a command economy to address the bitter realities of PO + CD.
    In that case the primary limitations would presumably be America’s international credit-rating post PO, and its creditors’ patience. –



  62. If this allegation is true then we have to look at the problem from the global perspective. The Saudi Arabian leaders have recently warned the US president not to humiliate Mubarak which means that there is still considerable pressure made on the US. If we make another enemy in the region we may become fully dependent on the oil reserves of Iraq which is not very promising either since the country has still been undergoing dramatic transformation.

  63. Robert says:

    I don’t really understand why anyone thinks Saudi would want to increase demand to curb prices, or how it could possibly be in their best interests to overstate reserves. If I was in their position and wanted to maximize revenue on whatever finite reserves I had left then I would UNDERSTATE reserves in order to create the impression of shortage for as long as possible. I believe the diamond market has been rigged in this way for decades by the key producers.

    This statement by Vidal makes little sense:

    “Many analysts expect that the Saudis and their Opec cartel partners would pump more oil if rising prices threatened to choke off demand.”

    The sudden spike to $147 in 2008 arguably triggered global recession, so was not really in anyone’s economic interests. However, sustained and steady high prices must be in Saudi’s long term interests. Limited supply causes high prices and as supply will always equal demand how can Vidal’s statement make sense?

    The concept of “swing producer” made a lot of sense to OPEC in the ’90’s when oil was down in the $10 range and their role was to keep prices up. Once prices are high the whole idea of OPEC and swing producers goes out of the window and we are back to basic supply and demand market economics.