Saudi Lies And American Stupidity

The UK newspaper the Guardian has reported on some diplomatic correspondence about oil in WikiLeaks cables: Saudi Arabia cannot pump enough oil to keep a lid on price.

US diplomat convinced by Saudi expert that reserves of world's biggest oil exporter have been overstated by nearly 40%

The US fears that Saudi Arabia, the world's largest cruded 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%...

One cable said: "According to [former Saudi Aramco executive] Sadad al-Husseini [above, left] the crux of the issue is twofold. 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 and energy optimists would like to portray."

It went on: "In a presentation, Abdallah al-Saif, current Aramco senior vice-president for exploration, reported that Aramco has 716 billion barrels of total reserves, of which 51% are recoverable, and that in 20 years Aramco will have 900 billion barrels of reserves.

"Al-Husseini disagrees with this analysis, believing Aramco's reserves are overstated by as much as 300 billion barrels. In his view once 50% of original proven reserves has been reached … a steady output in decline will ensue and no amount of effort will be able to stop it. He believes that what will result is a plateau in total output that will last approximately 15 years followed by decreasing output."

To those in the peak oil business, Sadad al-Husseini's views on Saudi reserves and production are Old News. Many people, including ASPO-USA co-founders Steve Andrews and Randy Udall, interviewed al-Husseini, wrote about al-Husseini, and tried to convince policy-makers to take his well-informed assessment seriously. I often mentioned al-Husseini's views during the time I was writing a weekly column for the ASPO-USA website. 

What is news is that American diplomats urged those in the government to do the same thing—take al-Husseini's assessment seriously. Needless to say, that didn't happen. Do you remember this exchange between Will Smith (Edwards) and Tommy Lee Jones (Kay) in Men In Black?

Edwards — Why the big secret? People are smart. They can handle it.

Kay — A person is smart. People are dumb, panicky dangerous animals and you know it. Fifteen hundred years ago everybody knew the Earth was the center of the universe. Five hundred years ago, everybody knew the Earth was flat, and fifteen minutes ago, you knew that humans were alone on this planet. Imagine what you'll know tomorrow.

I laughed outloud the first time I heard that because it was so true! And if people (in groups) are dumb, panicky dangerous animals, what does that make CNBC market shills, Republicans, Democrats and Government Institutions? And aside from Governments in general being dumber than dumb, other terms come to mind as well, words or phrases like corruption, malfeasance, dereliction of duty, dishonesty, criminal negligence and impervious (as in "impervious to reason").

It's all Saudi lies and American stupidity. I covered the OPEC (and Saudi) reserves issues in OPEC Will Never Run Out Of Oil. I recommend you read it if you care about the our oil future.

There was simply no way that big shots in our Government were going to listen to the diplomats sending these now leaked cables, let alone listen to Steve Andrews, Randy Udall—who actually has two close family members in the Senate—or a nobody like Dave Cohen about the very probable correctness of Sadad al-Husseini's analysis.

Now, people like Andrews, Udall and I are mostly out of the peak oil business. Speaking for myself, I simply gave up, and oil certainly wasn't the only insurmountable problem we were facing. Folks like Mother Jones' Kevin Drum have now taken up the peak oil cause. Others who I know, like Tom Whipple or the folks at the The Oil Drum, keep plugging away. Kevin Drum recently alluded to an important article that appeared some years ago in Business Week called Saudi Oil: A Crude Awakening On Supply?

Way back In July, 2008, when the oil price was over $140 per barrel, I wrote an ASPO-USA column called Peak Oil Is A Done Deal, and took this (slightly marked up) graph from that Business Week article.

Ghawar is the world's biggest oil field, producing about 5 million barrels per day. The data above hint at the beginning of it's inevitable decline in a relatively short time-frame.

The data in this table, which looks plausible based on what we know and knew back in 2008, comes from a leaked internal Saudi document, and purports to show their own estimates of their actual production capacity through 2013. If you knew anything about Saudi oil production this was (and still is) a scary graphic.

And now we find out courtesy of Julian Assange that American diplomats thought the Saudis may be lying about exaggerating their recoverable reserves! This is shocking to say the least. I don't know about you, but I am sitting on the edge of my seat waiting for future revelations about this latest oil scandal. As Kay said in Men In Black, just imagine what we'll know tomorrow.

Now that we know that the Saudi government is playing fast and loose with the truth, and the American government is too dumb to figure that out, it wouldn't surprise me to learn that Alan Greenspan turned out to be wrong about the economy, or that Wall Street bankers and Washington politicians are colluding in a way which is contrary to the best interests of the American people.

What frightening new revelations will the future bring?

Comments

[Gail]

"What frightening new revelations will the future bring?"

I can answer that! US government agencies KNOW that the level of background tropospheric ozone from fuel emissions is inexorably rising. They KNOW air pollution is toxic to people - it is driving the increasing incidence of epidemics of cancers, emphysema, and asthma, and is linked to autism, diabetes, and Alzheimer's. They KNOW that vegetation is even more sensitive to ozone than humans and that consequently trees are dying and crop yields are diminished by at least 10% (accepted science based on past numbers - the percentage is increasing).

All this is right on the websites of the Dept. of Ag, the Forestry Service, the EPA, The Park Service, and NASA.

What they won't tell anyone is how quickly this is going to lead to ecosystem collapse, and widespread crop failures, and famine...either because they want to avoid panic, or they're too stupid to understand the obvious implications.