First, the amount of oil reserves in Saudi Arabia:
And T Boone Pickens points out in his book, "The First Billion..." that the Saudi's have been increasing their unaudited, stated reserves every time another country increases their unaudited, stated reserves.Based on data from OPEC at the beginning of 2011 the highest proved oil reserves including non-conventional oil deposits are in Venezuela (20% of global reserves), Saudi Arabia (18% of global reserves), Canada (13% of global reserves), Iran (9%).[
Then, Peak Oil: Peak Oil was a theory that oil production world wide would peak at about 80 million barrels/day. We seem to be at that point. Back when China was going and growing and increasing demands for more oil, the only thing that changed was the price.
So consider this: If OPEC has oil and could produce it for 2$ a barrel, and Rock's company had oil that it produced for 60$/barrel, then why would OPEC not make the obvious move and put Rock's company out of business?
I don't think they can. I think they're faking it, and the world wide figures - especially on Saudi Arabia - back me up.
Here's an article:
Surprised? I was, too. And I can't convince myself that Saudi Arabia is willingly letting Russia out produce them.In a recent interview on the Keiser Report I found myself casually mentioning that Russia had now surpassed Saudi Arabia to become the number one oil producer in the world. This is not an event that happened last month, either. The leap forward emerged as far back as 18 months ago, in October of 2008. ......
Saudi Arabia has been stuck in the 9 million barrel/day category for 30 years, since 1980. And I think that is because it is the best they can do.
Starbuck – my attempt to read your seekingalpha link takes me to a search page from my DSL supplier and when I go to seekingalpha directly it will let me do nothing until I have established a membership. I would love to read it if you can clear up the link? Or post pertinent portions here.
When in December 2008, 60 Minutes correspondent Lesley Stahl asked Saudi Oil Minister Ali al-Naimi how much it cost Saudi Arabia to produce one barrel of oil, he didn't blink: "Probably less than $2 to produce a barrel." If it costs only $2 to produce a barrel of oil, then why do we pay over $105 a barrel?
I’m going to give Sheik Al-Naimi his $2 a bbl quote under the following conditions: It was 2008. It was in the sweetest spot in the sweetest field (Ghawar) in the country. He was speaking only of the current day cost for some individual to gauge the tank as they weren’t pumping nor pipelining and, of course, an Arab never lies. It’s against their religion. Considering all that, read here about the latest development in Ghawar and here about the offshore development then tell me again how they produce oil at $2/bbl. The oil drum website is home to some of the wisest heads in the industry (and some of the biggest kooks as well) and essays like this one with the subsequent elaboration and discussion usually parts the fog and gives a pretty clear view. The kooks are laughed outta town.
Members of the oil cartel sit on top of nearly 80 percent of the world's conventional crude reserves. Yet they account for only a third of global oil production.
I trust bone-head Pickens about as far as I could throw that semi-tank he drives but his comment about SA and their claimed reserves does crave attention. UNAUDITED is a very key word in evaluating the PR of every member of the OPEC cartel. Actually, if really doesn’t deserve to be called a cartel any more. Too many countries, too many lies, too much cheating on quotas, etc., etc., etc. And, again, it was far too long ago to be of any use today.
SA is now either #1 or #2 in exporting crude according to whom you believe. It is also #1 in consumption of crude. It must make some choices about which oil at what cost it exports and what it keeps, refines and uses. Since that export is the sole source of income for the rulers/guvmint and it receives no other income at all, it must have a very large markup.
Now let’s say they did want to run that small Oklahoma company out of business. They must decide to sell the proper volume of oil to the proper customers to make the opposition hurt. They can’t just open the taps and sell like that to everybody or that little outfit in Bugtussle would never know the difference. Even selling their 9-10 million bbls a day at $2 would still leave about 75 million bbls, give or take, at some higher price. There are many countries similar to SA in their need for those $60-80 prices just to meet their budgets. Just like this:
Since the beginning of the Arab Spring, Saudi King Abdullah almost doubled his Kingdom's budget, committing billions in subsidies, pensions and pay raises in an effort to keep his subjects from storming the palaces.
This expensive response effectively raised the price of oil needed for the Saudis to balance their budget from under $70 a barrel before 2011 to at least $110 a barrel by 2015.
At least they make it off the imports rather than off the backs of the citizens like in the US.
Every time we fuel our car we send an extra 35 cents per gallon, or roughly $6 per fill up, to the Save the King Foundation.
That assumes every bbl is imported from SA – Fail! In reality SA is third in the list of US suppliers with an 11% share - behind Canada and Mexico.
Fact: Every time we fuel our car we send an extra 18.4 cents per gallon to the Save Obama Foundation – and then he gives it to GM and Mopar.
At a time in the past, say 35 years ago, the claim that OPEC could turn the tap and drive prices anywhere they wanted them was close to the truth. Today? No way in hell. They would have a revolution that makes the Arab Spring look like a Mayday waltz.
Now don’t get me wrong. The US will never attain energy independence short of fusion technology. But “substitute for petroleum by purchasing competing fuels, like alcohol fuels, biodiesel…”? and “they are less costly on a per mile basis”? Now we are getting into hallucinations and fairy tales.
For anyone willing to complete the exercise it would be interesting to go back to when the US guvmint set the price of a bbl of crude and see how the producers had to scrape to stay in business at that price. It was limited at that constant for a great number of years. Then, again, go back to that same time the price was topped out and figure what overall inflation has done to the dollar as compared to the price of gasoline.
Last but far from least, “peak oil” is a moving target. As technology progresses and prices increase, more oil becomes available. It won’t last forever and improvements in alternative energy will continue until the price of crude becomes prohibitive for everything but plastics and such. And one day even that will change.
PS if you are really interested in what SA has to say try this. There is even a link to download the slide set.
Lemme quote the whole thing:
In a recent interview on the Keiser Report I found myself casually mentioning that Russia had now surpassed Saudi Arabia to become the number one oil producer in the world. This is not an event that happened last month, either. The leap forward emerged as far back as 18 months ago, in October of 2008. It seems in Russia, big things often unfold in October.
As subscribers to Gregor.us Monthly know, I like to break up the world of global oil production into four parts. There is OPEC, anchored by Saudi Arabia. And then thereís Non-OPEC, anchored by its top producer, Russia. With the most recent EIA data out for April crude oil production, I made up charts for Saudi Arabia, and Russia, and thought it might be instructive to pose a few questions. First, letís take a look at Russia (click to enlarge):
As I have discussed previously, without Russia the world of Non-OPEC supply would have fallen down into a hole shortly after 2003. Indeed, without Russia Non-OPEC production (Non-OPEC ex-Russia) would have fallen every year from 2004 through the present day. Whatís been a surprise is that Russia has been able to sustain its current ~9.5 mbpd for over four years now. A number of analysts are reasonably confident that Russian oil production has now entered a plateau. Now letís look at Saudi Arabia (click to enlarge):
As we look at the chart of Saudi Arabia crude oil production, I like to consider the following propositions:
1. This is a chart of the central bank of oil, with lots of spare capacity, that works to dampen oil price increases.
2. This is a chart of the central bank of oil, with lots of spare capacity, that works to perfect oil price increases.
3. This is a chart of what had once been the central bank of oil, as it transitions to a secondary role.
4. This is a chart of an oil producer doing its best, within technical and geological limits, to maximize its profit.
Regardless of which we choose among these possibilities (or others), itís clear that Saudi Arabia has been a very different kind of oil producer than Russia, in the past ten years. I would encourage readers to think about, in particular, the period starting in late 2005 through late 2007 when against a backdrop of steadily increasing prices Saudi Arabia production fell by nearly a million barrels per day. Per the interview mentioned above, with the Keiser Report, we might also want to consider the decision to develop fields such as Khurais. | see: Khurais Update: Got Seawater?
Based on the totality of information over the past ten years, I think one can get much closer to reality in Saudi Arabiaís production profile than many presume, given the countryís secrecy. I would also remark that the untested assumption that Saudi Arabia has ~3-to-4 mbpd spare production capacity is one of those slippery and large concepts that can easily lose its shape, in the wrong hands. What do you think?
Saudi Oil Production:
There ain't but two or three of us on the forum that really follow this subject, but I sure appreciate the intelligent discussion which has ensued. I'm an active investor and could use all the opinions that are out there. (I'll have to decide for myself who's on first)
Right now the open market price per barrel is not our problem, if we could get the EPA to back off to reasonable regulation rather than regulation for political effect producers overhead would be lower. Also state and local blend requirements put in place because of a false hole in the ozone scare and other environmentalist fairy tails have raised refinery prices, add this to forced additive programs such as E10 and soon to be E15 and you have an even higher pump price. We haven't even brought up ridiculous sulfur scrubbing with diesel that adds 70 cents per gallon to diesel, oh and then we have the new diesel pickups with the expensive buckets of piss(urea) that mixes with the fuel while you drive.
We are fucked by rooms full of idiot parasitical politicians that have no common sense.
Did I forget state, local, federal and hidden taxes?
Last edited by Rockntractor; 02-05-2013 at 01:25 AM.
I don't invest in "big Oii" since I retired and sold my company stock in the 401. I work the medium to small outfits. Much better chance to make a big move and easier to understand and watch.
Overall I've had two excellent winners, a few moderates and a couple of disappointments.
I closed a 10 bagger on SWN back a couple of years ago and I've had a chunk of APA now for several years. I waffled between that and APC before finally deciding. Got some spare cash right now and looking for another SWN to get into.
Rock - ya got it in one. You talk about the EPA and blends but for the most part it is the individual states that drive the extremes. If the states did not interfere and up the ante, ther would be about 10 total blends over the 50 states for both winter and summer combined. See CA for a worst case scenario.
Add to that the fact that the guvmint forced the use of MBTE and then fines everyone for using it. Now it is demanding the use of non-corn ethanol in millions of bbls when there are about 100000 bbls produced total over the last few years. then it is fining refineries for not using it. When the courts found in favor of the refiners they demanded more use while they are appealing the decision.
SNAFU to the 100th power.
Rock got it all correct. I looked one time, and found 70 different blends that the EPA requires at different places and different times of the year. What is legal in St Louis is illegal across the border in Illinois, and so forth.
The whole thing about Ultra Low Sulfur Diesel and Diesel Exhaust Fluid is causing some pretty interesting problems - and some solutions, too.
(A) There is a plethora of diesel RV buyers who are adventurous enough to want to travel to Mexico, but they can't because their shiny, new diesel RV requires ULSD, which is generally unavailable in Mexico, which is one of our two biggest suppliers of oil.
(B) It is serving as a driver to force companies to used natural gas. Today, for example, we learned that the City of LA ordered 900 natural gas powered buses. (disclaimer: I don't give a shit what they do in LA, and if I knew how to make money off it I probably would refuse just on principle)
I keep posting this every chance I get in every venue I have access to. And it only has 10K views - this should be broadcast on the local news twice a week until the guvmint acknowledges the idea.
Now tell me they are wrong?
Nice video with good ideas and information. I'm not really comfortable with the call for legislators to "do something", though, because as we all know, THEY WILL! And it'll be the wrong thing.
Today, there was this release:
Yes, as we all knew, the electric car is reaching a dead end. It'll be shown right next to the steam powered car in future museums.Recent moves by Japan's two largest automakers suggest that the electric car, after more than 100 years of development and several brief revivals, still is not ready for prime time - and may never be.
In the meantime, the attention of automotive executives in Asia, Europe and North America is beginning to swing toward an unusual but promising new alternate power source: hydrogen.
The reality is that consumers continue to show little interest in electric vehicles, or EVs, which dominated U.S. streets in the first decade of the 20th century before being displaced by gasoline-powered cars.
Despite the promise of "green" transportation - and despite billions of dollars in investment, most recently by Nissan Motor Co - EVs continue to be plagued by many of the problems that eventually scuttled electrics in the 1910s and more recently in the 1990s. Those include high cost, short driving range and lack of charging stations.
Read more: http://www.foxbusiness.com/news/2013...#ixzz2K5YfHENg
Hydrogen? Yeah. Some day. But not yet. For right now natural gas is surely the way to go, if Matt Damon will allow fracking.
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