Heading Out

Seeking the winds that help to sail on Shakespeare's tide.

Wednesday, March 16, 2005

Saudi admission on a lack of oil reserve

Well that didn't take long. The Saudi minister just commented on ABC News this evening that they are running out of light crude. And people are saying that they don't know why the price is going up! I think we might call this the Ostrich Syndrome. The Saudi government have been saying there ws no problem for years, and suddenly now, as demand starts to go back up -whoops! Er! Maybe they were overconfident!

I would suspect that predictions that demand will rise by 2.7 mbd this year are now just so much hot air. Because we are unlikely to see much more than a million barrel increase in supply over the course of the year. And that means it has become a sellers market, and the price will never be this cheap again!

This is a wierd feeling. Those of us who have looked at the numbers have seen Hubbert's Peak coming, and now it is very close to being here. There seems to have been little planning from a government being run by folk with a deep background in this industry. Yet having played Cassandra, and apparently going to be proved right, what is gained? We are now at a point where there are no known answers. One cannot create oil out of thin air, nor instantly legislate its appearance at a refinery. The Arctic Refuge oil will not be here for years and we need an additional source of supply by October. It is interesting to note that were the oil pipelines still flowing in Iraq then this problem might have been delayed for a year or two, but they aren't and it isn't. Well time to bury my head back in the sand, after all I will only be joining the MSM.

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