WikiLeaks cables: Saudi Arabia cannot pump enough oil to keep a lid on prices | Business | The Guardian

Peak oil has always been the purview of the tin foil hat brigade but because this information came from confidential embassy cables, which were never meant for the public, I think everyone should sit-up and pay attention.

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%.

The revelation comes as the oil price has soared in recent weeks to more than $100 a barrel on global demand and tensions in the Middle East. Many analysts expect that the Saudis and their Opec cartel partners would pump more oil if rising prices threatened to choke off demand.

However, Sadad al-Husseini, a geologist and former head of exploration at the Saudi oil monopoly Aramco, met the US consul general in Riyadh in November 2007 and told the US diplomat that Aramco's 12.5m barrel-a-day capacity needed to keep a lid on prices could not be reached.

According to the cables, which date between 2007-09, Husseini said Saudi Arabia might reach an output of 12m barrels a day in 10 years but before then – possibly as early as 2012 – global oil production would have hit its highest point. This crunch point is known as "peak oil".

Husseini said that at that point Aramco would not be able to stop the rise of global oil prices because the Saudi energy industry had overstated its recoverable reserves to spur foreign investment. He argued that Aramco had badly underestimated the time needed to bring new oil on tap.

Read more: WikiLeaks cables: Saudi Arabia cannot pump enough oil to keep a lid on prices | Business | The Guardian

US military warns oil output may dip causing massive shortages by 2015

We are in for some difficult times in the coming years but its not too late to get serious about our energy policy. The Department of Energy has a $26 Billion budget in FY 2010 and was tasked back during the Carter administration with lessening the U.S.'s dependence on foreign oil but has been an abject failure in this regard.

Currently the U.S. consumes about 20 million barrels of oil per day of which 60% is from foreign countries. The U.S. gets the vast majority of its foreign oil from Canada and Mexico which both account for 35% of the total supply used in the U.S. The next largest exporters of oil to the U.S. are Saudi Arabia and Venezuela with the remaining balance coming primarily from Africa.

So why have we spent literally trillions of dollars over the past 30 years to decrease our dependence on foreign oil yet out imports of foreign oil have steadily increased year after year. The answer is very simple. Politicians. Politicians are not our friends especially when it comes to solving problems. Creating problems, well they do a fine job in that regard. Its time to allow industry in the U.S. to bring us back to the forefront of technology by removing regulatory hurdles which prevent innovation. We need to act now. Our economy and security as a nation depends on us solving the problem before its too late.

The US military has warned that surplus oil production capacity could disappear within two years and there could be serious shortages by 2015 with a significant economic and political impact.

The energy crisis outlined in a Joint Operating Environment report from the US Joint Forces Command, comes as the price of petrol in Britain reaches record levels and the cost of crude is predicted to soon top $100 a barrel.

"By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 million barrels per day," says the report, which has a foreword by a senior commander, General James N Mattis.

It adds: "While it is difficult to predict precisely what economic, political, and strategic effects such a shortfall might produce, it surely would reduce the prospects for growth in both the developing and developed worlds. Such an economic slowdown would exacerbate other unresolved tensions, push fragile and failing states further down the path toward collapse, and perhaps have serious economic impact on both China and India."

http://www.guardian.co.uk/business/2010/apr/11/peak-oil-production-supply