Saudi Oil Minister Ali Al-Naimi said on Tuesday output cuts already agreed by OPEC had removed much of the world's excess supply and there was no need to panic over a steep fall in prices.In short, all those stories about "peak oil" to the contrary, the world seems to be awash in oil -- so much so that producers are apparently having a hard time keeping production low enough to produce the prices they want. It's enough to make you wonder whether Greg Palast wasn't right after all, when he argued last summer that, yes, the Iraq war was about oil, but no, it was not about controlling it in order to sell it. It was about controlling it in order to keep it in the ground.
The Organization of the Petroleum Exporting countries decided in October to cut supply by 1.2 million barrels per day (bpd) from November and last month agreed a further reduction of 500,000 bpd to take effect from February 1.
A 15 percent price plunge since the start of 2007 has many OPEC producers deeply concerned and Venezuela calling for an emergency meeting to take a further 500,000 bpd off the market.
Did Dick Cheney send us in to seize the last dwindling supplies? Unlikely. Our world's petroleum reserves have doubled in just twenty-five years -- and it is in Shell's and the rest of the industry's interest that this doubling doesn't happen again. The neo-cons were hell-bent on raising Iraq's oil production. Big Oil's interest was in suppressing production, that is, keeping Iraq to its OPEC quota or less. This raises the question, did the petroleum industry, which had a direct, if hidden, hand, in promoting invasion, cheerlead for a takeover of Iraq to prevent overproduction?Read the rest at the link. You might never look at supply and demand in the oil industry in quite the same way.
It wouldn't be the first time. If oil is what we're looking for, there are, indeed, extra helpings in Iraq. On paper, Iraq, at 112 billion proven barrels, has the second largest reserves in OPEC after Saudi Arabia. That does not make Saudi Arabia happy. Even more important is that Iraq has fewer than three thousand operating wells... compared to one million in Texas.
That makes the Saudis even unhappier. It would take a decade or more, but start drilling in Iraq and its reserves will about double, bringing it within gallons of Saudi Arabia's own gargantuan pool. Should Iraq drill on that scale, the total, when combined with the Saudis', will drown the oil market. That wouldn't make the Texans too happy either. So Fadhil Chalabi's plan for Iraq to pump 12 million barrels a day, a million more than Saudi Arabia, is not, to use Bob Ebel's (Center fro Strategic and International Studies) terminology, "ridiculous" from a raw resource view, it is ridiculous politically. It would never be permitted. An international industry policy of suppressing Iraqi oil production has been in place since 1927. We need again to visit that imp called "history."
The troubling question now is, what next? With Iraq in total chaos and much of its oil off the market, there still seems to be way too much oil slopping around in world oil markets. The trouble with OPEC is, everyone cheats. To get supply and demand back in a nice proper balance that keeps oil prices high, it would be nice if you could find another country whose entire oil supply you could just remove from the market.
Hey, what about finding a pretext to attack Iran? Yeah, that should do it.