Why is there such disagreement over oil reserves?The places with large oil reserves are run by undemocratic thugocrats, with rare exceptions such as Canada and Norway. These thugocrats need high oil prices in order to keep the natives from getting restless. Since these thugocrats prohibit free speech and an open press, why should we accept their reporting on oil reserves? It's in their interest to claim that reserves are declining.
All numbers tend to be informed estimates. Different experts make different assumptions so it is understandable that they can come to different conclusions. Some countries see the size of their oilfields as a national security issue and do not want to provide accurate information.
Meanwhile, up in Oklahoma: Cushing oil glut worrisome.
6 comments:
Forget $2/gallon... I predict that gas stations will be paying drivers to take the gas off their hands. ;-)
Lou, I'm not so sure. OPEC quotas are set based on total reserves, for OPEC countries it therefore makes sense to exaggerate their reserves to get a bigger quota. I don't think these countries are capable enough to manipulate the oil price at the level you're suggesting
Most thugocrats overestimate their reserves. Price depends on production rates not on total oil in the ground. the net present value, and how much the thuggie can borrow to buy new crappy russian planes depends on total reserves.
Think of shell oil. they were overestimating their reserves, they got caught and their stock was destroyed.
The big thugocrats are more worried about people thinking we're running out of oil and making a systematic shift to something different like snake oil. once we hit peak snake oil then we're screwed.
I don't see why the same delusional dynamic we saw in the mortgage, bank and financial markets, and we see in our political markets in Washington and the capitals shouldn't be, or more so, in even more closed, duplicitous societies like the oil states.
Half of the 20 or so Arab countries have or keep no domestic social or economic data at all. The rest that do, are suspect. Half or more of Arabs are illiterate. Generations of first cousin marrying. The entire GDP of ALL Arab countries combined, is less than Finland. There is not one world class university in the Muslim world.
Even with in the oil ministries, there is rampant stealing of oil, equipment and money. Many parts of the industry are not all that complex, although the industry in total is. The reason so much of these thug states have their oil run by westerners is honesty, or dishonesty of their own people,tribes, family. It's cheaper to pay western corporations than the costs of your family and friends working for you.
This is why Hugo can not order his stealing leftist incompetents to produce more oil after he kicked the US guys out. Even with historically high prices, he's pumping less and less oil, every year at greater costs.
So, ahhh, I guess they didn't include the 1 trillion barrel reserve of oil shale in Colorado?
Half of the 20 or so Arab countries have or keep no domestic social or economic data at all.
Exactly. If so many of us mistrust stats from the US federal government, why should we give the OPEC thugocracies credence?
Post a Comment