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WikiLeaks cables: Saudi Arabia cannot pump enough oil to keep a lid on prices

By Vicente   Follow   Wed, 9 Feb 2011, 9:18am   3,370 views   49 comments
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Well this should throw a little oily spice....BAM!.... on our commodities salad.

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%.

WikiLeaks cables: Saudi Arabia cannot pump enough oil to keep a lid on prices

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1. ¥ Follow Befriend 35 threads 5,700 comments Bellingham, WA

   1   12:46pm Wed 9 Feb 2011   Share   Quote   Permalink   Like (1)   Dislike   pkennedy says While % wise the pain will be the highest in the US, we can afford to pay more, it will also greatly affect consumption patterns. I actually drove around the American SW in the summer of 2007 because I wanted to do that while gas was still under $5/gallon : ) Once gas hits $10, kiss the tourism industry goodbye, a new xbox game will be a substitute good for going somewhere. Rising energy costs will be an additional tax on people this decade. It's not that significant on the individual scale -- I for one only fill up once every two weeks or so, but it is a cost-push that will raise the cost of living in everything that has petroleum in the supply chain. It's not something we particularly need to have hit us now, and is just another reason why I'm so mega-bearish about this decade.

2. justme Follow Befriend (2) 33 threads 3,460 comments

   2   11:07am Sat 12 Feb 2011   Share   Quote   Permalink   Like (1)   Dislike   SiO2 says So 125 * 35 = 4375 gallons. Consider another sporting event. Let’s say an NFL or NCAA college game. 60,000 people, average 3 people per car, so 20k cars. Average round trip, 35 miles. (that’s a total swag, some people go more, some go less. a handful take transit, but most nfl or ncaa stadiums are not convenient to transit.) 20k * 35 = 700k miles. 25 mpg = 28,000 gallons of gas. I think looking at NASCAR in the above way (call it the "4375 / 28000 argument" ) is counterproductive. On a larger scale, someone will always make a comparison that says one particular waste is insignificant, for example "well, oil is only about 1/3 of our total energy consumption, so why should we worry about oil in particular"? This is bogus. Everyone has to do their part, and the nails that stick up the furthest should be pounded in first. Let's start by shutting down NASCAR.

3. MarkInSF Follow Befriend 14 threads 1,118 comments

   3   11:50pm Sun 13 Feb 2011   Share   Quote   Permalink   Like (1)   Dislike   Like with most of the WikiLeaks, this is hardly surprising. RE: Fracking above. Yeah, we've figured out a great way to lick the bowl clean after eating the bowl of pudding. I doesn't really change much.

4. justme Follow Befriend (2) 33 threads 3,460 comments

   4   5:13pm Mon 14 Feb 2011   Share   Quote   Permalink   Like (1)   Dislike   pkennedy says Algae has a far better rate than anything corn can do, and multiple crops per year can be grown When they quote X gal/acre/year, that INCLUDES all the "crops" of algae you can grow in a year. There is no multiplication factor there that has not been accounted for already. pkennedy says As of now, 80% of corn is used for livestock, we eat 12%. Considering how much is wasted producing ethanol, we should be fine there. How many years of eating meat are you going to give up for that weekend airline trip to Paris? Please do the calculation, and you will see that it is NOT GOING TO HAPPEN. You will stay home and eat hamburgers instead.

5. jvolstad Follow Befriend (4) 992 threads 1,125 comments San Antonio, TX jvolstad's website

   5   11:34am Wed 9 Feb 2011   Share   Quote   Permalink   Like   Dislike   Peak Oil here we come. BTW, the military is very concerned about future oil supplies.

6. pkennedy Follow Befriend (8) 28 threads 1,342 comments Redwood City, CA

   6   12:01pm Wed 9 Feb 2011   Share   Quote   Permalink   Like   Dislike   Came from 2007 apparently. (2007 quoted on CNN) ** 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". Nothing too new. It won't create oil shortages, just huge oil prices, which will force countries with expensive fuel to get more expensive and force them to pull back their usage. While % wise the pain will be the highest in the US, we can afford to pay more, so we'll just eat it in many cases. Some people will be forced to give up their SUVs for better cars, but in general, most of us will just pay.

7. SiO2 Follow Befriend 3 threads 189 comments

   7   1:06pm Wed 9 Feb 2011   Share   Quote   Permalink   Like   Dislike   Troy, $10/gal would affect tourism, but perhaps not as much as one might think. Consider taking a 1000 mile round trip, in a car that gets 25 mpg. 25 mpg highway is not really that good nowadays (for a car, not a truck), and should get better over time anyhow. 1000 miles / 25 mpg = 40 gal. Today let's say $3/gal, so $120. Let's that it goes to $10, so it's $400. more than 3x more! But put that in the context of the vacation. Hotel $125 per night (for an average place in California), with tax. Food for a family could easily be $100 per day if you go to restaurants. Amusement park tickets could be $50/day/person. So for a family of four, for a week: 7 * 225 (food + board) = $1575. 3 days of amusement park * 4 * 50 = $600. That's $2175. Now, the added $280 for gas is a 13% adder to the total vacation cost. After all, people in Europe take vacations with $9/gal gas. (Yes I know that there's taxes that cause the gas to cost that much, but the fact is that it costs that much.) This will have a bigger impact on the college student road trip though. The bigger impact is likely in your 3rd paragraph, how this will increase the cost of many many other things. It's really amazing how natural gas and petroleum are the basis for almost anything. Plastics. Food (via natural gas fertilizer, and tractors etc).

8. iwog Follow Befriend (48) 274 threads 12,572 comments 47 male Lafayette, CA Premium

   8   6:22pm Wed 9 Feb 2011   Share   Quote   Permalink   Like   Dislike   Protected   There's a very real oil and natural gas boom going due to new drilling technology that will greatly improve the financial health of the United States. I'm a big advocate of peak oil preparation, however some of the numbers are amazing if true. We may cut our oil imports by half because of rising domestic production, and decades worth of new natural gas reserves have been found. This isn't a long term solution by any stretch, but the short term looks very bright and will help the economic recovery. I think a big push to run automobiles on natural gas while we're preparing an electric economy would really turn things around. I'm nowhere near as pessimistic as I was 2 years ago. http://hosted.ap.org/dynamic/stories/U/US_SHALE_OIL?SECTION=HOME&SITE=AP&TEMPLATE=DEFAULT

9. American in Japan Follow Befriend (28) 149 threads 1,398 comments

   9   6:38pm Wed 9 Feb 2011   Share   Quote   Permalink   Like   Dislike   @Vicente Thanks for the Wikileaks link. I wonder how Wikileaks is doing these days with the various with attempts to put a lid on it.

10. EBGuy Follow Befriend 4 threads 2,099 comments

    10   12:27pm Thu 10 Feb 2011   Share   Quote   Permalink   Like   Dislike   I don't watch auto racing at all, but even I can get excited about KERS (Kinetic Energy Recovery System) being used in Formula One vehicles. That said, I think all motorsports could use a bit more 'hybridizing'; welcome to the 21st century guys. I’m nowhere near as pessimistic as I was 2 years ago. Thanks for posting the link on hydro fracking; I had no idea they could also use the technique for oil as well. Aubrey McClendon rises again. Pretty amazing to see the renaissance in North Dakota. Cautiously optimistic given some of the environmental concerns around hydro fracking.

11. justme Follow Befriend (2) 33 threads 3,460 comments

    11   7:51pm Thu 10 Feb 2011   Share   Quote   Permalink   Like   Dislike   SIO2, The problem is not as simple as shutting down NASCAR races, I'll agree with that, although I'd be happy if they went away. I'm going to use a new phrase that I coined a while ago, but may not have used yet: The NASCAR Economy. The USA has a NASCAR Economy. It consists of going around in circles burning lots of oil, and having little in terms of results to show for it. This is what has to stop.

12. justme Follow Befriend (2) 33 threads 3,460 comments

    12   7:54pm Thu 10 Feb 2011   Share   Quote   Permalink   Like   Dislike   EBGuy, Given that KERS is just a specialized form of hybrid regenerative braking, I think it would be better if Honda spent their R&D money on improving consumer-grade hybrid vehicle technology instead of this gold-plated racing version.

13. justme Follow Befriend (2) 33 threads 3,460 comments

    13   10:06am Fri 11 Feb 2011   Share   Quote   Permalink   Like   Dislike   EBGuy says Cautiously optimistic given some of the environmental concerns around hydro fracking. http://en.wikipedia.org/wiki/Fracking#Environmental_and_health_effects http://www.youtube.com/watch?v=LEFQcNTVWRk&NR=1 There are LOTS of environmental concern about Hydraulic Rock Fracturing (fracking). Basically, the pressure of the fracturing liquid (which contains some very undrinkable chemicals) has to be so high that any cracks in the well casing (concrete) will lead to contamination, and this can happen between surface level and the bottom of the groundwater level, although the "target" of the fracturing may be 2 miles down!

14. MattBayArea Follow Befriend 9 threads 123 comments

    14   12:57pm Fri 11 Feb 2011   Share   Quote   Permalink   Like   Dislike   SiO2 says SF Ace- I’m not a huge motorsports fan, but it’s fun to watch once in a while. And why single out that one? Consider this - A typical NASCAR race ... = 4375 gallons. Consider another sporting event. Let’s say an NFL or NCAA college game...= 28,000 gallons of gas. Plus the workers, carrying all the goods to and from the event, etc. So the gas consumed by the spectators for any event, be it football, soccer (ROW football), whatever, is significantly more than the fuel consumed by the motorsport event. Plus, NASCAR races are the longest races - Formula 1 races are 150 miles or so. Motorcycle races are shorter, plus they get better mpg. Not that I have anything against NASCAR aside from thinking it's generally pretty silly (I'd say the same about football, unless you're playing it), but this analysis is flawed on too many levels to count. Here are a few: You are counting the fuel consumed by the event itself in one case, and in the other you are counting the fuel consumed by the spectators. You could get a slightly more accurate analysis if you included the fuel consumed by the event and spectators in both cases, rather than one in the first and the other with the second. Further, I think anyone using a computer to read this forum would agree that we can find a reasonable fuel expenditure for any given amount of social benefit (any more than that might be called wasted fuel). There is some social benefit to these events, and perhaps there is more at the larger events - this may offset the larger fuel costs for the larger events (like NFL games). Perhaps. At the end of the day, at least with regular sports some people are getting great exercise - and maybe encouraging others to get off their couch and get some exercise of their own. With NASCAR, they're just driving in circles. Hopefully they don't encourage others to do the same!

15. Kevin Follow Befriend 40 threads 2,652 comments

    15   12:13pm Sat 12 Feb 2011   Share   Quote   Permalink   Like   Dislike   People talk about peak production, but ignore the fact that in the western world we have already hit peak consumption. Demand for petroleum will decrease significantly between now and 2030 in wealthy countries, but that will be offset b increased demand in China and India. Eventually, even those countries will switch to different energy sources. My prediction: By 2050, oil is mostly used for manufacturing of petrochemical products like plastics, and not as fuel.

16. Vicente Follow Befriend (8) 204 threads 4,415 comments Davis, CA

    16   2:40pm Sat 12 Feb 2011   Share   Quote   Permalink   Like   Dislike   If there's one application that benefits from oil refined into fuel, it's airplanes. It packs a lot of energy by weight. When the oil becomes too scarce, the ability to run a LOT of passenger aviation all over the planet will end. No more jetting off to Paris for a week, then Switzerland for a weekend of skiing before heading back to your cubicle. Not to say people won't travel, but it won't be as cheap and easy.

17. justme Follow Befriend (2) 33 threads 3,460 comments

    17   2:54pm Sat 12 Feb 2011   Share   Quote   Permalink   Like   Dislike   Vicente says When the oil becomes too scarce, the ability to run a LOT of passenger aviation all over the planet will end. Agreed. Airplane travel is THE WORST form of oil waste on the planet. And a huge portion of it is just vanity travel weekend trips, and equally vain business trips that are quite unneccessary and serve no real purpose except status and self-importance. NASCAR is bad, but the airline industry is the worst offender. Number two is excessive driving and commuting in oversized cars with oversized and inefficient engines.

18. ¥ Follow Befriend 35 threads 5,700 comments Bellingham, WA

    18   3:01pm Sat 12 Feb 2011   Share   Quote   Permalink   Like   Dislike   I think we'll be able to create Jet A via biologic processes. We need 20 billion gallons of the stuff, about 1M 55 gallon drums' worth a day. Air travel is less than 10% of our oil draw, cars burn 40%. So if we can eliminate the car draw we'll be in much better shape. This goes for China and India, too, they need to stop copying us cuz this planet isn't big enough for 4 major consumer economies.

19. pkennedy Follow Befriend (8) 28 threads 1,342 comments Redwood City, CA

    19   8:36pm Sat 12 Feb 2011   Share   Quote   Permalink   Like   Dislike   For those areas where we still need oil, we'll probably get it from algae. We're decently close to creating a system now, of all the bio fuels, it's the most likely to generate the most fuel with the best energy return. Planes should be able to use it as well, and planes will find better ways to conserve as well. The latest boeing is supposed to get 30% better fuel economy which is pretty massive.

20. Kevin Follow Befriend 40 threads 2,652 comments

    20   9:56pm Sat 12 Feb 2011   Share   Quote   Permalink   Like   Dislike   Vicente says If there’s one application that benefits from oil refined into fuel, it’s airplanes. It packs a lot of energy by weight. When the oil becomes too scarce, the ability to run a LOT of passenger aviation all over the planet will end. No more jetting off to Paris for a week, then Switzerland for a weekend of skiing before heading back to your cubicle. Not to say people won’t travel, but it won’t be as cheap and easy. Airplanes are amongst the easiest vehicles to retrofit for new propulsion technologies, so as soon as there's a viable replacement it'll happen very quickly. The most likely fuel source for airplanes in the future is hydrogen. GE already produces such an engine, and Boeing has built two prototype planes that use it. Airbus seems to be more interested in liquified natural gas. Basically, I'm not worried.