02/09/11 Baltimore, Maryland – We’ve suspected for some time Saudi Arabia has less oil in the ground than they claim. Apparently so do diplomats in the US State Department…at least, according to even more scintillating cables released from Julian Assange’s WikiLeaks website.
The cables come from inside Saudi Arabia’s state-owned oil company, Saudi Aramco.
In 2007, Aramco’s former head of exploration Sadad al-Husseini told the US consul general in Riyadh that the firm had purposely overstated its reserves by 40% to spur foreign investment.
“Our mission now questions how much the Saudis can now substantively influence the crude markets over the long term,” reads one of the cables. “Clearly, they can drive prices up, but we question whether they any longer have the power to drive prices down for a prolonged period.”
None of this will be news to longtime readers, but it might register a minor blip on the EKG of the couch-surfing nightly news set. It could even make an impression on readers of the Drudge Report, where the headline is prominently displayed this morning.
Ultimately, however, the revelation that the Saudis are 40% less impressive than they were yesterday will have little impact.
“The bottom line is that in the short term,” says our oil analyst, the vastly popular Byron King, “Saudi’s problem doesn’t really matter. They’ll export as much oil as they need to cover their bills and shape the price environment. The tankers will sail.
“Medium term, Saudi will have trouble meeting its goals. But characteristically, the Saudis will cover up the problem.
“Long term, every day that we don’t plan for new ways of running the energy-consuming part of the world is another day closer to disaster.”
Addison Wiggin
for The Daily Reckoning
Addison Wiggin
Addison Wiggin is the executive publisher of Agora Financial, LLC, a fiercely independent economic forecasting and financial research firm. He’s the creator and editorial director of Agora Financial’s daily 5 Min. Forecast and editorial director of The Daily Reckoning. Wiggin is the founder of Agora Entertainment, executive producer and co-writer of I.O.U.S.A., which was nominated for the Grand Jury Prize at the 2008 Sundance Film Festival, the 2009 Critics Choice Award for Best Documentary Feature, and was also shortlisted for a 2009 Academy Award. He is the author of the companion book of the film I.O.U.S.A.and his second edition of The Demise of the Dollar… and Why it’s Even Better for Your Investments was just fully revised and updated. Wiggin is a three-time New York Times best-selling author whose work has been recognized by The New York Times Magazine, The Economist, Worth, The New York Times, The Washington Post as well as major network news programs. He also co-authored international bestsellers Financial Reckoning Day and Empire of Debt with Bill Bonner.
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Why did Sadad al-Husseini tell the US rep this? Was it an answer to the US rep’s question like, “Gee wiz Mr. al-Husseini why aren’t you pumping more oil out of the wells?” or how about, “Gosh darn-it Mr. Oil Minister why are oil prices going up so much?” This particular wikileak is really more about how some big oil producers will say anything to justify a higher price for crude oil.
Remember also that the Saudi royal family is a factious, geriatric regime that could fall apart at any minute. The political instabilities have the potential to exacerbate any problems caused by an oil shortage exponentially.
We really have to suck the lifeblood out of the oil ticks, so that never again the Middle East will be able to interrupt Western commerce.
oh there’s still about 45yrs of known oil reserves left. Plus another 200yrs of natural gas. I wouldn’t lose any sleep over dwindling supplies.
Articles like these a pure propaganda. If push comes to shove we can find oil reserves. North Dakota for one. If there is a shortage it is a contrived one for the power elites benefit. My hope is as America leaves the stage. The Chinese will demand more exploration and supply.
Actually i’m From Saudi Arabia
And if You Want To Know The Truth About our Oil , Dont Go to Google And Search About it
The Truth is Allah Bless us
All The Saudi Arabians Are Muslims 100%
Our Life is So Easy
Go And Read About The Holy Quran
And You’ll See The Truth