According to new a WikiLeaks release, Saudi Arabia, which houses about a quarter of the world’s known oil, vastly overstated its oil reserves in an effort to bolster foreign investment. That’s terrible news for anyone hoping to keep energy prices low in the coming years, including America, which imports 15 percent of its oil from Saudi Arabia.
This information, which originated in confidential cables from the U.S. embassy in Riyadh, hinges largely on the testimony of Sadad al-Husseini, a geologist and former head of exploration at the Saudi oil monopoly Aramco. Husseini told America’s consul-general that the country is not only sitting on less oil than it says it has, but that it will never be able to reach the 12.5 million barrel per day capacity needed to maintain the price of oil.
According to the cables, which date between 2007 and 2009, Mr Husseini said Saudi Arabia might reach an output of 12 million 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”.
Mr Husseini said 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.
Other energy analysts have backed Husseini’s predictions in the past two years, lending even more credence to his frightening predictions. Alas, that hasn’t stopped sites like OilPrice from calling peak oil a “myth” that deserves to be “debunked.”
photo via Wikimedia Commons
