[srenie1]

I am a believer of peak oil, and i indeed believe in the medium to long term supply will not meet demand.
However, there's one part of the theory i don't get. Many people believe the kingdom of SA doesn't have the capacitiy to increase its output, and that they lie about it.
However, from an economical point of view, that would be dumb. Suggesting spare capacitiy keeps prices lower, admitting we're at peak oil would increase their prices and increase profits.

So why would they lie? Politics? I don't know. But if it's true they are at peak, this lie costs them a lot of money...

Any suggestions?

[vision-master]

SA doesn't release much info about their oil fields.

[cipi604]

I am a believer of peak oil, and i indeed believe in the medium to long term supply will not meet demand.
However, there's one part of the theory i don't get. Many people believe the kingdom of SA doesn't have the capacitiy to increase its output, and that they lie about it.
However, from an economical point of view, that would be dumb. Suggesting spare capacitiy keeps prices lower, admitting we're at peak oil would increase their prices and increase profits.

So why would they lie? Politics? I don't know. But if it's true they are at peak, this lie costs them a lot of money...

Any suggestions?

At the very high level, they know. For the sheeple ... there is a different story. If you stay quiet, you get a lot of investments, if you go doomerish... bye bye internal/external economic stability.
You say "more money", paper money that is. You need to keep the paper money stable, or else you just sold your stuff for nothing.

[PrestonSturges]

That is an easy question if you put yourself in the shoes of a Saudi prince - you want all the money you can get NOW, and screw the next generation.

So you inflate the size of your reserves so it looks like you are being thrifty while you are actually pumping the fields dry.

The incentives are totally in the direction of lying.

[Schmuto]

I am a believer of peak oil, and i indeed believe in the medium to long term supply will not meet demand.
However, there's one part of the theory i don't get. Many people believe the kingdom of SA doesn't have the capacitiy to increase its output, and that they lie about it.
However, from an economical point of view, that would be dumb. Suggesting spare capacitiy keeps prices lower, admitting we're at peak oil would increase their prices and increase profits.

So why would they lie? Politics? I don't know. But if it's true they are at peak, this lie costs them a lot of money...

Any suggestions?

1st Peak Oil is NOT a theory. Peak Oil is the moment in time when production is maximized, and then never reaches that level again.

Peak Oil WILL happen. The only question is WHEN it will happen.

OK?

As for the KSA's motivation for lying, oh lawdy lawdy, where should I start?

1st - Don't assume that the KSA is completely independent. They may answer to the U.S. at some level.

2nd - You have to see the bigger picture. If the KSA were to come out and say, "we're running out of oil," the result would not be higher oil prices, which they could then capitalize on.

The result would be complete and absolute panic, all over the world.

Oil would go to 100 in about 3 trading sessions. To 200 in about 10.

Any remaining doubt that the U.S. is in the Middle East for something other than oil will be gone - the myth of the U.S. as democratic prosylotizer will completely evaporate. We will then be seen in our naked glory - as a conquering Empire.

J6P will have his thick, consumming head held under water repeatedly until he understands, completely, that he will never, ever again buy gas for less than 10 bucks a gallon.

The U.S. and world economy go into rapid and irrevocable decline as the price of oil shoots past 200.

Governments attempt to intervene in oil markets, making the problem worse.

And on and on and on and on.

In short - IF the KSA says they are running out of oil, it is completely equivalent to the statement, "the world is running out of oil."

Think about it. Complete panic. Complete, uncontrollable panic.

It can't be done. The lie will be told all the way back down the production curve. It will be told as long as it can be told.

The truth can't be leaked out, because then things go from bad, right now, to complete planetary chaos.

That's why.

As a side note, I don't believe that the global economic meltdown was intentionally engineered to coincide with peak, which I think has already happened. But the coincidence is striking. In the end, it has helped me out a lot. We're not quite limited by peak oil. We will be soon, IMO, but not quite yet. Prep!

[Micki]

Yes, but sometimes money is not all. Especially if you are dead.
This is my understanding; The Royal family of S.A. is a dictatorship and not particulalry popular even in SA. The only way they can remain in power is by ensuring stability in the country and surrounding region. That is why SA is keen to make friends with nations like US and Israel.
Basically when US closed the gold window in -71 US had to protect the strength uf the dollar and they did this through petrodollar recycling. (That is why nations like Iraq that stopped selling for USD and now Iran planning to do the same, is such a threat to US). In return for supporting USD Saudia Arabia has received military support.

Being the swing trader has also given SA some power over other producing nations in that it can decide if and when they have suffered economically. Say for instance SA is bothered by increasing Shia influence in the region stemming from Iran. Dropping oil prices has in that case ensured Iran's economy suffered and thereby regional influence.

But at the end of the day, what determines prices is not what is said but what oil actually hits the market VS demand. So SA jawboning allows for short term fluctuations but if for instance they claim to have capacity but do not produce, it will put upward presure on price.

For major producers it is af upmost importance that world demand is kept up as long as they have something to sell. Admitting a near term peak in global production would have consequences for demand as prices may temporarily shoot up but also crash the economy (and we have seen now how demand jitters can have a negative impact on price) and create a scramble to develop alternatives.
So not driving away demand too early is imperative to them.

SA's remaining capacity is of course difficult for an outsider to estimate. Matt Simmons for instance who has made an attept doesn't say they are out of oil. In fact what he has observed is that it is the light sweet stuff that is maturing as the amount of water injection taking place is high. It is his opinion that there is plenty of oil left but of heavy sour crude kind, which is much harder to extract and costly to refine and refining capabilities for this is very limited. Given that it normally is a 10-20 year timeframe for bringing on-line a new refinery, it is therefore suggesteded that SA light sweet peaking is sufficient for resulting in major impact to the world.

If you combine this with the fact that several other major fields like Cantarell and north sea for instance being in steep decline and all the new finds are significantly smaller in size you will face issues with there being need for more and more oil infrastructure to handle the scattered litle fields (and in many case more complex installations to handle deep sea oil etc).

+ of course with the downturn in economy now resulting in explorations and new projects being aborted, there will be a lag time from when prices/demand picks up to when industry can respond by even getting these activities going again.
One can say the way to ensure high oil prices is low oil prices.

[coyote]

However, there's one part of the theory i don't get. Many people believe the kingdom of SA doesn't have the capacitiy to increase its output, and that they lie about it.
However, from an economical point of view, that would be dumb. Suggesting spare capacitiy keeps prices lower, admitting we're at peak oil would increase their prices and increase profits.

None of that is really part of peak oil theory.

However, I can think of many reasons the House of Saud might lie - most of which involve saving their own hides for a little while longer.

[Vogelzang]

Saudi untouched?

Nov 14th 2008
From the Economist Intelligence Unit ViewsWire
The global economic slowdown may affect Saudi Arabia less than some

http://www.economist.com/agenda/display ... d=12623356