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Comment by Dr Mamdouh G Salameh, International Oil Economist Visiting Professor of Energy Economics at ESCP Europe Business School, London is also interesting.

Comment by Dr Mamdouh G Salameh, International Oil Economist Visiting Professor of Energy Economics at ESCP Europe Business School, London is also interesting. No way of verifying accuracy. 'Having done a lot of research and analysis for years about Saudi proven oil reserves, I reached the final conclusion that Saudi reserves couldn’t be more than 55 billion barrels (bb) rather than the 266 bb the Saudi have been claiming for years. Moreover, the Saudis haven’t been transparent enough about their production capacity. Their oil production peaked in 2005 at 9.65 million barrels a day (mbd) and has been in decline since. In my estimate, their production capacity doesn’t exceed 8.5 mbd. Moreover, they never had a spare capacity of 2 mbd as they have been claiming because to have such a spare capacity would mean that their production capacity is 12 mbd and this figure has never been tested. When they say they are producing 10 mbd, at least 1.5 mbd come from their stored crude. With estimated stored crude oil of 130 million barrels , the Saudis could continue to meet their customer needs for less than a month after which their stored oil would have been totally exhausted. The proof they aren’t telling the truth about the timetable for repairs is that they have been telling their customers that some lighter grades would likely be replaced with heavier crude grades. The truth about Saudi oil potential and reserves will eventually come out. And when it does, the global oil market will get the shock of its life with a horrendous global oil crisis to match.'

magashna 7y ago
Might be the shock we need to work on renewables and batteries more seriously on a global level.
- ajross 7y ago
  That's what we thought 20 years ago during the "peak oil" nonsense and they just invented fracking. Talking about oil "reserves" paints a picture that petroleum extraction is like just scooping sludge out of a big underground bucket. Real deposits come in a huge variety of forms and qualities, and extracting them sits on a cost spectrum. All making oil more expensive does is make the more expensive oil worth extracting, prices stabilize at a slightly higher point and the market adapts. Unfortunately we aren't going to run out of oil anywhere near soon enough to save the planet. We need to do it the hard way.
  - ed312 7y ago
    However the costs of renewable tech is coming down - at some point it's just a better business decision to switch off oil.
    - ajross 7y ago
      Exactly. Which is the "hard way". We need to win this with technology and, where technology alone isn't enough, with government action to curtail emissions. We aren't going to get lucky and run out of oil.
  - acchow 7y ago
    > prices stabilize at a slightly higher point Which encourages renewable development. Renewables would not be as successful today with oil at $20/bbl.
    - fooblitzky 7y ago
      Renewables would be ahead on cost down to USD 9-10/barrel: https://investors-corner.bnpparibas-am.com/investment-themes/sri/petrol-eroci-petroleum-age/ https://investors-corner.bnpparibas-am.com/investment-themes...
      - AnthonyMouse 7y ago
        "Competitive" is a curve, not a point. Solar can be cheaper for daytime generation before it's cheaper for nighttime generation (when you need to tack on the cost of storage). Electric cars may already have a lower TCO, but if you already have an ICE car, it may not be worth the transaction costs of immediately selling it and buying an electric car instead of waiting until you would have bought a new car anyway, whereas it could be if gas prices were higher. The TCO is also affected by how much you drive, so the gas price that justifies replacing your car depends on how much you drive it. There isn't a price level where $0.01 below it no one can justify buying an electric car and $0.01 above it everyone can. The higher oil prices get, the more people end up on the other side of the line.
- colechristensen 7y ago
  No, the price of oil will jump to 80-100/bbl and all of the tar sands extraction will become rather profitable again and North American production will explode. OPEC had been keeping the prices around 100 until the tar sands extraction became big and they had to drastically cut prices because they couldn't handle the loss of revenue. There is an enormous amount of oil tied up in those tar sands and it is very extricable, but it is considerably more expensive to extract such that it isn't economical at current prices.
  - hangonhn 7y ago
    Not to mention actually very inefficient and polluting.
    - ndarwincorn 7y ago
      Seriously. Ask some Athabascans about how extricable tar sands oil is.
      - foobiekr 7y ago
        We are so far out over our skis in terms of the need for oil input to the agricultural sector that the overall economic system will not bat an eye at despoiling everything around it.
  - Brakenshire 7y ago
    Oil prices going back up to $100 a barrel would drive adoption of electric cars at a much faster pace.
    - cobookman 7y ago
      Itd actually be a good thing for the environment. The greater the cost the more conservation makes business sense. If an efficient fridge is only 15$/month cheaper it's not replacing your current fridge. At 50$/month it quickly pays off.
- ars 7y ago
  If oil prices go up renewables become more profitable, BUT they also become more expensive, since energy is a huge component in their cost. It's pretty much a wash. Don't expect higher oil prices to spur renewables, it has never happened, and never will. Instead renewables become profitable (and thus popular) when we become more efficient at making and installing them.
  - acchow 7y ago
    > since energy is a huge component in their cost I want to see some data to back up this claim. > It's pretty much a wash. I guess you'd need energy to make up >90% of the cost to make it "pretty much a wash"?
    - ars 7y ago
      > I want to see some data to back up this claim. I'll try to get some, but do a thought experiment: What component of, say, a solar panel cost is not energy? > I guess you'd need energy to make up >90% of the cost to make it "pretty much a wash"? Yes, and it is. Not in terms of you have to pay oil companies all that money, but rather that energy is the multiplier that all prices are based off of. If oil costs go up, then your suppliers costs go up, all the way down the chain. Including salaries - since the workers need more money to buy stuff, they want higher salaries. Think about what is costs to make something, every single thing, at it's endpoint costs energy.
      - rgbrenner 7y ago
        You've forgotten all of the other sources we use to produce energy: coal, gas, hydro, nuclear, renewables, etc.. and a fraction also comes from oil. So oil tripling overnight would not result in a tripling of energy prices. There would be a small increase as load is shifted to other sources.. and there would be an increase in transportation costs of solar panel delivery. But the cost of a panel would barely increase. And those factories near nuclear, hydro, etc plants would see a slight competitive advantage over those in areas where energy comes from oil (but again, coal is a big source of energy.. oil much less so).
- zaroth 7y ago
  More seriously? I’m not sure it’s a reasonable position to claim that renewables and battery tech are not being “seriously” worked on. Just looking at solar and battery manufacturing growth, on the order of $100 billion / year is being invested annually in these technologies. I think it’s very reasonable to conclude that doubling the investment would not nearly double the rate of advances, because all the top experts are already fully employed and fully funded.
  - BlueTemplar 7y ago
    Hmm, how does this compare with money invested in fossil fuels ?
    - zaroth 7y ago
      As a percentage of the current market size, the R&D for batteries and renewables is probably an order of magnitude greater than R&D in fossil fuels. From a public investment perspective, the trend is that fossil fuel R&D is shrinking, and renewables investment is increasing or steady. Renewables public investment was first higher than fossil fuels in 1998, and has been higher than fossil fuel public investment 9 out of the last 10 years. [1] [1] - https://www.iea.org/statistics/rdd/ https://www.iea.org/statistics/rdd/
      - BlueTemplar 7y ago
        But 20 G$ isn't 100 G$... And that's just for the IEA countries, if you aren't counting the big fossil fuel players like Russia and OPEC on one hand and also China on the other - what is even the point of these numbers ? And I see that the biggest US tight oil firms had a deficit of nearly 7 G$ for 2018, so I'd assume that their development costs (which are the majority of their costs due to the very high depletion rate) are even higher - so where does yours "order of magnitude greater" comes from ? https://www.reuters.com/article/usa-shale-finances/cash-flow-still-weak-at-u-s-shale-firms-stock-prices-underperform-idUSL1N211001 https://www.reuters.com/article/usa-shale-finances/cash-flow...
  - BlueTemplar 7y ago
- LifeLiverTransp 7y ago
  I can already hear the venezuela is creating weapons of mass destruction propaganda.
AnimalMuppet 7y ago
> The truth about Saudi oil potential and reserves will eventually come out. And when it does, the global oil market will get the shock of its life with a horrendous global oil crisis to match. I'm skeptical. Maybe the Saudis don't have the capacity they say they do. They have the capacity that they're delivering, though, and that capacity is enough for the needs of the market... ... until some other supplier has a problem. But while the results may be a shock and a crisis, I suspect it won't quite add up to the apocalyptic terms of the quote.
- monocasa 7y ago
  IDK, when you're so dependent on others not to screw up like that, sounds like what's necessary for a systemic collapse.
- Scarblac 7y ago
  The way oil peaks work, at first production decreases slowly, but then it goes faster and faster. If they're about 1 million barrels per day below the peak after a decade, the next similar decrease will come a lot faster.
colechristensen 7y ago
>the global oil market will get the shock of its life with a horrendous global oil crisis to match. It won't. There is a very large amount of oil production on hold or at low capacity in North America because the prices are currently too low and very much expected to go higher in the future. Prices will rise up to 50% but that isn't much of a crisis or unprecedented. Renewables will become more attractive and their growth will accelerate a little.
- Voloskaya 7y ago
  > "Prices will rise up to 50% but that isn't much of a crisis " If a 50% price increase isn't a crisis, then what is?
  - sandworm101 7y ago
    Not having enough at any price. The "peak oil" nightmare scenarios are where demand truly outstrips supply. Price eventually becomes irrelevant as physical access to the resource matters more than cash. I personally don't think that will ever happen. The increased adoption of renewables means oil demand will not outstrip supply.
    - avip 7y ago
      idk. Global oil consumption has been steadily ramping up 1-2%/year with little regard to renewables or climate crisis. The increasing penetration of renewables is dwarfed by increased population + raising living standards.
      - AnthonyMouse 7y ago
        Oil consumption has been increasing primarily because the price has been declining. If the price was higher then more people would use alternatives that are currently more expensive but wouldn't be against higher oil prices. If the Saudis are under-reporting their reserves, that's why. They don't want oil prices to be higher because it makes alternatives more competitive. It doesn't help them to sell oil for 50% more for a few years while that spurs everyone to buy electric cars and charge them with solar panels, only to have that demand reduction cause oil prices to decline below their current level and stay there forever. Or worse (for them), for consumption to decline to the level that consumers no longer strongly oppose a carbon tax, which would naturally cause consumption to fall off a cliff (as intended) as even more people switch to alternatives. On top of that, the alternatives need volume to build economies of scale which make them more competitive. This is already happening but would happen faster with higher oil prices, and as it does the result is a permanent reduction in alternative energy costs, making oil less competitive even at lower prices.
stefan_ 7y ago
Why does it matter what their potential production capacity is? That sounds like asking how many money printing machines they have; it seems they could build as many of those as they want, but of course you only do that according to market needs. And of course oil reserves have had the unfortunate tendency to significantly increase whenever the oil price is high.
- gruez 7y ago
  >Why does it matter what their potential production capacity is? Because they're planning to IPO? Surely if Aramco had double the production capacity, it would be worth more to investors because it would be better equipped to handle disruptions.
- throwaway2048 7y ago
  Think of oil in the ground like a sponge, after a certain point it doesn't matter how many wells you have to extract it, its only going to "leak out" at a certain rate that can not be raised. It isn't necessarily trivial to raise production.
- la_barba 7y ago
  Capacity is the currency of the industry they're in. Its right in the article itself. >What Saudi is trying to do by not revealing the true picture is to protect its reputation as a reliable oil supplier, especially to its target clientele in Asia, so we have to take all of these comments with a hefty pinch of salt,
jcampbell1 7y ago
OPEC has generaly set country targets based on peak capacity and reserves. Everyone has assumed the numbers have been part bullshit for 50 years because there is a huge incentive to lie to have higher OPEC allowances. Frankly, they'd make more total revenue over the long term if they didn't lie.
dfsegoat 7y ago
This is interesting. I read a book back in 2009 called "The Coming Economic Collapse: How You Can Thrive When Oil Costs $200 a Barrel" by Stephen Leeb, Ph.D (2007) [1] The title is total trash, and it seemed alarmist but IIRC the premise of the entire book is basically what you describe, at least in my very pedestrian understanding of energy / petroleum markets. Are you familiar with this title, or the author? Your post makes me want to pull it out for a re-read. edit: maybe not. really spotty reviews. [2] [1] - https://www.amazon.com/Coming-Economic-Collapse-Thrive-Barrel/dp/B002IT5P1U https://www.amazon.com/Coming-Economic-Collapse-Thrive-Barre... [2] - https://www.goodreads.com/review/show/13711731 https://www.goodreads.com/review/show/13711731
Audoenus 7y ago
Dr. Salameh doesn't account for advancements in technology or new oil discoveries https://oilprice.com/Energy/Crude-Oil/Does-Saudi-Arabia-Really-Have-As-Much-Oil-As-Analysts-Think.html https://oilprice.com/Energy/Crude-Oil/Does-Saudi-Arabia-Real...

magashna 7y ago

Might be the shock we need to work on renewables and batteries more seriously on a global level.

ajross 7y ago
That's what we thought 20 years ago during the "peak oil" nonsense and they just invented fracking. Talking about oil "reserves" paints a picture that petroleum extraction is like just scooping sludge out of a big underground bucket. Real deposits come in a huge variety of forms and qualities, and extracting them sits on a cost spectrum. All making oil more expensive does is make the more expensive oil worth extracting, prices stabilize at a slightly higher point and the market adapts. Unfortunately we aren't going to run out of oil anywhere near soon enough to save the planet. We need to do it the hard way.
- ed312 7y ago
  However the costs of renewable tech is coming down - at some point it's just a better business decision to switch off oil.
  - ajross 7y ago
    Exactly. Which is the "hard way". We need to win this with technology and, where technology alone isn't enough, with government action to curtail emissions. We aren't going to get lucky and run out of oil.
- acchow 7y ago
  > prices stabilize at a slightly higher point Which encourages renewable development. Renewables would not be as successful today with oil at $20/bbl.
  - fooblitzky 7y ago
    Renewables would be ahead on cost down to USD 9-10/barrel: https://investors-corner.bnpparibas-am.com/investment-themes/sri/petrol-eroci-petroleum-age/ https://investors-corner.bnpparibas-am.com/investment-themes...
    - AnthonyMouse 7y ago
      "Competitive" is a curve, not a point. Solar can be cheaper for daytime generation before it's cheaper for nighttime generation (when you need to tack on the cost of storage). Electric cars may already have a lower TCO, but if you already have an ICE car, it may not be worth the transaction costs of immediately selling it and buying an electric car instead of waiting until you would have bought a new car anyway, whereas it could be if gas prices were higher. The TCO is also affected by how much you drive, so the gas price that justifies replacing your car depends on how much you drive it. There isn't a price level where $0.01 below it no one can justify buying an electric car and $0.01 above it everyone can. The higher oil prices get, the more people end up on the other side of the line.
colechristensen 7y ago
No, the price of oil will jump to 80-100/bbl and all of the tar sands extraction will become rather profitable again and North American production will explode. OPEC had been keeping the prices around 100 until the tar sands extraction became big and they had to drastically cut prices because they couldn't handle the loss of revenue. There is an enormous amount of oil tied up in those tar sands and it is very extricable, but it is considerably more expensive to extract such that it isn't economical at current prices.
- hangonhn 7y ago
  Not to mention actually very inefficient and polluting.
  - ndarwincorn 7y ago
    Seriously. Ask some Athabascans about how extricable tar sands oil is.
    - foobiekr 7y ago
      We are so far out over our skis in terms of the need for oil input to the agricultural sector that the overall economic system will not bat an eye at despoiling everything around it.
- Brakenshire 7y ago
  Oil prices going back up to $100 a barrel would drive adoption of electric cars at a much faster pace.
  - cobookman 7y ago
    Itd actually be a good thing for the environment. The greater the cost the more conservation makes business sense. If an efficient fridge is only 15$/month cheaper it's not replacing your current fridge. At 50$/month it quickly pays off.
ars 7y ago
If oil prices go up renewables become more profitable, BUT they also become more expensive, since energy is a huge component in their cost. It's pretty much a wash. Don't expect higher oil prices to spur renewables, it has never happened, and never will. Instead renewables become profitable (and thus popular) when we become more efficient at making and installing them.
- acchow 7y ago
  > since energy is a huge component in their cost I want to see some data to back up this claim. > It's pretty much a wash. I guess you'd need energy to make up >90% of the cost to make it "pretty much a wash"?
  - ars 7y ago
    > I want to see some data to back up this claim. I'll try to get some, but do a thought experiment: What component of, say, a solar panel cost is not energy? > I guess you'd need energy to make up >90% of the cost to make it "pretty much a wash"? Yes, and it is. Not in terms of you have to pay oil companies all that money, but rather that energy is the multiplier that all prices are based off of. If oil costs go up, then your suppliers costs go up, all the way down the chain. Including salaries - since the workers need more money to buy stuff, they want higher salaries. Think about what is costs to make something, every single thing, at it's endpoint costs energy.
    - rgbrenner 7y ago
      You've forgotten all of the other sources we use to produce energy: coal, gas, hydro, nuclear, renewables, etc.. and a fraction also comes from oil. So oil tripling overnight would not result in a tripling of energy prices. There would be a small increase as load is shifted to other sources.. and there would be an increase in transportation costs of solar panel delivery. But the cost of a panel would barely increase. And those factories near nuclear, hydro, etc plants would see a slight competitive advantage over those in areas where energy comes from oil (but again, coal is a big source of energy.. oil much less so).
zaroth 7y ago
More seriously? I’m not sure it’s a reasonable position to claim that renewables and battery tech are not being “seriously” worked on. Just looking at solar and battery manufacturing growth, on the order of $100 billion / year is being invested annually in these technologies. I think it’s very reasonable to conclude that doubling the investment would not nearly double the rate of advances, because all the top experts are already fully employed and fully funded.
- BlueTemplar 7y ago
  Hmm, how does this compare with money invested in fossil fuels ?
  - zaroth 7y ago
    As a percentage of the current market size, the R&D for batteries and renewables is probably an order of magnitude greater than R&D in fossil fuels. From a public investment perspective, the trend is that fossil fuel R&D is shrinking, and renewables investment is increasing or steady. Renewables public investment was first higher than fossil fuels in 1998, and has been higher than fossil fuel public investment 9 out of the last 10 years. [1] [1] - https://www.iea.org/statistics/rdd/ https://www.iea.org/statistics/rdd/
    - BlueTemplar 7y ago
      But 20 G$ isn't 100 G$... And that's just for the IEA countries, if you aren't counting the big fossil fuel players like Russia and OPEC on one hand and also China on the other - what is even the point of these numbers ? And I see that the biggest US tight oil firms had a deficit of nearly 7 G$ for 2018, so I'd assume that their development costs (which are the majority of their costs due to the very high depletion rate) are even higher - so where does yours "order of magnitude greater" comes from ? https://www.reuters.com/article/usa-shale-finances/cash-flow-still-weak-at-u-s-shale-firms-stock-prices-underperform-idUSL1N211001 https://www.reuters.com/article/usa-shale-finances/cash-flow...
- BlueTemplar 7y ago
LifeLiverTransp 7y ago
I can already hear the venezuela is creating weapons of mass destruction propaganda.

AnimalMuppet 7y ago

> The truth about Saudi oil potential and reserves will eventually come out. And when it does, the global oil market will get the shock of its life with a horrendous global oil crisis to match. I'm skeptical. Maybe the Saudis don't have the capacity they say they do. They have the capacity that they're delivering, though, and that capacity is enough for the needs of the market... ... until some other supplier has a problem. But while the results may be a shock and a crisis, I suspect it won't quite add up to the apocalyptic terms of the quote.

monocasa 7y ago
IDK, when you're so dependent on others not to screw up like that, sounds like what's necessary for a systemic collapse.
Scarblac 7y ago
The way oil peaks work, at first production decreases slowly, but then it goes faster and faster. If they're about 1 million barrels per day below the peak after a decade, the next similar decrease will come a lot faster.

colechristensen 7y ago

>the global oil market will get the shock of its life with a horrendous global oil crisis to match. It won't. There is a very large amount of oil production on hold or at low capacity in North America because the prices are currently too low and very much expected to go higher in the future. Prices will rise up to 50% but that isn't much of a crisis or unprecedented. Renewables will become more attractive and their growth will accelerate a little.

Voloskaya 7y ago
> "Prices will rise up to 50% but that isn't much of a crisis " If a 50% price increase isn't a crisis, then what is?
- sandworm101 7y ago
  Not having enough at any price. The "peak oil" nightmare scenarios are where demand truly outstrips supply. Price eventually becomes irrelevant as physical access to the resource matters more than cash. I personally don't think that will ever happen. The increased adoption of renewables means oil demand will not outstrip supply.
  - avip 7y ago
    idk. Global oil consumption has been steadily ramping up 1-2%/year with little regard to renewables or climate crisis. The increasing penetration of renewables is dwarfed by increased population + raising living standards.
    - AnthonyMouse 7y ago
      Oil consumption has been increasing primarily because the price has been declining. If the price was higher then more people would use alternatives that are currently more expensive but wouldn't be against higher oil prices. If the Saudis are under-reporting their reserves, that's why. They don't want oil prices to be higher because it makes alternatives more competitive. It doesn't help them to sell oil for 50% more for a few years while that spurs everyone to buy electric cars and charge them with solar panels, only to have that demand reduction cause oil prices to decline below their current level and stay there forever. Or worse (for them), for consumption to decline to the level that consumers no longer strongly oppose a carbon tax, which would naturally cause consumption to fall off a cliff (as intended) as even more people switch to alternatives. On top of that, the alternatives need volume to build economies of scale which make them more competitive. This is already happening but would happen faster with higher oil prices, and as it does the result is a permanent reduction in alternative energy costs, making oil less competitive even at lower prices.

stefan_ 7y ago

Why does it matter what their potential production capacity is? That sounds like asking how many money printing machines they have; it seems they could build as many of those as they want, but of course you only do that according to market needs. And of course oil reserves have had the unfortunate tendency to significantly increase whenever the oil price is high.

gruez 7y ago
>Why does it matter what their potential production capacity is? Because they're planning to IPO? Surely if Aramco had double the production capacity, it would be worth more to investors because it would be better equipped to handle disruptions.
throwaway2048 7y ago
Think of oil in the ground like a sponge, after a certain point it doesn't matter how many wells you have to extract it, its only going to "leak out" at a certain rate that can not be raised. It isn't necessarily trivial to raise production.
la_barba 7y ago
Capacity is the currency of the industry they're in. Its right in the article itself. >What Saudi is trying to do by not revealing the true picture is to protect its reputation as a reliable oil supplier, especially to its target clientele in Asia, so we have to take all of these comments with a hefty pinch of salt,

jcampbell1 7y ago

OPEC has generaly set country targets based on peak capacity and reserves. Everyone has assumed the numbers have been part bullshit for 50 years because there is a huge incentive to lie to have higher OPEC allowances. Frankly, they'd make more total revenue over the long term if they didn't lie.

dfsegoat 7y ago

This is interesting. I read a book back in 2009 called "The Coming Economic Collapse: How You Can Thrive When Oil Costs $200 a Barrel" by Stephen Leeb, Ph.D (2007) [1] The title is total trash, and it seemed alarmist but IIRC the premise of the entire book is basically what you describe, at least in my very pedestrian understanding of energy / petroleum markets. Are you familiar with this title, or the author? Your post makes me want to pull it out for a re-read. edit: maybe not. really spotty reviews. [2] [1] - https://www.amazon.com/Coming-Economic-Collapse-Thrive-Barrel/dp/B002IT5P1U https://www.amazon.com/Coming-Economic-Collapse-Thrive-Barre... [2] - https://www.goodreads.com/review/show/13711731 https://www.goodreads.com/review/show/13711731

Audoenus 7y ago

Dr. Salameh doesn't account for advancements in technology or new oil discoveries https://oilprice.com/Energy/Crude-Oil/Does-Saudi-Arabia-Really-Have-As-Much-Oil-As-Analysts-Think.html https://oilprice.com/Energy/Crude-Oil/Does-Saudi-Arabia-Real...