Oil Crisis

“EIA Administrator Guy Caruso on Tuesday predicted crude prices will fall to $57 a barrel by 2016 as exploration and development expands, bringing new supplies to the market“. link

Found Caruso’s comments yesterday honestly, “misinforming” to say the least. The prediction that somehow crude prices will fall below $57 a barrel is not only unrealistic given the current global energy situation, but frankly, totally naive if not purposely misleading. But that wouldn’t surprise me. According to APS reports - Saudi Oil Minister, Ali al-Naimi reiterated the fact that “From now, there’s a line below which prices won’t fall. If you take into account all the subsidies involved in the production of a barrel of biofuels, I doubt whether anyone could make money from that with a price lower than $60 or $70″.

Meanwhile, back to Caruso’s comments, he goes on with the idea of bringing new oil supplies to the market. How? Doesn’t the EIA Administrator know that no significant world-scale oil discoveries have been made since the North Sea and Alaska in the ’70s?!. In 2003 the top 10 oil companies spent $8 billion on exploration, finding only less than $4 billion worth of oil and gas. According to a statement made by chairman of Exxon Mobile in Sept of 2005, “On average, production in the world’s oil and gas fields is declining between four and six percent each year”. Moreover, Oil companies are not building new pipelines. They’re not building new refineries. If there were good prospects out there, we all know they’d be drilling like crazy.

Saudi officials, for the first time ever admitted to the world’s leading industrial powers that OPEC will not be able to meet Western oil demand in 10–15 years. Let’s face it ; whether we like it or not - the reality is ; the world’s wells are running dry and we are eventually going to see the unavoidable economic reality of crude hitting $200 a barrel by 2010. The only way to start doing something about energy crisis, is to stop projecting from the past and look at the present with no spin.