Where is Saudi’s Excess Capacity When You Need It?

Recent Blog Post

What the leaders need to understand about Canada’s shifting economy

As Canadians are becoming all too aware, the spectre of a recession, no matter the definition, looms large during an election campaign. Despite such prominence, the recent debate made it abundantly clear that none of the candidates understand why the economy stopped growing in the first half of the year and they have even less [...]

Read More...

Where is Saudi’s Excess Capacity When You Need It?

Posted by Jeff Rubin on April 13th, 2011 under SmallerWorldTags: brent crude, oil, Saudi Arabia • 61 Comments

Exactly how high do oil prices have to rise before Saudi Arabia will start using it supposed three million barrels of spare capacity?

Does Saudi Aramco intend to stay on the sidelines watching Brent crude prices -already $120 per barrel – climb as high as $200 per barrel, while blaming speculators for distorting market fundamentals?

Or is the emperor simply wearing no clothes? Is Saudi Arabia, and by extension, OPEC, already tapped out, barely struggling to make up for the loss of 1.3 million barrels of oil exports from a now non-producing, war-torn, Libya.

Even less credible than the country’s official estimates of its reserve capacity is the notion Saudi Arabia could bring down today’s triple digit oil prices but instead chooses not to

No country in the world is more dependent on a healthy global oil market than Saudi Arabia, which pumps out nine million barrels a day. And it is no mystery a further increase in oil prices will lead to another oil induced recession and a subsequent collapse in world oil demand and prices.

If the House of Saud is having trouble buying off its increasingly rebellious populace when triple digit oil prices are giving OPEC its first trillion-dollar revenue year, what are the royal kleptocracy’s chances of survival when oil prices plunge back to $40 in another oil price-induced global recession?

The real reason Saudi Arabia can’t respond to today’s growth-threatening rise in oil prices is exactly the same one as their failure to respond to President Bush’s personal plea in 2008 for more production during the first encounter with triple digit prices. Saudi Arabia has nothing more to pump, save for very limited amounts of heavy sour oil that most of the world’s refineries can’t handle.

As that reality becomes more apparent, expect world oil markets to become more and more skittish.

If the loss of Libyan production has thrown the global oil market into triple-digits, what happens if Nigerian production takes a haircut during the course of its federal election like it did the last time the country went to the polls?

Or what about another supply disruption from any number of Middle Eastern oil producers whose streets fill every day with protestors demanding regime change?

The world is a pretty dangerous place when you no longer have excess capacity to offset disruptions.

Even if there are no further supply shocks, who is going to be pumping the fuel to meet another two million barrel a day increase in global oil demand that occurred last year.

If triple-digit oil prices can’t get Saudi Arabia to pump out its fabled 12.5 million barrier a day peak capacity, what can?

Enviro Skeptic

Those who play with their plaything for 40 years will never advance to adult activiies and modes of transportation. It affects the mind.

from beautiful Shanghai
Enviro Skeptic

Those who play with their plaything for 40 years will never advance to adult activiies and modes of transportation. It affects the mind.

from beautiful Shanghai
Enviro Skeptic

Those who play with their plaything for 40 years will never advance to adult activiies and modes of transportation. It affects the mind.

from beautiful Shanghai
Anonymous

As both a biker and a driver I’m puzzled by your position.

If 50% of current drivers rode bikes you’d have less traffic on the road, less demand pressure for gas prices and more parking space.
In fact, imagine a world where you’re the only enlightened driver, while all those losers save money and get healthier, and you have all the road laying empty for you across the horizon and empty parking space as far as your eyes can see.

Isn’t this utopia enough for you to start encouraging more people to ride bikes?

Cheers
Anonymous

As both a biker and a driver I’m puzzled by your position.

If 50% of current drivers rode bikes you’d have less traffic on the road, less demand pressure for gas prices and more parking space.
In fact, imagine a world where you’re the only enlightened driver, while all those losers save money and get healthier, and you have all the road laying empty for you across the horizon and empty parking space as far as your eyes can see.

Isn’t this utopia enough for you to start encouraging more people to ride bikes?

Cheers
Enviro Skeptic

Take a look at a newsreel of Shanghai from circa 1955 and you will see what you are promoting. Now you have orderly smooth- flowing traffic with a mode of transportation that everyone is aspiring to have. As I have said before 99.9% of people over 30 are not interested in using a bike for serious transportation and promoting this as a viable, effective green solution is ridiculous. Moreover, they are a hazard to drivers when mixed with vehicular traffic, are not pedestrian friendly and should be banned from the road to promote safety. They are playthings and use oil and mining resources like anything else to build.
The are a regressive technology that is never going to solve CO2 problems (CO2 is not a climate- altering gas in any case and worrying about it leads to other rediculous money- wasting regressive environmentalism).
Enviro Skeptic

Take a look at a newsreel of Shanghai from circa 1955 and you will see what you are promoting. Now you have orderly smooth- flowing traffic with a mode of transportation that everyone is aspiring to have. As I have said before 99.9% of people over 30 are not interested in using a bike for serious transportation and promoting this as a viable, effective green solution is ridiculous. Moreover, they are a hazard to drivers when mixed with vehicular traffic, are not pedestrian friendly and should be banned from the road to promote safety. They are playthings and use oil and mining resources like anything else to build.
The are a regressive technology that is never going to solve CO2 problems (CO2 is not a climate- altering gas in any case and worrying about it leads to other rediculous money- wasting regressive environmentalism).
Anonymous

1.I know we both promote freedom of choice so I’m not advocating turning the world into Shanghai anymore than you are saying everyone should be mandated to drive.

2. “99.9% of people over 30 are not interested in using a bike for serious transportation” Reference? Also, do you believe there is not an upwards trend in biking?

3. Biking is viable under certain conditions, especially distances under 10km in urban environments. Cars are very efficient when they carry a lot of cargo or people and take advantage of their flexibility in distances longer than 10km in environments where they can go faster, which is precisely outside cities. Because they don’t overlap I use both according to occasion. There isn’t a “one shoe fits all” solution here.

4. A driver has a 2 ton steel exoskeleton travelling at several dozens of miles per hour, a cyclist has his/her 60kg watery bag of meat. Are you serious when you say they’re an hazard? Do you realize that more pedestrians are killed by cars than any other vehicle or object? Did you know they are killed… mainly in urban environments? Sigh.

5. What is your criteria for saying they’re regressive? I’d ride my bike with immense pleasure even if CO2 was as harmful as baby bunnies.

For someone so bent on advocating for freedom you seem rather opinionated on things that people want to do individually.

So follow my appeal and introduce more people to cycling so that one day you can be the only driver in your hometown and finally have some legroom thanks to all those sissy bikers.
Enviro Skeptic

Arrogance, in fact, is a typical characteristic of the user.
Enviro Skeptic

The honourable poster advances some good points, all of which are taken under advisement for future consideration and action.
As for playtime amusement…..
Hey, if it feels good, do it. Always remember, however, if you are not part of the solution, you are part of the problem. Ruminate on that!
Hic academicus.

from Shanghai with my new Buick(very popular here) hoping the Saudis come through
oilwatcher

Double digit prices are back….

Recent Blog Post

What the leaders need to understand about Canada’s shifting economy

Where is Saudi’s Excess Capacity When You Need It?