<DrumBeat: June 26, 2007 The Oil Drum DrumBeat: June 27, 2007>

126 comments on Peak Oil Overview - June 2007

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Cherenkov on June 26, 2007 - 4:10pm Permalink | Subthread | Parent | Comments top

• Faith in OPEC oil reserves. The Saudi oil company Aramco was taken over by Saudi Arabia in 1980. Shortly thereafter, the amount of oil reserves was doubled, without finding any more oil. Other OPEC countries soon followed suit, since higher reserves meant higher oil production targets under OPEC rules. Current OPEC reserves appear to be seriously overstated, but they are repeated endlessly as fact, in news media and textbooks.

Just to avoid confusion. Saudi Arabia was not the first to raise its reserves estimates. Iraq was first and Saudi Arabia was last, completing its reserves increase in 1990.

It was OPEC which decided to implement the production quota based on reserves system, no doubt with SA's strong influence. I know this may seem to be nitpicking, but on a site that promotes accuracy, I would suggest you clarify your statement.

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Gail the Actuary on June 26, 2007 - 4:31pm Permalink | Subthread | Parent | Comments top

Thanks for the clarification. I had not gone back and checked who was first.

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martinw on June 26, 2007 - 8:45pm Permalink | Subthread | Parent | Comments top

Since you seem to know quite a bit about this, can I ask for a bit more clarification on the reserves to production quota? How exactly does it work? Is the quota directly proportional to reserves, ie if a country doubles its reserves it basically doubles it's quota? And is that an upper limit or a mean production value?

Thanks.

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GreyZone on June 27, 2007 - 12:09am Permalink | Subthread | Parent | Comments top

The quota system was never to my knowledge actually predicated on reserves. They talked about it, everyone inflated their reserves, then they quietly dropped the idea when they saw each other cheating like mad.

Stuart Staniford's excellent graphic from his article What would we have predicted for Kuwait? is referenced below and clearly shows the odd shape of the OPEC reserves increases, all coming within a span of a few years and not accompanied by any one single discovery anywhere in the Middle East!

Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett

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126 comments on Peak Oil Overview - June 2007

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