Although it is widely assumed that the world has reached a point where oil production has peaked and proven reserves have sunk to roughly half of original amounts, this idea is based on flawed thinking, said Richard Pike, a former oil industry man who is now chief executive of the Royal Society of Chemistry. Current estimates suggest there are 1,200 billion barrels of proven global reserves, but the industry's internal figures suggest this amounts to less than half of what actually exists. The misconception has helped boost oil prices to an all-time high, sending jitters through the market and prompting calls for oil-producing nations to increase supply to push down costs.and from The Herald:
Most news programming is produced by and for sheep. Here's hoping there will be more informational wolves in our region soon.
OPEC stunned the legislators by pointing out that oil inventories in the US are now higher than at any time in the past eight years. Production of crude oil by Middle East countries has been increasing steadily since 2003. The US government's own forecast is that there will be a surplus of between three and five million barrels of oil a day by 2010. So, why have crude oil prices doubled in the past year alone? Surely, if there is a surplus of oil, prices should fall.
It doesn't seem to make economic sense, until you look at what has been happening in the international financial markets, where there has been an astonishing boom in speculative commodity trading in the wake of the credit crisis. Oil economists, such as F W Endgahl, believe 60% of the current oil price is due to a combination of cheap money and speculation. Rather like the dotcom stock market bubble, which burst in 2000, and the housing bubble, which burst in America in 2006, and is bursting here now, the oil-price bubble is yet another consequence of low American interest rates and the decline of the dollar.