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Originally posted by ProjectJimmy
The reason gas in the United States has gotten so expensive is really quite simple: it's all about speculators driving the price up trying to make a quick buck.
Saudi Arabia's Oil Minister Ali al-Naimi says the world oil market is oversupplied and that the world's top oil exporter has already reduced production due to weak demand.
Consumers have urged OPEC to quickly add supply to quell the rally that has taken oil to its highest level in two and a half years amid unrest in North Africa and the Middle East.
"The market is overbalanced... Our production in February was 9.125 million barrels per day (bpd), in March it was 8.292 million bpd. In April we don't know yet, probably a little higher than March. The reason I gave you these numbers is to show you that the market is oversupplied," Mr Naimi told reporters.
Two Saudi-based industry sources told Reuters last week the kingdom had cut production by 500,000 barrels per day (bpd) in response to weak demand.
OPEC officials have strongly rejected responsibility for high oil prices in recent weeks but Mr Naimi's words are the clearest indication yet that the group is unconvinced there is a need for more oil and that OPEC may well leave its policies unchanged at its June meeting.
Originally posted by iamsupermanv2
.... ultimately its a group of guys in a room looking at events and what is coming up (Memorial Day here in the US, the "official" start of summer, more car trips) that decide how much gas will be.
However, Sadad al-Husseini, a geologist and former head of exploration at the Saudi oil monopoly Aramco, met the US consul general in Riyadh in November 2007 and told the US diplomat that Aramco's 12.5m barrel-a-day capacity needed to keep a lid on prices could not be reached.
According to the cables, which date between 2007-09, Husseini said Saudi Arabia might reach an output of 12m barrels a day in 10 years but before then – possibly as early as 2012 – global oil production would have hit its highest point. This crunch point is known as "peak oil".
Husseini said that at that point Aramco would not be able to stop the rise of global oil prices because the Saudi energy industry had overstated its recoverable reserves to spur foreign investment. He argued that Aramco had badly underestimated the time needed to bring new oil on tap.
One cable said: "According to al-Husseini, the crux of the issue is twofold. First, it is possible that Saudi reserves are not as bountiful as sometimes described, and the timeline for their production not as unrestrained as Aramco and energy optimists would like to portray."
It went on: "In a presentation, Abdallah al-Saif, current Aramco senior vice-president for exploration, reported that Aramco has 716bn barrels of total reserves, of which 51% are recoverable, and that in 20 years Aramco will have 900bn barrels of reserves.
"Al-Husseini disagrees with this analysis, believing Aramco's reserves are overstated by as much as 300bn barrels. In his view once 50% of original proven reserves has been reached … a steady output in decline will ensue and no amount of effort will be able to stop it. He believes that what will result is a plateau in total output that will last approximately 15 years followed by decreasing output."
The US consul then told Washington: "While al-Husseini fundamentally contradicts the Aramco company line, he is no doomsday theorist. His pedigree, experience and outlook demand that his predictions be thoughtfully considered."