Steven Kopits: Oil, the Economy and Policy

Steve Kopits, Managing Director of Douglas-Westood consulting firm, made a presentation called “Oil, the Economy, and Policy” to the US House of Representatives Energy Subcommittee recently that I thought was interesting. I this post, I explain the presentation a bit and give my views related to it.

I was impressed that Steve was able to make a presentation to this group. (Steve later clarified that his presentation was really the subcommittee staffers–but they are very important too. They are often the hands-ons people in drafting legislation.) He sent me the presentation by e-mail; I am not aware that the presentation is available online. Steve recently wrote a post called An Oil Shock in 2012? (published by ASPO-USA) that covers part this material, if readers would like more of his explanation.

I find the historical information slides in the first part of  the presentation interesting in and of themselves. I am not sure I would come up with the same forecasts of future production as shown in this presentation, though–it seems to me that they are on the optimistic side. There is a question of what forecast a person should show to a committee such as this congressional committee: even a fairly high estimate is likely to shock the committee, and too low an estimate is likely not to be believed. Many of us, in a similar circumstance, would offer our most optimistic view of the future. It may be that Douglas-Westwood is shading its estimates a little on the optimistic side, too–I don’t know.

Slide 1

Slide 5

The footnote on Slide 5 says, “Demand growth = GDP growth – 1.2% annual efficiency gain.” It is interesting to see what formula is being used. This equation would seem to suggest that if a decline in oil supplies of greater than 1.2% per year takes place, GDP growth can be expected to be negative.

I (Gail, not Steven) would expect that the recent surge in coal consumption has been one of the factors that has helped keep economic growth higher, in the absence of oil growth. Rising natural gas production may also have helped.

Slide 7

There has been huge growth in capital expenditure in recent years. The amounts shown are in nominal dollars (that is not inflation adjusted), but even if one mentally adjusts for the impact of rising costs, there has been a real increase in capital expenditures for exploration and production. These rising costs no doubt reflect the fact that we now have to pursue oil in increasingly expensive to produce locations, such as in deep-sea locations, and where extensive fracking is required (for example, Bakken shale).

Slide 11

I skipped some slides about where all of the new expenditure went: more sophisticated equipment, more total drilling rigs, more employees in total, and more PhDs on staffs. The result of all of this additional expenditure has been no increase in oil production–it just kept production approximately level.

Note that the graph shows that total expenditures for the ten-year period 1995-2004 period were equal to those for the six-year period 2005-2010. Thus, the average yearly expenditure was much higher in the later period, but the drilling results were terrible–a small decline in production compared to an increase in the 1995-2004 period.

Slide 12

Douglas-Westwood comes to the same conclusion about oil prices being recessionary as results I have quoted elsewhere from Steven Balogh, Dave Murphy, and Charles Hall–at $85 barrel. The ratios to GDP appear different (4% for Douglas-Westwood; 5.5% for Hall, Balogh, and Murphy), because one analysis uses retail oil prices and the other uses wholesale oil prices, but the fact that the two approaches come out with the essentially the same dollar threshold for recessionary impact shows that they are equivalent.

Slide 13

“First peak oil recession?” This sounds pretty much like what I (Gail) have been saying.

Slide 17

I hadn’t focused on the extent to which the recent rise in production is in fact Natural Gas Liquids (NGLs) production. I know that the US has had a recent rise in NGLs because of the recent shift to “liquids-rich” gas plays. I hadn’t focused on the big increase in NGL production in OPEC, though.

NGLs have lower energy per barrel than crude oil and generally sell for a lower price than crude oil. NGLs include propane, butane, and other “liquids” that are close to gases. One thing I have been trying to learn more about is the extent to which these actually act as substitutes for crude oil. I know that some portion of these liquids can be added to “winter” gasoline, but not to summer gasoline, because they tend to evaporate too much in warmer weather. This is one reason why winter gasoline prices tend to be lower than summer gasoline prices. Clearly, NGLs can be “reformed” into longer chains. I don’t know how expensive or how widely available this procedure is, though.

Slide 20

How much spare capacity Saudi Arabia really has is a big question. Steven Kopits says if Saudi Arabia’s maximum level of production is really on 10 million barrels a day (that is, the bottom line on his graph), an oil shock is theoretically expected in the third quarter of 2012, based on Douglas-Westwood’s demand estimates.

Slide 23

I don’t remember seeing a slide like Slide 23 before. One question I would ask is where all of the future increases in oil production that Douglas Westwood is forecasting are going to come from, if all of the majors are past peak. Does this mean that all of the increases are going to be from much smaller operators, producing NGLs, Barnett Shale, and the like? If so, these smaller operators are going to have come up with enough capital to finance all of their increases in operations. Theoretically, if oil prices are high enough, this could work out, but as this presentation indicates, recession tends to set in at $86 a barrel. So it is by no means clear that prices will be high enough to make production economically attractive.

Slide 24

This is a comparison of “all liquids” production estimates for the year 2030. (All liquids includes ethanol, natural gas liquids, and other liquids besides crude oil.) In a way, this slide is irrelevant, if the real message of this presentation is that there will be an oil supply crunch occurring as soon as 2012, and this in itself could have very unpleasant impacts.

The mitigation attempts that are shown in the later slides are based on the assumption that growth will continue as shown in this forecast. In my (that is, Gail’s) view, financial and political changes are likely to take place between now and 2030, so production in 2030 may be quite different from what is suggested by the range of forecasts.

Slide 25

This slide uses an estimate of 100 million barrels a day of oil production in 2030. This is in the range forecast by the EIA, based on Slide 24. The conclusion that Douglas-Westwood reaches is that in this scenario, US consumption in 2030 would be 14 million barrels per day, down 1/3 from consumption of 21 million barrels per day in 2007.

The slide says, “Bad, but not the end of the world.” I (Gail) would point that such a decline in oil consumption is likely to result in continuing recession and a huge amount of loan defaults. The graph suggests a similar fate for Europe and the rest of OECD. (Note that we are already at a recessionary price level for oil.) Maybe continuing recession and major loan defaults wouldn’t be the end of the world, but it seems to me that it could very easily lead to even more adverse outcomes (major international defaults, governments overthrown, etc.). If these changes tend to interfere with international trade, then it seems to me that there could be disruptions to oil extraction and liquids production, since international trade is involved in replacement parts for oil equipment, and in high technology equipment. As a result, no country may do as well in terms of oil consumption in 2030 as the graph suggests.

Slide 28

Here, the presentation shows where increases in “liquids” production are likely to come from. Conventional onshore production, shown at the bottom, is likely to continue to its decline. Natural gas liquids, shown in grey next above, become a thicker layer. Renewable liquids, which I would interpret to be biofuels, becomes a much thicker layer. Other liquids (dark gray), which I would assume would include coal-to-liquid, would become much larger than today. Alaskan production of the type we have today will drop off fairly significantly. Shale oil (such as that from the Bakken, shown in rose-gray) is seen as increasing greatly. Offshore Gulf of Mexico oil is seen as dipping, then increasing until perhaps 2018, before it declines again. The big increase between 2020 and 2030 relates to oil from Alaska’s Outer Continental Shelf.

The question I would have, is whether these ramp-ups in production can really be done at affordable price levels. If the economy goes into recession above $86 barrel, will it really be feasible to produce high-priced oil from the Bakken, or from Alaska’s Outer Continental Shelf? We haven’t yet found a way to produce cellulosic ethanol or diesel from algae at an affordable price level, either. Unless there are huge technology breakthroughs, some of these forecasts seems to imply the production of extremely expensive oil, and thus the likelihood that oil prices will need to be much higher than today.

Slide 30

What this slide shows is EIA’s estimate of future oil production from the Gulf of Mexico (excluding a little strip along the shore, which is state controlled, rather than federally controlled). The point being made is that the forecast drop in oil production from the Gulf of Mexico of about 600,000 barrels per day is very significant, amounting to 11% of crude oil production. The expected job loss according to Douglas-Westwood’s calculations is 65,000 full-time equivalent employees.

The point should probably made too, that the loss from the Gulf of Mexico is actually crude oil, while quite a bit of forecast new production is products which have lower energy per barrel than crude oil. Thus, a drop in Gulf of Mexico production can be expected to have a bigger impact than an equivalent drop in something like ethanol or natural gas liquids.

Slide 36

Here, I would very much agree with Steven Kopits–if natural gas vehicles are to be used, they need to be priced the same as gasoline vehicles. I am less convinced than he is that we actually will have enough extra natural gas to make a significant switch work, though. See my recent post Don’t Count on Natural Gas to Solve US Energy Problems.

Slide 37

I (Gail) hadn’t seen this quote from Steven Chu, but it pretty well summarizes the problem with electric cars. I have been making the point that high-priced oil is recessionary. The problem is that high-priced substitutes for oil, including high-priced electric cars to replace internal combustion cars, are also recessionary. So they leave us worse off than we were before, from a financial point of view, unless there total costs to the consumer per mile are lower.

To date, electric vehicles have not had to pay taxes to cover road improvements. It seems to me that this cannot continue, if electric vehicles are to become any significant share of roadway users. Cost comparisons should include these taxes as well.

Slide 40

This is the first two summary slides. Steve suggests here that the next oil shock is in 2013, even though the earlier slide seemed to suggest 2012 as a possibility, and Steve’s recent post for ASPO-USA is called An Oil Shock in 2012? Perhaps this summary statement is a matter of shading the results a bit for an audience who will be shocked even by an estimate of an oil shock in 2013.

Slide 41

This is the final slide. It seems to me (Gail) that if we can’t get the price down to a reasonable level (and I am afraid we can’t), we do need to dismiss Alaska’s Outer Continental Shelf as a possibility. This will be something oil companies will be learning more about, as they look into the particulars of extraction in that part of the world.

Steve’s final point is

The single largest risk to the US economy today is an oil shock— awareness and management of this risk appear minimal.

I would very much agree with this, which I believe is his major point to the committee.

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
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27 Responses to Steven Kopits: Oil, the Economy and Policy

  1. Jerry McManus says:

    For any given critical resource there is an invisible threshold beyond which it becomes so un-economic that people simply can no longer use it.

    For example, the big story on the news last night was the rapidly rising gasoline prices and the networks did the customary “man on the street” interviews with people in pain at the gas pumps as they filled-up their giant American SUV’s.

    One young woman in particular, interviewed at filling station in a far flung L.A. suburb, struck me as a true parable for our times. With furrowed brow she quietly declared, almost with resignation, that she could no longer drive to work because she couldn’t make enough wages in a day to pay for the gas!

    I was so inspired by her story I’m using it as a new quote to help explain our predicament to people:

    Peak oil is like not being able to drive to work anymore because you don’t make enough in a day to pay for the gas.

    Jay Hanson often used a similar metaphor to explain net energy:

    If your scooter has a five gallon tank, but the nearest gas station is six gallons away, then you might as well start walking for a living.

    • Jan Steinman says:

      Nice Jay Hanson quote.

      One I use on “invisible hand” ethusiasts who insist that renewables will easily take over “when oil gets expensive enough.”

      You’re in a spacesuit, circling the earth, with ten minutes of air left and $100,000,000,000. How much of that money will it take to buy you another minute’s worth of air?

  2. Les Denham says:

    To date, electric vehicles have not had to pay taxes to cover road improvements. It seems to me that this cannot continue, if electric vehicles are to become any significant share of roadway users. Cost comparisons should include these taxes as well.

    The amount of wear and tear on roads by electric personal vehicles is completely insignificant. For that matter, so is the damage done by any vehicle weighing less than a couple of tons. Damage to roads is almost entirely caused by heavy axle loads. A heavy vehicle with 12000 pound axle load 1300 times as much damage to a road as a light vehicle with a 2000 pound axle load. The taxes need to be on the vehicles that cause the damage.

    • As he number of vehicles using the road goes down and the cost of repairs go up, there is going to be a problem, and government agencies will look to tax anyone they can, I would expect, even if they really aren’t the culprits.

  3. Ikonoclast says:

    I still wonder what the 3 Trillion dollars wasted on the Iraq-Afghanistan wars could have bought in terms of renewable energy infrastructure.

    It is not that we did not have the economic-industrial capacity to attempt the transition. The facts are that we (the West) acted to waste our treasure on wars abroad and the over-consumption of late stage corporate capitalism and consumerism at home. We did this instead of doing the serious work of reining in comsumerism and transitioning to a sustainable future.

    Whether we had the volitional capacity as a mass to make better decisions is doubtful to me at the philosophical level. However, once we had adopted the wrong system (corporate command capitalism), we certainly had no hope of making the right decisions. The term “corporate command capitalism” (not my own) has been coined to characterise the form of capitalism created in the US and spread to the rest of the West.

    In corporate command capitalism, democracy is subverted by the power elites who run the corporations, the markets and the country to suit their short term interests alone. Long term and public interests (sustainability and equity being the key interests here) are ignored.

    The US adopted the wrong system. In Darwinian terms, corporate command capitalism is maladaptive and leads to extinction. This is the real Manifest Destiny of the USA now. We are about to see the proof.

  4. Bicycle Dave says:

    Hi Gail,

    Thanks for posting/commenting this presentation. I would really like to see something similar that only reflects your perspective. I think it should have two parts.

    The first part would follow Steven’s basic outline as he does seem to cover the issues. However, it should probably be a bit shorter and omit any unrealistic optimism.

    The second part should address all the alternative technologies and energy sources that are typically suggested will compensate for fossil fuel decline. It should be a realistic assessment of these technologies along with the impact of growing human populations.

    And, Gail, I know you have covered all these points in various writings. However, what I keep looking for is a compact PDF that I can send to my circle of friends and political representatives that provides a solid framework for discussing what kinds of personal and public policies we should be developing.

    I would also like another similar piece that deals with climate change, species extinction, ocean damage, deforestation, and other environmental degradation issues. But, I know this is not your area.

    • The big issue I see in making forecasts is that everything is closely networked. People come up with estimates for any one piece, assuming BAU will happen for all of the other pieces. I suppose I could do that too. The problem I see with this approach is that it produces results that are likely very far wrong. I think that the Limits to Growth type analyses are likely closest to the truth, but even they do not take into account debt, and the fact that a declining oil supply has a very adverse impact on the ability to pay back debt with interest. If debt were included, I expect the downslopes would be even worse than Limits to Growth analyses suggest.

      I put together a forecast back in this post. I see the economy and all of the fossil fuels as pretty closely linked together, so all are likely to go down pretty much together, pretty quickly. This is good news for all of the negative things that theoretically might happen to the environment. The minor detail is that most of us are not likely to survive, so we won’t know one way or another. I expect the world (including ecosystems, etc.) will recover pretty well without us, or with only a remnant.

      So maybe in some ways our worries are overdone. In other ways, they are not enough.

      I am pessimistic that we can figure out ways to really fix our problem. Our problem basically comes down to too many people for available resources, and that is a hard problem to fix. We need to figure out how to use what resources we do have with only truly renewable approaches, but it is hard to make such an approach produce enough goods and services for all of the people alive today. Some things I would do:

      1. Ban feed lot cows and pigs. (We have too many “beings” on earth. We can all eat more vegetarian food.)
      2. Find a way to fix wages, so the maximum wage is not more than 10 times the minimum wage (so that what resources we have can be more equitably distributed).
      3. Ban biofuels, except for running farm equipment, and perhaps bringing it to local markets.
      4. Teach gardening (using crop rotation and only local inputs) in school, as a required subject.
      5. Undertake a major effort to get rooftop water catchment systems for homes, so people have a backup to city water systems that may stop if electricity becomes unavailable.

      • Neil Howes says:

        Perhaps a simpler alternative would be to only manufacture and sell EV’s, PHEV’s and high mpg hybrids, so that the US would only need to consume 25% of present oil consumption.
        Do we really need EV batteries that give identical performance and range as ICE vehicles running on gasoline, or is it good enough use present batteries that can allow PHEV’s to travel 90% of miles on battery power, and 10% on gasoline or CNG or ethanol?
        Our problem basically comes down to too high per capita consumption of non-renewable resources, by about 15% of the worlds population. Really, how much of a hardship would it be if only vehicles that achieved > 50mpg could be sold in future?

        • The problem is building all of the EVs, PHEVs, etc. They are energy intensive–that is why their prices tend to be higher than for corresponding other vehicles. So I don’t think consumption would really be only 25% of present oil consumption–we will need oil to build and transport the new vehicles, and indirect oil use like people flying around the world supporting lithium battery production, plus all of the rare earth minerals from China. I don’t see EVs, PHEVs, etc. as particularly sustainable. The cars will be hard to produce and hard to maintain in a world with less international trade. So I don’t see the world as any better off with a huge number of them. Perhaps it might keep the oil limit from hitting for a few years, but we will hit other limits pretty much simultaneously, that will make them less useful.

  5. phil harris says:

    We seem to be getting to the nub now of the questions asked by earlier Peak Oil analysts. Inevitably commentators are on ‘the outside’, but oil industry and traders give the impression they are reacting to PO in real time: these are the accommodations and positioning we might expect; ramped up investment in production/extraction, including barely ‘economic’ tar sands and US ethanol, albeit with diminishing returns.
    As you say, nobody knows how to deal with ‘oil shocks’: substitution, efficiency and conservation barely register. When it comes to it, there is just recession. This looks like the rinse and repeat recipe that makes major effective structural adjustments going forward seem highly conjectural ( ‘uneconomic’?).

    • Bicycle Dave says:

      Hi Phil,

      substitution, efficiency and conservation barely register

      Well, there is curtailment (voluntary or not) as proposed by Pat Murphy in “Plan C: Community Survival Strategies for Peak Oil and Climate Change”. But, I won’t be holding my breath for this to happen.

    • Agreed. We are kind of scraping along at the bottom now. Maybe innovation will help us for a bit, as Steven Kopits suggests, or maybe costs will remain too high. Hard to find a fix for where we are now.

  6. Ikonoclast says:

    I wonder what is the US contingency plan for unrest in Saudi Arabia? Al Quada and other hardline groups would be well aware that an oil shock will greatly harm the USA. The USA has failed to pacify, contain and control Iraq and Afghanistan, so its chances of containing and controlling the entire M.E. would seem to be about zero.

    Of course, even in a best case scenario (the M.E. remains largely peaceful and continues to pump oil at capacity) an oil shock arrives in 2012-13. If large scale unrest breaks out it won’t be a mere oil shock but a total coronary attack for the entire world economy.

  7. Angie says:

    I wouldn´t say oil production, it´s extraction, it´s the raw material we use to built almost everything so it´s not only a problem of energy. Electric cars also need tires and fabrics. We use oil to produce a wide range of basic necesities, and actually the only deposit where we can find enought oil is in rubbish dumps. Without supply there´s not more champoo or even toothpaste. I wonder how we will buy youghurt in the future if we haven´t any plastic, and, the wheat and corn are almost all hybrid, how will we produce the next harvest to the oil crash? Bye bye to the pasta

    • Jan Steinman says:

      Angie wrote: “I wonder how we will buy youghurt in the future if we haven´t any plastic…”

      We sell all our farmstead products in re-usable glass, with a deposit. Our yogurt comes in a quart canning jar.

      But of course, re-use is not fashionable these days — everyone is into recycling, which is pretty obviously inferior to re-use.

      • Angie says:

        Well. I´m so happy that all around the world you can sell your farmstead products in re-used glass, but the people I know mostly buy in supermarket like these:
        The yogurt was an example, I hope the farms gain more protagonism the sooner the better, we must to buy locally produced groceries if we want save costs. The reference to the dumping site wasn´t to recycle, it was, as you said, to re-use all the envelopes and good cuality plastic we can. Personally I think farmers are in the best position to help and the most vulnerable spot. Keep the good work.

        • Jan Steinman says:

          “I think farmers are in the best position to help and the most vulnerable spot. Keep the good work.”

          It takes two! You can do your part by shopping at farmers’ markets and farm stands and preferring a product packaged in re-usable materials when offered a choice.

          And then tell “people you know.” You may have more influence than you think.

        • Kitegal says:

          ultimately….you may want to think about making your own yogurt…from your own dairy animal which you may share with neighbors. That also is just an example but in the not too far future we all may have to do much more to produce our own food, our own materials (clothing) etc. as perhaps industrial processes may not deliver goods at affordable prices any more (once oil gets really expensive). Or from a different view: If you believe the PO story then you should start to learn skills needed to produce food, materials, shelter, store food (without freezer/refrigerator) etc. You know – supermarkets may be one of the first things on the chopping block once transport, energy, materials become unfordable for the average Jane or Joe. And everything Jan says I want to second as well….

  8. marty says:

    Chu’s comments possibly prove that once you win the Nobel, you take no more risks.
    His focus is replacing the current vehicle used in the current way, or possibly it is the “ideal vehicle” of 2007 used by the ideally employed individual of 2007 – it might be laughable except for my neighbors economic/existential state. Perhaps Steve Jobs should be designing else cars, consider a world today still toting around a Nobel/DOE designed “boombox” on my shoulder and scratching CD’s for my music. One needs to estimate where a market is going to BE when one takes N years of Design and prototyping, and then manufacturing ramp up.

    Given what you have been saying Gail, and this report (ignoring any food/political desires by citizens of the ME), I suspect in 2013 there may be a radical change in what the average citizen/serf might be doing for transportation.

    What I would like is a a 2 seat, and 4 seat vehicle that is batter powered and can travel at 35mph that charges a 1kw, with a delivery van and pickup truck version.

    • Bicycle Dave says:

      Hi Marty,

      Every time the opportunity arises, I beat the drum for a national max speed limit of 35 mph. Of course, this is usually dismissed out-of-hand as impractical if not a ridiculous suggestion. And, until gasoline is rationed or north of $10 a gal, it will continue to be viewed as a silly idea.

      The problem with any speed limits greater than 35 mph are the safety issues. Vehicles traveling 50 mph need seat belts, air bags, shock bumpers, structural integrity in a roll-over, etc. A 35 mph glorified electric golf cart (Neighborhood Electric Vehicle) can be built and operated relatively cheaply and by local entrepreneurs. Of course, this implies other mass transit facilities for longer distance travel.

      Another reason that vehicles should not be allowed to exceed 35 mph is to give Human Powered Vehicles (HPV – bikes, trikes, velomobiles) a fighting chance on the public roadways. A major disincentive for HPV usage is the very real fear of being maimed or killed by motor vehicles – at a bare minimum, it is generally a very unpleasant experience trying to compete in today’s traffic with a bicycle.

      I find it quite amazing how this suggestion is so readily dismissed as nuts. Regarding bikes, there are all the usual bromides about weather, fitness, age, etc. I would suggest observing a 500 mile group vacation tour that takes place annually in Wisconsin. This week long tour (with around 300 people) has an average age of about 50 with many folks in their 60s and 70s. The average daily mileage is 50 to 70 – rain or shine. A major part of the tour’s success is the fact that it is run on very quiet country roads. It’s a great vacation that uses minimal fossil fuels (there are some support vehicles).

      All of the so-called developed countries have adopted this insane car culture. There is no such thing as a “natural right” to a car – I suspect that we will eventually come to understand this.

      • I had never thought about a 35 mile an hour speed limit, to give neighborhood vehicles and bikes a chance.

        I think the other thing that is helpful is using a grid structure for roads in cities, so as to distribute traffic over many roads. In the suburb of Atlanta where I live, each subdivision has its own roads, with only one or two outlets to very busy streets. The over-concentration of cars on these main arterial streets is a problem, and there is no easy way for bikes to avoid them.

  9. Hi Gail,

    Did you see this by Michael Klare? He quietly puts the 12mbpd myth of Iraqi production to bed …

    The other thing is that the ME explosion is demand coming out of the closet. Instead of four new Saudi Arabias we have four more Chinas. Nails in the coffin of ‘Peak Demand’ nonsense.

    • Steve,

      Yes I saw that post, actually this version of that post earlier. Michel Klare says:

      One conclusion isn’t hard to draw: Efforts by outsiders to control the political order in the Middle East for the sake of higher oil output will inevitably generate countervailing pressures that result in diminished production. The United States and other powers watching the uprisings, rebellions, and protests blazing through the Middle East should be wary indeed: whatever their political or religious desires, local populations always turn out to harbor a fierce, passionate hostility to foreign domination and, in a crunch, will choose independence and the possibility of freedom over increased oil output.

      The one thing about peak demand that is right is if you are too pay to pay for something, demand will go down. And we are facing that issue as well.

  10. wotfigo says:

    “From here on Saudi willingness and ability to increase production will be key (for the US oil requirements?)”

    And 2 days ago reporting on continuing ramifications on the political struggles in the Middle East & North Africa, The Guardian reported “Saidi Arabia’s subtle protests are serious”

    Protests in the KSA will produce instant mayhem in oil markets & oil importing countries. Even if the Kingdom survives the current moves toward a more democratic Arab world, there are other very serious problems on relying on an oil bailout from the KSA. These include inflated reserve figures and increasing domestic consumption eating into export quantities.

    It seems wholly improbable that DOE & the House subcommittee on Energy Policy are unaware of these scenarios by now. Can anyone explain their silence?

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