For those oil enthusiasts who believe that petroleum will remain abundant for decades to come -- among them, the president, vice president and their many friends in the oil industry -- any talk of an imminent "peak" in global oil production and an ensuing decline can be easily countered with a simple mantra: "Saudi Arabia, Saudi Arabia, Saudi Arabia."
Not only will the Saudis pump extra oil now to alleviate global shortages, as is claimed, but they will keep pumping more in the years ahead to quench our insatiable thirst for energy. And when the kingdom's existing fields run dry, lo, it will begin pumping from other fields that are just waiting to be exploited. This is the basis for the administration's contention that we can continue to increase our yearly consumption of oil, rather than conserve what's left and begin the transition to a post-petroleum economy.
But that may not be the case. In a newly released book, investment banker Matthew R. Simmons convincingly demonstrates that, far from being capable of increasing its output, Saudi Arabia is about to face exhaustion of its giant fields and will probably experience a sharp decline in output relatively soon. He also argues that there is little chance that Saudi Arabia will ever discover new fields that can take up the slack from those now in decline.
If Simmons is right about Saudi Arabian oil production -- and the official dogma is wrong -- we can kiss the era of abundant petroleum goodbye forever. This is so for a simple reason: Saudi Arabia is the world's leading oil producer, and there is no other major supplier (or combination of suppliers) capable of making up for the loss in Saudi production if its output falters.
According to the U.S. Department of Energy, Saudi Arabia possesses about one-fourth of the world's proven oil reserves, an estimated 264 billion barrels. Also, the Saudis are believed to harbor additional reserves containing another few hundred-billion barrels. On this basis, the department asserts that "Saudi Arabia is likely to remain the world's largest oil producer for the foreseeable future."
Consider the DOE's projections. Because of the rapidly growing international thirst for petroleum -- much of it coming from the United States and Europe, but an increasing share from China, India and other developing nations -- the world's expected requirement for petroleum is projected to jump from 77 million barrels per day in 2001 to 121 million barrels by 2025. Fortunately, says the DOE, global oil output will also rise by this amount in the years ahead. But over one-fourth of this additional oil -- about 12.3 million barrels per day -- will have to come from Saudi Arabia.
