Need another reason to push for alternative energy sources sooner rather than later? If you're running short, the Saudis can help you this week, as they circle the globe promising lots of long-term oil they may not have.
The Saudis are making a lot of big commitments, and there is good reason to doubt they'll be able to meet them all. While they say they cannot control prices, they continue to insure tight supply by "overbooking the flight", as it were.
First, their official position on prices:
Saudi Arabia's oil minister said Friday that oil prices, now hovering above $65 a barrel, are unlikely to fall in the near term because of factors beyond the market's control.
"I have no control over prices," Ali Naimi told reporters in New Delhi, where India and Saudia Arabia agreed to develop a more strategic energy partnership. "We accept that they're high, and of course, we want them to come down."
But how can that be, when the Saudis are promising increased supply to China and India, yet they're not discovering any new oil, and they can't keep increasing production forever?
In India this week:
In the "Delhi Declaration" signed by Saudi King Abdullah and Indian Prime Minister Manmohan Singh, the two countries agreed to tighten their energy relationship, which is based on interdependence.
This would be achieved through increased volume of crude oil supplies to India, Saudi investments in oil refining, marketing and storage in India and setting up of India-Saudi ventures for gas-based fertilizer plants in Saudi Arabia, the declaration said.
Prior to that, China, and then some others:
Chinese President Hu Jintao yesterday gave a red carpet welcome to Custodian of the Two Holy Mosques King Abdullah at the Great Hall of the People and said the royal visit would open a new chapter in Sino-Saudi relations. [...]
Neither side immediately provided further details of the agreements, although Foreign Minister Prince Saud Al-Faisal spelt out before the signing ceremonies the main interest of both nations. "China is one of the most important markets for oil and Saudi oil is one of the most important sources of energy for China," said the prince who is accompanying the king. [...]
[King Abdullah] will visit Malaysia from Jan. 29 and Pakistan from Feb. 1 on the final legs of his tour. A large group of prominent Saudi businessmen is traveling with him.
Saudi Arabia is trying to use oil revenue, while it lasts, to diversify its economy. In other words, start thinking about how to git while the gittin's good. And that's perfectly understandable. But what happens when they can't increase production anymore, and they can no longer meet their simultaneous commitments to the U.S., India, and China?
Is that really likely to happen? The Capital Spectator pointed out back in August, even before all these expanded agreements:
Regardless, the challenge of delivering more and more crude going forward will require nothing less than extraordinarily successful results in discovery and production, along with maximizing output of existing oil fields. How extraordinary? As a step toward an answer, we'll close by quoting Sadad al-Husseini, the recently retired head of Saudi Aramco's exploration and production division, courtesy of the current issue of the New York Times Magazine, where he discusses the trend of ever-rising global oil demand and the problem of quenching that thirst on a global scale:
"The problem is that you go from [average worldwide oil consumption of] 79 million barrels a day in 2002 to 82.5 in 2003 to 84.5 in 2004. You're leaping by two million to three million a year, and if you have to cover declines, that's another four to five million.'' In other words, if demand and depletion patterns continue, every year the world will need to open enough fields or wells to pump an additional six to eight million barrels a day--at least two million new barrels a day to meet the rising demand and at least four million to compensate for the declining production of existing fields. ''That's like a whole new Saudi Arabia every couple of years,'' Husseini said. ''It can't be done indefinitely. It's not sustainable.''
In the short term, the Saudi royal family isn't going anywhere at all, and they'll make no more than cosmetic steps toward democracy and human rights. If we won't fawn and fall all over ourselves to help them out, India and China will. And so gracious are the Saudis. As China helps prop up the royal family, the Saudis in turn express support for the "one-China" policy. So Saudi Arabia helps foment disagreement over more than just oil. In addition, the threat of terrorism against the U.S., India, and China will endure as long as we all drool over the oil and keep fueling the Saudi dictatorship.
When production does finally top out (and it can't be long at this rate), how will these three nuclear powers hash it out? What will happen to the royal family? Will the U.S. make a play to occupy Saudi Arabia in the name of stability and free trade? Will China and India appreciate the gesture?
I have a better idea. Let's aggressively pursue alternative energy sources NOW. Understand the urgency and make it an absolute national priority. Though George W. Bush's platitudes will sound nice on Tuesday, they will not be nearly enough.