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Saudi King: Halt To Oil Exploration To Save Wealth
Saudi King: Halt To Oil Exploration To Save Wealth
RIYADH (Zawya Dow Jones)--Saudi Arabia's King Abdullah has ordered a halt to oil exploration operations to save the hydrocarbon wealth in the world's top crude exporting nation for future generations, the official Saudi Press Agency, or SPA, reported late Saturday.
Re: Saudi King: Halt To Oil Exploration To Save Wealth
this may be making a virtue of necessity. there have been many questions about the extent of saudi reserves, and their ability to maintain, let alone increase, production. with this declaration they hide any such problems. it may also be that any remaining reserves would be too expensive to develop at current prices.
King Abdullah of Saudi Arabia, holder of the world’s largest crude-oil reserves, encouraged using the fuel wisely to protect the interests of future generations, rather than a ban on exploration, an analyst said...
...“The King’s statement shouldn’t be perceived as a message that Saudi Arabia is stopping its capacity expansion projects but rather that Saudi Arabia has to be mindful of the future needs of the country and be cognizant of its usage wisely and prudently to support future generations,” said John Sfakianakis, chief economist at Riyadh-based Banque Saudi Fransi...
Nothing has changed. This is sort of the Saudi equivalent to Obama saying the economy is recovering.
I have a hard time reading into Saudi announcements at times.
So I'm guessing this is the polar opposite of Saudi saying in 2008 that it was going to crank up more imaginary swing production?
The only thing I'm sure of about Saudi is that it is probably about that time for them to again buy more of the very expensive and shiny stuff still actually manufactured in the US(weapons, planes, telecom integration, etc.) that they don't even need to recycle some more petro dollars.
Last edited by lakedaemonian; July 05, 2010, 10:58 PM.
Re: Saudi King: Halt To Oil Exploration To Save Wealth
So if $ are an oil standard what better way to save it than with higher prices ?
The U.S. monetary system is not on a gold standard in 2009 as it was in 1933. Instead the U.S. and the rest of the world monetary regime employ a de-facto global oil standard.
So if $ are an oil standard what better way to save it than with higher prices ?
I think there is truth to much of what has been posted here. None of the facts are mutually exclusive in my view.
I believe that Matt Simmons is close to the truth when he says that Saudi Arabia oil production has peaked - or may peak soon. And yes, the regime in Saudi Arabia is a client of the US. BUT... that same regime is not stupid and just as many other countries are doing - they are hedging their bets. They know the dollar standard won't last forever, which would impact their investment decisions. They are investing in more gold - probably more than they let on.
Most importantly, they understand that if there is a change in a global currency, or if the dollar continues to slide (thru devaluation/debt default, etc...) what they get in return for oil may be worth less. The dollar is quickly losing its store of value function.
Many of us here at iTulip constantly rebalance our portfolios or at least think about it... currency diversification, gold allotments, etc... it's a rapidly changing world - and it's a headache to keep up with it.
Now imagine what Saudi Arabia's headaches are. Not only do they need to constantly rebalance investments... but each barrel of oil they sell is one less barrel they have, with no real industry to replace the oil business on the horizon. That's scary stuff for a sovereign, especially for the Saudi Family.
The King may not care that much about the lower classes... but I believe he really is worried for his grandchildren. If/when they lose their oil relevance, his family could be in danger. He won't see it in his lifetime, but wouldn't you be concerned if you were in his position? Imagine thinking that one day, your grandchildren or their children may end up like the French nobility? So he's thinking, "how do I prevent that from happening?"
I think there is truth to much of what has been posted here. None of the facts are mutually exclusive in my view.
I believe that Matt Simmons is close to the truth when he says that Saudi Arabia oil production has peaked - or may peak soon. And yes, the regime in Saudi Arabia is a client of the US. BUT... that same regime is not stupid and just as many other countries are doing - they are hedging their bets. They know the dollar standard won't last forever, which would impact their investment decisions. They are investing in more gold - probably more than they let on.
Most importantly, they understand that if there is a change in a global currency, or if the dollar continues to slide (thru devaluation/debt default, etc...) what they get in return for oil may be worth less. The dollar is quickly losing its store of value function.
Many of us here at iTulip constantly rebalance our portfolios or at least think about it... currency diversification, gold allotments, etc... it's a rapidly changing world - and it's a headache to keep up with it.
Now imagine what Saudi Arabia's headaches are. Not only do they need to constantly rebalance investments... but each barrel of oil they sell is one less barrel they have, with no real industry to replace the oil business on the horizon. That's scary stuff for a sovereign, especially for the Saudi Family.
The King may not care that much about the lower classes... but I believe he really is worried for his grandchildren. If/when they lose their oil relevance, his family could be in danger. He won't see it in his lifetime, but wouldn't you be concerned if you were in his position? Imagine thinking that one day, your grandchildren or their children may end up like the French nobility? So he's thinking, "how do I prevent that from happening?"
So, what's a possible narrative for the King's actions if peak oil is bogus?
The greatest obstacle to discovery is not ignorance - it is the illusion of knowledge ~D Boorstin
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