interesting read...
telegraph.co.uk
ISSUE 1857 Sunday 25 June 2000
Sheikh Yamani predicts price crash
as age of oil ends
By Mary Fagan, Deputy City Editor
SHEIKH YAMANI, the former Saudi oil minister, has told The
Telegraph that he expects a cataclysmic crash in the price of oil in
the next five years.
In an unprecedented personal interview, Sheikh Yamani also predicts
that, within a few decades, vast reserves of oil will lie unwanted and
the "oil age" will come to an end.
In an interview with Gyles Brandreth, he says: "Thirty years from
now there will be a huge amount of oil - and no buyers. Oil will be
left in the ground. The Stone Age came to an end, not because we had
a lack of stones, and the oil age will come to an end not because we
have a lack of oil."
Sheikh Yamani, who was Saudi Arabia's oil minister from 1962 to
1986 and is now in charge of an energy consultancy, became the
public face of the revolutionary oil policy that altered the balance of
world power in the early Seventies.
He predicts that a combination of recent oil discoveries, the advance
of new technology, and heavy investment in exploration and
production will all lead to a collapse in the price of crude. He says:
"I have no illusion - I am positive there will be some time in the
future a crash in the price of oil. I can tell you with a degree of
confidence that after five years there will be a sharp drop in the price
of oil."
Fuel-cell motor technology - which can produce electricity by
combining hydrogen from a variety of fuels with oxygen from the air
- will have a dramatic impact on the oil market, he predicts. "This is
coming before the end of the decade and will cut gasoline
consumption by almost 100 per cent. Imagine a country like the
United States, the largest consuming nation, where more than 50 per
cent of their consumption is gasoline. If you eliminate that, what will
happen?" Saudi Arabia, he says, "will have serious economic
difficulties".
His remarks follow last week's agreement by the Organisation of
Petroleum Exporting Countries - in which Saudi Arabia is the
dominant force - to a marginal rise in production of 708,000 barrels
a day in response to mounting concern in the US and other major
consuming countries over the high price of oil. Prices per barrel
have been hovering at around $30, compared with $10 at the
beginning of last year. But industry experts have given warning that
Opec's latest production increase will not be enough to ease the
price.
In the interview, Sheikh Yamani forecasts that prices will stay high
temporarily because of demand in the US and parts of Asia. But he
argues that this price obscures the likely long-term effect of "huge"
recent discoveries in regions such as the Caspian Sea, Yemen, Egypt
and Africa. He also predicts that Iraq, which is capable of producing
6.5 million barrels a day, will become a bigger supplier before long.
He says: "On the supply side it is easy to find oil and produce it, and
on the demand side there are so many new technologies, especially
when it comes to automobiles." Yamani believes that automobile
engine technologies including fuel cells - which can produce
electricity by combining hydrogen from a variety of fuels with
oxygen from the air - will drastically reduce oil consumption and
that, in the longer term, no one will need oil.
His views reflect those of many in the industry, although few would
go so far as to predict an end to the use of oil. Vincent Cable, a
former chief economist at Shell and now industry spokesman for the
Liberal Democrats, said: "People in the industry would not be
surprised by a vision of the future with relatively weak prices, but
punctuated by occasional price shocks." |
