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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: Wyätt Gwyön who wrote (12896)	4/29/2004 6:57:14 PM
From: CalculatedRisk	Read Replies (1) of 110194

First, here is the article: arabnews.com Excerpts: Officials from Saudi Arabia’s oil industry and the international petroleum organizations shocked a gathering of foreign policy experts in Washington yesterday with an announcement that the Kingdom’s previous estimate of 261 billion barrels of recoverable petroleum has now more than tripled, to 1.2 trillion barrels. Additionally, Saudi Arabia’s key oil and finance ministers assured the audience — which included US Federal Reserve Chairman Alan Greenspan — that the Kingdom has the capability to quickly double its oil output and sustain such a production surge for as long as 50 years. “Saudi Arabia now has 1.2 trillion barrels of estimated reserve. This estimate is very conservative. Our analysis gives us reason to be very optimistic. We are continuing to discover new resources, and we are using new technologies to extract even more oil from existing reserves,” the minister said. Here is what I think: The reaction from the West is telling: silence. Several commentaries picked up the Saudi's comment about keeping the price between $22 and $28 per barrel, but the news stories are ignoring the wild assertion of 1.2 trillion in reserves. Both the price and reserves comments were made in the same speech. Greenspan was quoted as saying "most interesting". Obviously nobody believes it because it is absurd. So why is the minister making these comments? I think the comments were intended for internal (Arabia) consumption. Two of Bin Laden's main economic arguments are that Arabia is selling their oil far too cheaply, and that the oil belongs to all Arabs (not just the Saud family). Many in Arabia feel the Saud family is propped up by the US, and that the family is stealing the wealth of Islam. These arguments resonate with many Arabs. By saying the supply is essentially unlimited; this diffuses some of the argument for an immediate revolution in Arabia.

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