The oil reserve fallacy 4

By Bill Kovarik, PhD
(First published in 2002).

World media has had one view of oil reserves

The watchdogs of the press and public interest groups often miss the mark on complex scientific issues. CBS, AFP, the Washington Post, the New York Times, the Financial Times, Mother Jones and many others swallowed the oil industry line about reserves without any apparent second thoughts. We are not able to find a single instance of oil reserve estimates being questioned by journalists. Most of the time, not even the qualifying term “proven” is added to the description of the massive reserves of the Middle East. If it comes as a surprise that we have based our policy discussions on a fallacy, it is, perhaps, nothing more than a reflection on the myopic tendencies of pack journalism.

But it isn’t easy to dig beneath the surface of this issue. With DOE and the oil industry promoting a narrow view, even the normally sensible Worldwatch Institute opines that the bulk of future supplies will have to come from the Persian Gulf region. Similar views have come from most of the K Street think tanks in Washington DC.

The Chorus:

Washinton Post, June 17, 2004, Editorial A29 — Our Next Shortage by Robert J. Samuelson — American energy policy is nothing if not shortsighted and self-indulgent. By the early 1970s it was clear that we faced a long-term oil problem because (a) the country inevitably depended on imports and (b) two-thirds of global oil reserves lay in the Middle East — where politics and instability made a catastrophic loss of supplies a permanent danger. What did we do? Well, Congress took some sensible steps in the 1970s.

Baltimore Sun, July 29, 2004, EDITORIAL 23A — Over a barrel by Bruce M. Everett — AMERICA IS awash in impassioned calls for energy independence, and Democratic Sen. John Kerry has made it a major presidential campaign theme. In one TV ad, Mr. Kerry solemnly intones, “It’s time to make energy independence a national priority, and to put in place a plan that frees our nation from the grip of Mideast oil in the next 10 years.” Sounds great. Oil imports are indeed a serious problem. America relies on imports for more than half the 20 million barrels of oil per day we consume. And as Mr. Kerry correctly notes, the Middle East has two-thirds of the world’s oil reserves...[But] … Talk about tapping the ingenuity of the American people is just fluff. There is no technology now on the drawing board able to replace oil at an acceptable cost. New energy technologies will come, but only through private initiative and investment, and not at a time and place of our government’s choosing.”

The Independent (London), May 5, 2004, COMMENT; Pg. 3 A Red Alert for the Global Economy, by Hamish McRae
The oil price, in dollar terms at least, is now the highest it has been since 1990. It was soaring oil prices that tipped the world into three of the last four world recessions – the early 1970s, the early 1980s and the early 1990s – so there is an obvious concern. Add in the fact that the two countries with the largest oil reserves, Saudi Arabia and Iraq, are not in the most stable condition. Surely there should already be an amber warning light for the world economy… The share of the Middle East’s oil reserves remains huge – two-thirds of the world’s total – but its annual production is smaller; less than one third. Russian oil production is rising fast and has the potential to rise much further.

Mother Jones — Robert Dreyfuss, March-April 2003 — If you were to spin the globe and look for real estate critical to building an American Empire, your first stop would have to be the Persian Gulf. The desert sands of this region hold two of every three barrels of oil in the world — Iraq’s reserves alone are equal, by some estimates, to those of Russia, the United States, China and Mexico combined.

Washinton Post, March 9, 2003, Pg. A23, Reform With an Islamic Slant; Saudi Pro-Democracy Movement Poses Dilemma for U.S. by Michael Dobbs — The fledgling reform movement in Saudi Arabia, a pivotal U.S. ally that boasts a quarter of the world’s proven oil reserves, illustrates a dilemma confronting the Bush administration as it advocates the spread of American-style political freedoms in the Middle East…

NPR Morning Edition — Dec. 24, 2002 — by Christopher Joyce — Quotes analyst saying The Middle East has two thirds of what we know to be the oil in the ground, and America will always be dependent on foreign sources of oil.

Agence France Presse — Dec. 19, 2002– by Justin Cole — Iraqi opposition groups and US oil companies are quietly assessing how Iraq’s vast oil reserves could be best exploited after Iraqi leader Saddam Hussein is removed from power… Iraq controls about 11 percent of the world’s proven oil reserves, the second largest in the world after Saudi Arabia…

Financial Times (London) — Dec. 4, 2002– “The building pressures that threaten the world’s oil well” — By Martin Wolf — ÒIn the Gulf lie two-thirds of the world’s oil reserves, two of the three countries in President George W. Bush’s “axis of evil”, the US ally from which 15 of the 19 perpetrators of the September 11 2001 attacks originated, the most important Islamic holy places and some of the world’s most repressive regimes…

The New York Times — Nov. 3, 2002 — “The World; Giant Fields of Dreams” — THE magic number is 112 billion. That’s how many barrels of oil experts say is oozing through Iraq’s geology — the second largest proven reserves of oil on the planet,just behind Saudi Arabia’s. But that’s just what is known. Ever since the discovery of oil near Kirkuk in 1927, Iraq has struggled to maximize the commodity’s potential for wealth. There are 73 known oil fields in Iraq, but only a third of those are currently producing. Decades of war, sanctions, political instability and lack of resources have left Iraq’s oil reserves largely untapped or wholly unexplored. Some analysts speculate that Iraq’s reserves may be closer to 200 billion barrels. Others put the number closer to 300 billion. The wild speculation is at least partly because Iraq’s oil exploration thus far has been both shallow (generally no deeper than what geologists call Tertiary or Cretaceous levels), and clustered in the eastern half of the country. Deeper and more western prospecting has yet to be done. Even the known reserves, however, have yet to be fully developed. There are as many 17 giantfields in Iraq –an oil-industry designation indicating reserves in excess of one billion barrels. Throw in a few super-giants and a couple dozen large fields and the potential is clear, regardless of who controls the country.

The Oil Daily — Oct. 30, 2002 — “US Doesn’t Want Control of Iraqi Oil” … Iraq has oil reserves of 112 billion bbl, second only to Saudi Arabia, according to the US Energy Department.

Atlanta Journal and Constitution — October 23, 2002 Pg. 12A OIL AND IRAQ: Black gold: Should U.S. fight for it?; Economy runs on oil, and Iraq has plenty — By Michael Kanell — Every recession since 1970 has followed — if not been caused by — a spike in oil prices. Why not make sure that kind of economic damage cannot happen again? Iraq sits atop the second-largest oil reserve in the world…

NPR Morning Edition — Oct. 15, 2002 — Interview with Daniel Yergin on 75th anniversary of first oil well in Iraq Narrator notes Iraq has second largest proven oil reserves in the world.

Washington Post — Oct. 13, 2002, Prospect of Iraq War Poses Uncertainties For Oil and Economy; Prices Likely to Jump if Action Taken — By Lee Hockstader … Possibly, a reinvigorated Iraq could attract enormous foreign investment to capitalize on its massive oil reserves, the world’s second largest after Saudi Arabia’s.

Boston Globe — Oct. 10, 2002 — Confronting Iraq / Saudi Arabia — Of all US allies in the Arab world, none is more anxious over a US attack than Saudi Arabia, officials and analysts said. Saudi Arabia, home to the world’s largest oil reserves and a US ally since World War II, has made clear its opposition to a strike against Iraq and its leader, Saddam Hussein – rightfully so, diplomats and analysts across the region say, since the Saudis may face a no-win situation if war comes to pass. A protracted conflict could send Iraqi refugees streaming across the 506-mile Saudi border and inspire more anti-American sentiment in a country already irritated by US policies, from deep support for Israel to new restrictions on US visas following the Sept. 11 terrorist attacks. A successful war for the United States could have even more impact, observers say, because the installation of a democratic, pro-US Iraqi government in a country with the world’s second-largest oil reserves could produce new pressures on Saudi Arabia to reform. It would also create a precedent for US intervention in the region and would encroach on Saudi Arabia’s role as a strategic partner.

NPR Fresh Air, — Oct. 9, 2002 — Interview with Daniel Yergin “If you look at whats in the ground, whats called proven reserves, Iraq has the worlds second largest oil reserve.

Fort Worth Start Telegram — Sept. 29, 2002 — Pg.A-13 A POST-SADDAM OIL BOOM?; ITS HUGE RESERVES SECOND ONLY TO SAUDI ARABIA’S By David Montgomery — A U.S.-led invasion of Iraq could sharply retool world oil markets and open Iraq’s vast oil reserves to U.S. energy companies if Iraqi leader Saddam Hussein is driven from power, international energy experts say… Iraq boasts the world’s second-largest oil reserves after Saudi Arabia, but development has been stifled by more than a decade of U.N. sanctions…

CBS Evening News — Sept. 15, 2002 — Fate of Iraq’s huge oil reserves and whether they might make up part of the spoils of war “One factor weighing heavily on the debate over what to do about Iraq is the fate of that country’s huge oil reserves and whether they might make up part of the spoils of war. That’s tonight’s Sunday Cover: Iraqi oil and the troubled Gulf waters. President GEORGE W. BUSH: (From Thursday) By breaking every pledge, by his deceptions and by his cruelties, Saddam Hussein has made the case against himself. ROBERTS: At the United Nations, President Bush this week again called for tough action against Iraq. Yet there was no mention of what could be the administration’s biggest bargaining chip to lobby the permanent members of the Security Council. If America’s allies were to cooperate in the removal of Saddam Hussein, the reward could be good news for those countries’ oil industries. Mr. DANIEL YERGIN (Energy Analyst): Three out of four of the major oil companies in the world are not even headquartered in the United States. They’re headquartered in Europe. ROBERTS: Energy analyst Daniel Yergin says while the Bush administration has lobbied for military action to dismantle Saddam’s program of weapons of mass destruction, military intervention could also open the doors to Iraq’s massive 112-billion-barrel oil reserve, which UN sanctions have currently placed off limits. Mr. YERGIN: Clearly, there’s an oil component to this because Iraq is the second-largest holder of oil reserves in the world.