Recently two writers squared off on the Op Ed page of the San Luis Obispo Tribune giving pro and con viewpoints about the present state of oil availability along with concurrent politics.  However, in both cases the emphasis was on economics and missed facts.

Not long ago I received an education in this subject from Bill Baker, editor of Gulf Oil Publication Company whose flagship publications are World Oil and Hydrocarbon Processing .  His on the scene observations and contacts in the Gulf give him impeccable credentials to speak to the matter and his information comes directly from the oil and gas industry insiders about the availability of oil for market.

Freelancing for Mechanical Engineering Magazine (American Society of Mechanical Engineers) at the time, I asked him about Gulf information and disinformation.

Baker said the Saudis’ geophysical data they’ve accumulated over the last 30-40 years has never allowed to be released.  He added they are very tightlipped about it.  In 1991 when they kicked up production to make up for the loss of Kuwaiti and Iraq oil shipments at the request of the first President Bush, the Saudi wells ran into water problems.  That means an oil well producing water will gradually continue to produce more water than oil, at which time the well would become unprofitable. 

That was unexpected because Gulf oil has been called “sweet,” a term of admiration because it rose to the surface without any water in it at all. Global engineers immediately recognized that water—now mixed with Saudi oil—indicated a “maturing” well field that was running out of oil. 

                 

Baker pointed out that it is widely believed that current worldwide demand equals current production capacity but some of the figures normally used to determine that come from the International Energy Association, an organization that measures capacity and production.  At one point statistics and predictions became so rosy, the editor said he took exception to the information the IEA put out.  Baker knew that in the late 1990s, prices had fallen to $11-12 a barrel, and the organization claimed production was at a level so much over demand that too much oil had been pumped.  Baker had his own engineer staff do the computations and they found that global storage capacity, including shipping tankers, could not hold all the oil claimed to having been produced. 

         That incident brought home to Baker that politics and economics muddy the waters, pushing markets to be driven by speculative fear and widely claimed information that is often incorrect.

         Baker has proof that some OPEC members have ignored their quotas for years and that action is not reported in information used by investors.  Countries like Nigeria were known to be slipping in an additional few hundred thousand barrels a day, production that would cause prices to collapse if it became widely publicized. 

          

         Another important area to question oil capacity assumptions is the change in dealing with natural gas escaping from oil wells which until recently has been flared or simply vented into the atmosphere by Gulf oil suppliers for decades.  However, the Saudis are switching much of their country’s energy use to natural gas in order to save their oil for sale.  Natural gas has been a stepchild to oil for years but Europe and South America are also disengaging from oil and switching to gas and solar. 

Debate over the condition of oil availability can only be believable when facts are used instead of economic opinions and resulting projections.  One need only point to the fix the world got into with rosy predictions of housing and banking just prior to the Great Depression of 2008. 

I am left to wonder why American producing oil wells—closed down with the advent of cheap oil from the Gulf—are not being reopened.  While there is great expense in regenerating them, the ultimate cost is far less than trying to get crude from oil sands and shale.  More importantly, old wells regenerated might be the stopgap answer to the conversion from Gulf oil to more environmentally favorable energy generation. 

The preferable road in my opinion is getting all our energy needs from utility companies and celebrating that by burying global oil politics forever.