[Marxism] Mark Jones was right #2

[Louis Proyect <lnp3@xxxxxxxxx>]

http://www.janes.com/business/news/fr/fr040421_1_n.shtml

21 April 2004

World oil crisis looms

The oil industry has been gripped by scandal since Royal Dutch/Shell
twice this year downgraded its proven oil reserves by 20 per cent, or
nearly 4bn barrels. Shell may not be alone.

Other companies and even governments have hyped up the estimates of how
much oil they have, which is a vital factor in measuring their economic
health. If exaggeration proves to be widespread, it would have an
immense impact on the Middle East, whose economic weight is almost
totally dependent on oil and natural gas.

Geologists and analysts have been saying for some time that estimates of
global oil reserves may be dangerously exaggerated. If you take oil
prices currently at around US$37 a barrel, the highest for nearly 15
years, US petrol prices at record levels and you add terrorist attacks
and diminishing supplies, you have a recipe for inflation and economic
slowdown. The question of reserves becomes a much more important factor.

Earlier this month, The New York Times reported that internal documents
and other data indicated that Shell had over estimated its proven oil
reserves in Oman by as much as 40 per cent. But that seems to have been
done because everyone hoped that the latest drilling techniques would
reach more deposits than in the past and merit upgrading the estimates
of reserves.

The Oman estimates were based on assessments made in May 2000 by a
senior Shell executive who was subsequently fired. He was among several
executives who were said to have known about the unrealistic estimates
of reserves and to have done nothing about it.

If the exaggeration is confirmed, the estimate of recoverable oil will
have to be lowered. That is bad news for Oman, which claims reserves of
5.4bn barrels and is heavily dependent on oil and gas exports but it is
also bad news for the world as a whole.

As the world's natural resources shrink and global warming changes the
environment, competition for unimpeded access to them has intensified
and will continue to do so. About four-fifths of the world's known oil
reserves lie in politically unstable or contested regions.


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