An open letter to King Abdullah of Saudi Arabia

By George Monbiot

Published in the Guardian 26th May 2008

Your Majesty,

In common with the leaders of most western nations, our prime minister is urging you to increase your production of oil. I am writing to ask you to ignore him. Like the other leaders he is delusional, and is no longer competent to make his own decisions.

You and I know that there are several reasons for the high price of oil. Low prices at the beginning of this decade discouraged oil companies from investing in future capacity. There is a global shortage of skilled labour, steel and equipment(1). The weak dollar means that the price of oil is higher than it would have been if denominated in another currency. While your government says that financial speculation is an important factor, the Bank of England says it is not(2), so I don’t know what to believe. The major oil producers have also become major consumers; in some cases their exports are falling even as their production has risen, because they are consuming more of their own output(3).

But what you know and I do not is the extent to which the price of oil might reflect an absolute shortage of global reserves. You and your advisers are perhaps the only people who know the answer to this question. Your published reserves are, of course, a political artefact unconnected to geological reality. The production quotas assigned to its members by Opec, the oil exporters’ cartel, reflect the size of their stated reserves, which means that you have an incentive to exaggerate them. How else could we explain the fact that, despite two decades of furious pumping, your kingdom posts the same reserves as it did in 1988?(4)

READ THE REST: http://www.monbiot.com/archives/2008/05/27/majesty-we-have-gone-mad/