OPEC in 2009
Skeptical About OPEC? You Should Be...
"I'd like to see the amount of sea water the Saudis are pumping into Ghawar each day."
That was the first response I got from my colleague Keith Kohl, after I sent him this link from earlier in January, to a United Arab Emirates-based online newspaper article. It's titled "Saudi's Crown Jewel Has More Oil," a commentary on neighboring Saudi Arabia's supergiant Ghawar oil field, which is the largest in the world.
Keith Kohl questioned OPEC's oil reserves here, and even though we're working on getting updated reporting data, one thing's for certain: OPEC countries can play games with their reserve numbers with near impunity. The best countervailing trend against the cartel's fuzzy math may come from non-OPEC producers like Brazil, Canada, and even Russia.
With the exception of Russia, which is now viewed with suspicion in European capitals for its handling of gas exports, oil producers outside the cartel can pose themselves as valuable routes to flank OPEC fits and starts.
Above all, though, political and economic steps by heavy consumers aiming to reduce foreign oil supplies will take the ball out of OPEC's court. China is paying more attention than ever to pollution, and no less than Warren Buffett threw his weight behind Chinese hybrid battery maker BYD in 2008.
In the U.S. today, a week after Barack Obama was inaugurated, OPEC and the new president are playing energy tug-o-war.
As I wrote in Wealth Daily this week, Obama has instructed the Environmental Protection Agency to review 14 states' petitions for waivers from the Clean Air Act. The Clean Air Act sets federal mandates for all states to move emissions and fuel efficiency standards in lockstep.
But California and 13 other states wanted more autonomy in their targets, pushing mileage-per-gallon requirements up from a nationwide average of 35 to 36, and achieving the 36 MPG requirement four years sooner than the federal guideline (2016 instead of 2020).
Other states will find themselves pulled towards stricter California-led standards by industry inertia, unless Detroit can persuade a significant chunk of states to hold out and resist the fuel economy changes.
It's up to the President to connect the dots between higher domestic fuel efficiency and healthier international energy policy.
Energy Demand will Increase 58% Over the Next 25 Years
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