Why we can’t rely on Saudi Oil

Supply chain analysts agree that key to any economic rebound will be the price of fuel.

Derik Andreoli, an energy analyst and doctoral candidate at the University of Washington, says there’s deep uncertainty in how energy for power, heat, and mobility will be sourced and paid for.

In the meantime, the Obama Administration recently curtailed domestic offshore drilling while global demand for fossil fuels continues to surge.

Andreoli made many of the same oberservations in our recent Webast, 2011 Logistics Rate Outlook - Going Up!

“The potential consequences of failing to plan for the unfolding energy paradigm could be catastrophic,” he says.

In a dispatch to SCMR today, Andreoli points us to The Guardian:

“The U.S. fears that Saudi Arabia, the world’s largest crude oil exporter, may not have enough reserves to prevent oil prices escalating, confidential cables from its embassy in Riyadh show….

The cables, released by WikiLeaks, urge Washington to take seriously a warning from a senior Saudi government oil executive that the kingdom’s crude oil reserves may have been overstated by as much as 300bn barrels – nearly 40 percent…

Says Andreoli: “Sadad al-Husseini, a geologist and former head of exploration at the Saudi oil monopoly Aramco, met the U.S. consul general in Riyadh in November 2007 and told the US diplomat that Aramco’s 12.5 million barrel-a-day capacity needed to keep a lid on prices could not be reached.”

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