Sign of Declining Saudi Oil Production?24 Jun

On June 23, 2011 President Obama released 30 million barrels of oil from the U.S. strategic reserves to counter rising gas prices due to Libyan production shortfall. That’s odd because gasoline prices are already declining here and the United States only imports about 1 percent of its oil from Libya compared to far greater oil exports to Europe from Libya. The amount of oil released by President Obama equals approximately two days consumption by the United States.

Actually there are 28 countries that are tapping their strategic reserves to make up for greater than anticipated Libyan production decline. The United States is contributing about half of this strategic oil release to help the Europeans. What are they doing to help us?

The number of countries opening their strategic reserves was not mentioned in the CBS News report last night, nor in the Boston Globe today. It was, however, reported in the German online magazine, der Spiegel, last night. Why was this number of countries not reported by these two major U.S. news outlets? Not paying attention to details? Other reasons?

According to the Financial Times (February 25, 2011), “Saudi Arabia has begun producing more oil to fill the shortfall in global supplies caused by Libya’s political crisis…” Why are 28 countries, including the United States, now dipping into their strategic oil reserves when the Saudis were allegedly supplying extra oil to make up for the Libyan shortfall? Perhaps the Saudis have limited production capacity?

Here is a bit of insight into the current Saudi oil production capability that appeared in my blog of March 3, 2011. “Despite its large oil production, 90 percent of Saudi Arabia’s oil production comes from only five fields and up to 60 percent of its production stems from the Ghawar field. These giant, aging oil fields were discovered in 1941 to 1965. The Saudis may have irretrievably damaged some of their oil fields by over pumping salt water into them to maintain production. No external auditing of their oil fields is permitted by the Saudis. The turmoil spreading throughout the Middle East has not impacted Saudi Arabia yet. That situation, however, could change quickly. If that happens, what is the United States’ plan?”

Conclusion: Dipping into its strategic oil reserves clearly shows that the United States does not have an energy policy. Relying on the Saudis is not a comforting energy policy that promotes security of supply. U.S. consumption of 15 million barrels of oil per day only displays unabated, voracious greed without regard for future generations.

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About Dr. Everson

Prior to forming this SBIR consultant practice, Dr. Jeffrey Everson was director of business development for QinetiQ North America’s Technology Solutions Group (previously Foster-Miller, Inc.).

Dr. Everson has won and been the principal investigator for several SBIR programs, including a Phase I program for NASA, a Phase I project for the U.S. Air Force, and Phase I and II contracts from the U.S. Department of Transportation. For the Phase II program, he received a Tibbetts Award for exemplifying the best in SBIR achievement.

Previously Dr. Everson held senior scientist positions at Battelle Memorial Institute, The Analytic Sciences Corporation (TASC), Honeywell Electro Optics Systems Division, and Itek Optical Systems Division.

He holds a PhD in physics from Boston College and a MS/BS in physics from Northeastern University.


For more information about how JHEverson Consulting can help your company with its SBIR and STTR proposals, please contact Jeff Everson.

JHEverson Consulting is based in the Boston area but consults for clients throughout North America. It also is supported by affiliated consultants.