Wednesday, September 13, 2006

The world has vast untapped oil reserves

The world has tapped only 18 percent of the total global supply of crude, a leading Saudi oil executive said Wednesday, challenging the notion that supplies are petering out.

Abdallah S. Jum'ah, president and CEO of the state-owned Saudi Arabian Oil Co., known better as Aramco, said the world has the potential of 4.5 trillion barrels in reserves - enough to power the globe at current levels of consumption for another 140 years.

Trading in the oil market is driven by the fear that oil supplies might be reduced due to geo-political reasons. Middle East, the world's largest oil producing region is also one of the most unstable and volatile region.

Outside the Middle East other oil producers with their own issues have caused worry for investors, such as the strikes and political problems in Venezuela and potential instability in West Africa.

Critics of the oil industry argue that the true cost (the total costs both visible and hidden paid by western societies to obtain and use oil) of oil and subsquently gasoline are much higher than wholesale oil markets or retail gasoline prices reflect. The hidden oil/gasoline costs consist mainly of tremendous spending on military protection of world oil supplies.

When oil prices go high, passions can run high and can lead to global uncertainty.

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