That is the message from these leaked cables (from Wikileaks). Evidently, the country overstated its reserves in order to encourage outside investment. It’s an illegal strategy in the USA, but in Saudi Arabia, with a state-owned oil company, there are certainly different rules. This could certainly explain the reluctance of OPEC to increase production even with climbing prices. Surely those countries want to make all the money that stands to be made from selling their oil. So, the likely explanation for a refusal to increase production is just what the previous story mentions.

The implications, if this were true, would be that oil prices would continue to rise. It would also mean that the world is approaching “peak oil” production. Of course, as prices rise, reserves increase – because it is then cost effective to recover deeper oil. So, if these cables are true, it will mean rising prices until more sources of production are brought online. Either way, we likely won’t see 90 cent gasoline like when I was in college.

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