Sept. 27 (Bloomberg) -- Saudi Arabia's oil minister and the president of Exxon Mobil Corp. said world petroleum reserves are enough to last for decades, seeking to ease concern that supplies are peaking and prices will stay near records.Ah, time to parse:
Saudi Arabia, the world's largest oil producer, will ``soon'' almost double its proven reserve base, adding 200 billion barrels to the current estimate of 264 billion, said the nation's oil minister, Ali al-Naimi. Exxon Mobil President Rex Tillerson said the world may still have more than 3 trillion barrels from conventional oil fields, oil sands deposits and other sources.
First off, adding 200 billion barrels of oil is a big deal, but it doesn't add decades to our lifespan. It adds less than 7 years, at current world consumption. If this development actually lowers prices (which I doubt) that 200 billion disappears even faster.
Secondly, the statement that "the world may have more than 3 trillion barrels..." is technically true, but only if you group conventional oil and unconventional oil (tar sands, oil shale, etc.) in together. This is kind of like saying that I'll never run out of wine, because I've got Welch's grape juice in the fridge. The two are similar, but you've got no idea how to turn one in to the other at a reasonable cost.
So does this change anything? Yes, if the Saudis aren't lying about their oil reserves. Notice also that this isn't an announcement per se, but an announcement about an impending announcement. Whether or not we actually hear anything from Mr. al-Naimi again on this matter is a good question.