An open letter to the leader of Opec's biggest oil producer

There are several reasons for the high price of oil. Low prices at
the beginning of this decade discouraged oil companies from investing
in future capacity. There is a global shortage of skilled labour, steel
and equipment. The weak dollar means that the price of oil is higher
than it would have been if denominated in another currency. While your
government says that financial speculation is an important factor, the
Bank of England says it is not, so I don't know what to believe. The
major oil producers have also become major consumers; in some cases
their exports are falling even as their production has risen, because
they are consuming more of their own output.

But what you know
and I do not is the extent to which the price of oil might reflect an
absolute shortage of global reserves. You and your advisers are perhaps
the only people who know the answer to this question. Your published
reserves are, of course, a political artefact unconnected to geological
reality. The production quotas assigned to its members by Opec, the oil
exporters' cartel, reflect the size of their stated reserves, which
means that you have an incentive to exaggerate them. How else could we
explain the fact that, despite two decades of furious pumping, your
kingdom posts the same reserves as it did in 1988?

Read on...