Oct 31 2006
Dr. Onn Winkler of the University of Haifa's newly established Center for Advanced Energy Studies reached this somber conclusion, which he will detail to an international conference at the University on the International Implications of Energy Transit that begins Tuesday, October 31.
On a slightly more upbeat note, the Middle East analyst adds that the price will, however, come down slightly over the next 7-10 years. "We will no longer return to the halcyon days of 1999, when oil cost $10 a barrel," he remarks. "But we won't reach the hell of $70 a barrel, either."
An expert in the economics of the Middle East, Winkler referred to the unbroken rise in oil prices since 2002, whose price we pay every time we get into our cars. "The official price of the OPEC states today," he notes, "is $54 a barrel. An increase of 400 percent in the past seven years.
"There is no world oil shortage," he points out. "The proven reserves of Saudi Arabia, for example, amount to 260 billion barrels.
"Until recently, the OPAC countries maintained oil prices at a level of $22-$28 a barrel, a price that was a little less than the cost of familiar alternatives today, like gas, solar energy, or atomic energy."
Winkler said that the big change in the world oil market came about after the September 11 events in the United States. "For a long time, there was an unwritten agreement between the U.S. and the Saudi royal family," he comments. "The Saudis promised - and kept to their word - to increase the rate of production every time there was a crisis in the oil market. In return, the Americans protected the Saudi regime, especially against its Iraqi and Iranian neighbors.
"After September 11, 2001, and in light of the fact that 15 of the suicide plane hijackers were Saudi citizens, the Americans began to doubt the ability of the Saudi regime to continue to fulfill its traditional role as ‘swing producer.' As far as they were concerned, increased Iraqi oil production offered a solution to the energy crisis that began developing around the world."
The Mid East economic historian feels that Saddam Hussein fell into the hands of the Americans at just the right time. Here was a dangerous regime, he says, that was sitting on huge oil reserves. His collapse and the establishment of a friendly regime were in the interests of the U.S.
"But here the Americans made a mistake," he believes. "From the moment Saddam fell, they have not succeeded in stabilizing the Iraqi government or in bringing about any sharp increase in oil production that would have the effect of moderating prices.
"The Saudis, for their part, wanted to prove their importance to the Americans. They promised to step up oil production, but this is a process that takes time.
"In ten years, prices will come down. But over the next few years, they will still be high.
"We will not return to the gan eden of 1999, when a barrel of oil cost $10," Winkler again stressed, using the Hebrew term for Garden of Eve or heaven. "But neither will we go back to the hell of $70 a barrel."
Winkler and energy experts from around the world will speak at the international conference on energy transit. Among the noted speaker at the event, which begins Tuesday at the University of Haifa, will be the president of Georgia, Mikheil Saakashvili; the deputy prime minister of Kazakhstan, Karim Massimov, and Israeli Minister of Infrastructure Binyamin Ben-Eliezer. Other policy-planners and researchers scheduled to address this gathering will come from the United States, Azerbaijan, Turkey, Germany, and Italy.
http://www.haifa.ac.il/