Wednesday, May 23, 2007

Just Thinking out Loud

Too nice a day to post earlier so better late than never. I was re-reading some past work by Dr. Samsam Bakhtiari recently. For those that are not familiar with him or his work I humbly suggest you make some time to do so. Dr. Bakhtiari,now retired, is a former senior official of the Iranian National Oil Company. He holds a PhD in chemical engineering from SFIT in Zurich. His writing is anything but mainstream, which is in stark contrast to the CERA propaganda which I find shallow and regurgitated, and his facts will make you think about the issue of peak oil.

One aspect of his views I find intriguing and under the radar so to speak is his thoughts on Iran. Consensus estimates put Iran's reserves around 130-135 billion bbls. He believes the number to be closer to 35-45 billion. This 70% difference is staggering in and of itself let alone coming from someone from "the inside" like Dr. Bakhtiari. I recall reading somewhere back a while something Ari Fleischer, the former press Sec. said. He basically said that no country having that much oil develops nuclear technology for peaceful means. Now for a moment lets assume that we are not the only people on the planet with any IQ. I am not an apologist for the Iranian government or any of their statements,but just could it be possible that Iran, which like Saudi Arabia will not permit any outside auditing of their reserve numbers (we have to take them at their word so don't get me started there), really does want nuclear capability as an energy source because in fact the reserves are not anywhere near what the world believes them to be. That the mullahs running the show via their advisors see the writing on the wall and are actually being more proactive than most western governments. There is no where else I would rather live so don't misconstrue my writing as being a hater or country basher. But the fact is foreign governments don't have a corner on the market for corrupt and deceitful practices. Our government can go at it with the best of em' ,with cuff links and pressed shirt to boot so you don't see it coming ! Dr. Bakhtiari, who was in a position to know, believes the reserves are not there(to the extent the Iranians claim) or else they would not struggle to maintain production of 3-3.5 million bbls/day. There could be a lot of other excuses for this but in a world of $65 bbl oil I find it hard to believe that they cannot get production ramped up beyond this and address their unemployment situation. So now you have another major player on the world oil scene under the cloud of suspicion called reserves.

The mainstream press here whines about oil and gas prices but does little investigative journalism regarding the underlying issues of what is going on. Like the global warming debate, the case is closed to discussion once the media take their position, the facts be damned. Financial journalists are no different if not worse in this regard and if you need a case in point all you had to do was watch bubblevision a.k.a. CNBC during the tech bubble. They were great at the 'told you so' game after the fact. The press reports on the war on terror mainly Iraq and Afghanistan and little else. My apologies, they do report on missing children and C list celebrities ad nausiem. The politicians want a windfall profits tax on big oil yet the margins are less than plenty of companies in other industries. The reading of non-mainstream reports by Dr. Baktiari and others will at least make you consider all sides of the equation. You will definitely find yourself more informed and better equipped to map out your strategy. Deep down I hope Dr. Bakhtiari is wrong along with Matt Simmons and Colin Campbell but I have a nagging suspicion they are bang on and we are wasting valuable time where we could be repositioning ourselves to deal with the ramifications.
Good trading to you all.

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