ISSUE 1857
Sunday 25 June 2000
Sheikh Yamani predicts price crash as age of oil ends
By Mary Fagan, Deputy City Editor
Farewell to riches of the earth
SHEIKH YAMANI, the former Saudi oil minister, has told The
Telegraph that he expects a cataclysmic crash in the price
of oil in the next five years.
In an unprecedented personal interview, Sheikh Yamani also
predicts that, within a few decades, vast reserves of oil
will lie unwanted and the "oil age" will come to an end.
In an interview with Gyles Brandreth, he says: "Thirty
years from now there will be a huge amount of oil - and no
buyers. Oil will be left in the ground. The Stone Age came
to an end, not because we had a lack of stones, and the oil
age will come to an end not because we have a lack of oil."
Sheikh Yamani, who was Saudi Arabia's oil minister from
1962 to 1986 and is now in charge of an energy consultancy,
became the public face of the revolutionary oil policy that
altered the balance of world power in the early Seventies.
He predicts that a combination of recent oil discoveries,
the advance of new technology, and heavy investment in
exploration and production will all lead to a collapse in
the price of crude. He says: "I have no illusion - I am
positive there will be some time in the future a crash in
the price of oil. I can tell you with a degree of
confidence that after five years there will be a sharp drop
in the price of oil."
Fuel-cell motor technology - which can produce electricity
by combining hydrogen from a variety of fuels with oxygen
from the air - will have a dramatic impact on the oil
market, he predicts. "This is coming before the end of the
decade and will cut gasoline consumption by almost 100 per
cent. Imagine a country like the United States, the largest
consuming nation, where more than 50 per cent of their
consumption is gasoline. If you eliminate that, what will
happen?" Saudi Arabia, he says, "will have serious economic
difficulties".
His remarks follow last week's agreement by the
Organisation of Petroleum Exporting Countries - in which
Saudi Arabia is the dominant force - to a marginal rise in
production of 708,000 barrels a day in response to mounting
concern in the US and other major consuming countries over
the high price of oil. Prices per barrel have been hovering
at around $30, compared with $10 at the beginning of last
year. But industry experts have given warning that Opec's
latest production increase will not be enough to ease the
price.
In the interview, Sheikh Yamani forecasts that prices will
stay high temporarily because of demand in the US and parts
of Asia. But he argues that this price obscures the likely
long-term effect of "huge" recent discoveries in regions
such as the Caspian Sea, Yemen, Egypt and Africa. He also
predicts that Iraq, which is capable of producing 6.5
million barrels a day, will become a bigger supplier before
long.
He says: "On the supply side it is easy to find oil and
produce it, and on the demand side there are so many new
technologies, especially when it comes to automobiles."
Yamani believes that automobile engine technologies
including fuel cells - which can produce electricity by
combining hydrogen from a variety of fuels with oxygen from
the air - will drastically reduce oil consumption and that,
in the longer term, no one will need oil.
His views reflect those of many in the industry, although
few would go so far as to predict an end to the use of oil.
Vincent Cable, a former chief economist at Shell and now
industry spokesman for the Liberal Democrats, said: "People
in the industry would not be surprised by a vision of the
future with relatively weak prices, but punctuated by
occasional price shocks."
http://www.telegraph.co.uk/et?ac=000114832908976&rtmo=gwVVVZfu&atmo=99
999999&pg=/et/00/6/25/noil25.html
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