Is There an Oil Shortage? (Ismail Hossein-Hadeh)

The popular perception of the recently skyrocketing oil price is that there is an oil shortage in global energy markets. The perceived shortage is generally blamed on the Organization of Petroleum Exporting countries (OPEC) for “insufficient” production, or on countries like China and India for their increased demand for energy, or on both.

This perception is reinforced—indeed, largely shaped—by the Bush administration and its neoconservative handlers who are eager to deflect attention away from war and geopolitical turbulence as driving forces behind the skyrocketing energy prices.

{xtypo_quote_left} U.S. Representative Bart T. Stupak, Democrat – Michigan, chairman of the subcommittee investigating commodity market speculation, attributes even a higher percentage of the oil price hike to market manipulation: “Speculations now account for about 70% of all benchmark crude trading on the New York Mercantile Exchange, up from 37% in 2000." {/xtypo_quote_left} 

Impressions of an oil shortage are further bolstered by Wall Street and its financial giants that are taking advantage of the insecurity created by war and geopolitical turmoil in oil markets and are making fortunes through manipulative speculation in commodity futures markets.

Perceptions of insufficient oil supply are also heightened by the recently resuscitated theory of the so-called Peak Oil, which maintains that world production of conventional oil will soon reach—if it has not already reached—a maximum, or peak, and decline thereafter, with grave socio-economic consequences.[1]

However, claims of an oil shortage are not supported by facts. Evidence shows that, in reality, there is no discrepancy between production and consumption of oil on a global level. Citing statistical evidence of parity between production and consumption of oil, OPEC President Chakib Khelil recently emphasized that there was no shortage of oil: "As far as fundamentals are concerned I think we have equilibrium between supply and demand. . . . In fact right now we have more supply than demand."[2]

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