In early May, the average price of a gallon of regular gasoline was $2.18 … A year ago, it was $1.89 … Also in May, a barrel of light crude oil was quoted at $52 … When that price increase was announced, the stock market promptly fell nearly 30 points … Around that time, Venezuelan President Hugo Chavez told reporters in New Delhi that “The world should forget about cheap oil.” … His country is the fifth-largest oil producer in the world … His four-day visit to India was aimed at increasing oil trade with that country and China to ensure their fast economic growth … Between 1995 and 2004, demand for oil skyrocketed by 12.5 million barrels a day (mbd) … Global oil consumption last year increased by 3.4 percent instead of the usual 1 percent to 2 percent … Nearly one-third of that growth came from China, where oil consumption soared by as much as 16 percent … By 2007, Beijing estimates that China will rely on foreign imports for as much as 50 percent of its crude oil … Behind China's new thirst for oil is the 6-percent annual growth of its national economy due to a booming manufacturing sector … Experts predict that China will become the world's second-largest oil consumer behind the United States … As a result of increased consumption, global spare capacity last year dropped to 1 million barrels per day, a 20-year low … Almost all of this was in Saudi Arabia, the world's largest oil producer… Its most prosperous oil field is called Ghawar … Discovered in 1948, the 300-mile-long sliver near the Persian Gulf is the world's largest oil field, and accounts for almost 60 percent of Saudi oil exports … With more than 260 billion barrels of proven oil reserves, Saudi Arabia is virtually the sole source of liquidity in the oil market … Both the International Energy Agency and the U.S. Department of Energy assume Saudi oil output will double over the next 15 to 20 years … To meet global demand for oil, Saudi Arabia will need to produce 13.6 mbd by 2010 and 19.5 mbd by 2020 … But in a study released by Simmons & Company International, an energy investment banking firm, Matthew R. Simmons contends that this won't happen … Simmons analyzed 200 technical papers on Saudi reserves by the Society of Petroleum Engineers, and his work was peer reviewed by dozens of experts … He argues that 90 percent of Saudi oil comes from five giant fields discovered between 1940 and 1965 … Since the 1970s, there haven't been any new discoveries of that magnitude, and the Ghawar's bounteous northern regions are almost depleted … After the Simmons study was released, Saudi oil officials flew to Washington to publicly refute the analysis … Privately they are less confident, telling The New York Times that production beyond 12 mbd would damage the oil fields.
