The world isn’t short of oil, says edward n luttwak – and the price will go down, not up
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 he industrialised world needs more and more oil. The price is effectively set by Saudi Arabia, which has the largest production capacity and the loudest voice in OPEC. But - whatever happens in the wake of King Fahd’s death - the desert kingdom is increasingly seen as a problem rather than a solution in the global energy equation.
If the Saudis can't or won't pump significantly more oil, commentators fear already-high oil prices can only go on rising - with disastrous effects.
This pessimistic analysis is seductive, but wrong - partly because it is based on numbers that are unreliable and misleading.
We don't know precisely how much oil the world has left because the only reliable reserve statistics come from advanced countries such as the US and the UK, and
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| Edward N Luttwak is Senior Fellow at the Center for Strategic and International Studies |
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even those can change as higher oil prices make old fields and small wells more economic to exploit.
Reserve statistics for oil-rich but troubled countries such as Russia, Iran and Iraq, by contrast, are so unreliable as to make them useless: they may be underestimated because there has been no systematic exploration using the latest methods, or overestimated because the true potential has been reduced by over-pumping and mismanagement.
But what we do know for sure, in simple terms, is that there is enough oil under the ground to meet all our needs for many years. The Saudi oil company Aramco estimates it has reserves of 460 billion barrels, or 134 years of production at current rates – and the US’s government estimate for Saudi Arabia is much higher than that.
So global reserves are not the issue, and have little impact on today's oil price. Likewise, speculation plays only a small role, because the oil market is too big for speculators. In fact, the only thing that 
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