Tuesday, October 5, 2010

Temper Tantrum Tuesday: Iraqi oil

All over the news there is talk of a huge find of oil reserves in Iraq.

Here is the way oil exploration works.

Geologist are hired by oil companies to give convincing news of the chances of hitting oil, the companies pay them extra for getting good news.

The oil companies sell shares in oil drilling, the more favorable the report the more they make.

The Iraqi government can take loans off oil reserves.

Everyone in the chain makes more money if they can say they found more reserves.

In reality, Iraqi has been upping its claims of oil reserves since the 1980s but the most they have ever produced was 3 million barrels a day just before the war and historically they’ve only produced 2 million barrels a day.

I’m not saying the news of new reserves is total bull, but it has been false before and everyone involved in reporting larger reserves makes money from the reports even if they turn out to be false.

By Darrell B. Nelson author of Invasive Thoughts

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