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 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."