Madrid bombing
I'd like to take exception to Steven Plotkin's letter, "Madrid Bombing," (OGJ, Apr. 19, 2004, p. 10). He states there was no connection between Iraq and Al-Qaeda. There was a link prior to the US invasion, and strong enough that Hussein, if not involved, was at least aware of it. This comes out of the numerous files and papers of Iraq's government our military recovered.
Toby Elster
Consulting Geologist
Wichita, Kan.
A counterintuitive notion
The article by Andrew McKillop (OGJ, Apr. 19, 2004, p. 18) is worth reading because it forces us to check our basic assumptions. But the evidence does not support his conclusions.
First, the author's Table 1 selects only 5 years of data to represent the period from 1979 to 2003, whereas it should include all 25 years. Thus he writes, "The only price-elastic response that can be attributed to oil shocks would be the consistent falls in demographic oil demand during 1980-1985, with the demand rate of 4.42 bbl/capita/year (bcy) in 1985 being the lowest in the entire 1979-2003 period." But this is false because a total of six values were that low or lower, with the lowest being 4.33 bcy in 2002.
Looking further, Fig. 1 shows three possible scenarios from 2003 to 2008. Table 2 is limited to Taiwan, South Korea, and Singapore. Table 3 presents several "What if?" scenarios. That brings us to Table 4, "World Oil Demand Change by Volume," that covers the 10-year interval from 1990 to 2000, wherein all of the author's calculations appear to be wrong.
To check his numbers, I downloaded the data for world oil consumption from 1965 to 2002 and calculated the "percent change, year to year" for each year. However, my results show no resemblance to those in Table 4. For instance, where the author shows a growth of 2.53% in 2000, I show a growth of 0.26%. Now, I could live with all of the above. But it's the evidence from the years 1965 to 1989 (not included in his Table 4) where his hypothesis fails. Specifically, from 1965 to 1972 the average price of oil was about $10/bbl (2002 dollars), and world oil consumption increased at an average of 7.7%/year. In contrast, from 1979 to 1982 the average price of oil was about $72/bbl, and oil consumption decreased at an average of 2.6%/year.
Conclusion: Low oil prices correlate with increasing oil consumption; high oil prices correlate with decreasing oil consumption. The author's hypothesis is rejected.
Richard C. Duncan
Institute on Energy & Man
Seattle
The author responds
Simply taking this, try the figures for yearend 2003/early 2004.
We will assume that world oil demand on all-liquids base is running at 81.5 million b/d (but even that figure is open to plenty of doubt; it's more like 80.5-82 million b/d), and that world population is about 6.35 billion (anywhere from 6.25-6.45 billion). This gives 4.65 bbl per head per year, annual rate. Obviously, it's not valid to use two figures of decimals with such imprecise data—but this figure (well above 4.6) shows a strong upward trend relative to the low oil-price 1990s. We can also take the simple fact of annual growth rate differential: World oil demand is likely at 2.25% yearly growth, while world population grow this probably below 1.5% annual.
Andrew McKillop
Paris
