How many real oil barrels do you see here? The UAE wants you to believe there are 3. But only 1 is real, they made up the other 2.

Why does OPEC lie about its oil reserves?

Can fiction masquerade itself as fact? Well, there's a case study at hand-OPEC and its reserves. OPEC's crude oil reserves grew by almost 7.9 percent in 2008-from 940 barrels in 2007 to 952 billion barrels. This is attributed to the 'reassessment' of proven crude reserves of a member country Venezuela. Why, then, is there scepticism on this news?

OPEC, since the 80's, began determining production quotas based on the proven oil reserves of its member countries. And, in the same decade there was ridiculously large leaps in numbers: In 1983, Kuwait increased its reserves from 76 billion barrels to 92 billion barrels. Come 1987, Iraq's reserves went from 47 billion barrels to 100 billion barrels, Iran's reserves soared from 49 to 93 barrels, and the UAE oil reserves tripled from 31 billion barrels to 92 billion barrels in 85-86. Suspiciously, all the countries had either discovered new oil fields or their existing fields began producing more.

In 2006, PIW (Petroleum Intelligence Weekly) broke the news, in a leaked memo from the Kuwait Oil company (KOC) that Kuwait's proven reserves were only half of the reported figures. In the same year, Dr. Samsam Bakhtiari, then a senior expert of the (NIOC) National Iranian Oil Company said that the oil reserves in the Middle-East were "about half, or even less than what the respective national governments claim".

So, all the bloated oil reserve claims look closer to fiction which throws another question, why does OPEC lie?

1. As stated earlier, increased (proven) reserves help a country to have increased production quotas. The math is simple; lying about your reserves lets you increase your production quotas which are proportional to reported reserves to earn more money. Kuwait is reported a fictional 99 billion barrels oil reserves. Based on that, Kuwait can extract 2.25 million barrels a day, irrespective of its real reserves.
2. Countries can borrow more from gullible international banks and stock markets (read: your retirement plans) only with proven reserves. Since OPEC doesn't allow for audit by independent auditors, the figures can never be confirmed and OPEC countries gain influx of foreign cash.
3. OPEC countries are heavily dependent on income from oil. Oil other than increasing the revenue also gives key political, economic and strategic mileage for a country in the world stage. Middle-eastern politicians love that and the perception of world recognition helps with stability at home in an otherwise volatile region.
4. OPEC countries are ruled by politicians who, like most other countries' politicians, will choose immediate financial gains over their countries' national interests any day. Never mind that when their oil runs out early, western investors will drop OPEC faster than Dick Cheney drops a hunting partner. OPEC politicians are in it for the money, lots of it and now.

Inflated figures of the oil reserves mean that oil decline will come sooner than anticipated by most. According to a report from the US Joint Forces command, surplus oil production 'could entirely disappear, and as early as 2015'. After reading this, if you think that this is just one of those doomsday predictions; wait till the oil prices hit the roof again-OPEC would not be able to increase the oil production. Then, remember, you read the predictions here first.