OPEC.The true reason for our sky high oil prices.

[Clandestino]

without OPEC the market would truly be supply and demand. OPEC should be forced to disband...


OPEC May Act to Cool Oil Prices

2 hours, 37 minutes ago Business - Reuters



ABU DHABI (Reuters) - Two of OPEC (news - web sites)'s leading Gulf producers say the cartel may agree to keep pumping above formal oil output quotas to cool down overheated markets.

The United Arab Emirates Sunday joined Kuwait in suggesting the producer group might take such a decision as U.S. oil prices again threaten to breach $55 a barrel.


"The decision may be to maintain current production levels with the aim of calming the market," UAE Oil Minister Mohamed al-Hamli said in a statement issued ahead of a March 16 OPEC meeting in Isfahan, Iran (news - web sites).


Hamli did not specify how much the Organization of the Petroleum Exporting Countries is now producing, but a Reuters survey showed 10 members excluding Iraq (news - web sites) pumping 600,000 bpd above an official 27 million barrels per day (bpd) ceiling in February.


His Kuwaiti counterpart Sheikh Ahmad al-Fahd al-Sabah, also OPEC president, acknowledged Saturday that sky-high oil prices have tempted some members to exceed their quotas.


"I think that now everybody is overproducing," he said. "Current prices make it lucrative for everybody to hike production without the need for an (official) decision."


Neither minister saw signs of tightening oil supplies and Hamli suggested stockpiles could even build by 2 million bpd during the second quarter. Oil inventories typically rise then as demand declines following the northern hemisphere winter.


"That shows clearly the abundance of supplies and lack of shortage," said Hamli.


OUTPUT INCREASE


OPEC members Iran, Qatar, Venezuela and Algeria have come out in favor of keeping output steady, with Algeria's minister saying last week that OPEC had no spare capacity to lift quotas.


The two Gulf Arab ministers disagreed with the Algerian assessment, with Kuwait saying the cartel had 2 million bpd to spare.


While most OPEC members are pumping at full tilt, swelling total cartel output including Iraq to about 29.5 million bpd, Gulf producers the UAE, Kuwait and Saudi Arabia still have a sizeable production cushion.


They will shoulder the burden of any further supply increases, whether or not officially sanctioned.


"I think if the prices will continue like this, OPEC's ... behavior will be like 2004 and we will make sure we will do something to stabilize the prices," said the Kuwaiti oil minister.


OPEC raised its official output ceiling by 3.5 million bpd during the second half of last year, but the core Gulf producers -- especially Saudi Arabia -- took responsibility for the increase.


Booming demand growth in China and the United States has piled pressure on OPEC to expand output capacity.

And the UAE oil minister said the cartel is rising to the challenge.

"Many OPEC members, including the UAE, are currently investing to increase production capacity to meet any increase in future oil demand or any supply shortage," said Hamli.

The UAE's capacity is expected to increase by 200,000 bpd to 2.7 million bpd during the second half of 2005.

Top world exporter Saudi Arabia has plans in place to hoist capacity by 2.3 million bpd by 2009. The kingdom's current production capacity is 11 million.

[exstatic]

without OPEC the market would truly be supply and demand. OPEC should be forced to disband...

So a loose confederation of petroleum producing states, who rarely agree on anything, and usually overpump is a threat, but multinational companies actually gobbling each other up is OK? Your position is inconsistant.

[Clandestino]

So a loose confederation of petroleum producing states, who rarely agree on anything, and usually overpump is a threat, but multinational companies actually gobbling each other up is OK? Your position is inconsistant.

loose confederation? do you have any idea what opec is? i guess not since you call them a loose confederation. OPEC sets the price of the world's oil. they are the ones who are keeping it at this inflated level...

some of the countries are just trying to make a few extra bucks while the price of oil is this high. they say, they are at max output so the price remains high or goes higher... then you can plainly see that output is not near max levels because they are pumping more so they can cash in on sky high prices...

[exstatic]

It's not a matter of how much you pump out of the ground, it's how much you can refine. Take a basic petro-politics course, and get back to me. OPEC is a loose confederation because there is no enforcement. They set pumping goals, and then some little shit like UAE, Dubai, or Kuwait pumps however much they feel like.

You still haven't answered how this is any different than multi-nationals gobbling each other up and setting both labor costs and prices in the US market.

[Clandestino]

It's not a matter of how much you pump out of the ground, it's how much you can refine. Take a basic petro-politics course, and get back to me. OPEC is a loose confederation because there is no enforcement. They set pumping goals, and then some little shit like UAE, Dubai, or Kuwait pumps however much they feel like.

You still haven't answered how this is any different than multi-nationals gobbling each other up and setting both labor costs and prices in the US market.

one of the MAIN reasons prices are high is because of the supply shortage that OPEC has manufactured...

regarding your question.. the globalization you are referring to allows us have cheaper prices... we'd be paying 100-150 dollars for a pair of jeans if us workers made them vs someone in a low wage country.

[exstatic]

regarding your question.. the globalization you are referring to allows us have cheaper prices...

The offshoring of jobs doesn't bother you? It's not just garment workers any more. What difference do prices make when you don't have a job?

I think you overestimate OPEC. They don't really have any control over their member states. The shortage of consumer petroleum products (gasoline, diesel, motor oil) is more tied to lack of refinery capacity.

[Clandestino]

The offshoring of jobs doesn't bother you? It's not just garment workers any more. What difference do prices make when you don't have a job?

I think you overestimate OPEC. They don't really have any control over their member states. The shortage of consumer petroleum products (gasoline, diesel, motor oil) is more tied to lack of refinery capacity.

when OPEC meets they agree to production levels... if one member were to raise levels of production then the price of oil could drop for all... that person's incentive for extra production would then diminish...therefore they all agree it is in their best interest to stick to barrels per day levels set in their meetings... if they did not collude on limits then we would have a true market price on oil...

what difference would it make if you had a job, but prices for normal goods were too high that you couldn't afford anything? there are always jobs. people need to make choices based on what jobs are out there or create new jobs of their own...

[exstatic]

when OPEC meets they agree to production levels... if one member were to raise levels of production then the price of oil could drop for all... that person's incentive for extra production would then diminish...therefore they all agree it is in their best interest to stick to barrels per day levels set in their meetings...

Except that they don't abide by their agreements,and member states break them ALL the time. Fucking Saddam invaded Kuwait because they were overpumping. Read the news once in a while. OPEC was the boogyman back in the 70s.


there are always jobs. people need to make choices based on what jobs are out there or create new jobs of their own...

Except that with the merger acquisition mania, the competition is less, both in pricing for the consumer and in JOB COMPENSATION. Put it this way: mergers create sort of an OPEC of the pricing and compensation markets. Why you continue to support oligoloplies amongst multi-nationals yet argue that OPEC is some boogeyman is beyond me. They're the same thing: a lessening of competitive market forces.

[MannyIsGod]

Dude, Ex has kicked your ass around all over this thread.

#1 Forced to disband? On whose authority? Nations are free to do as they wish, and if they want to protect their asset and maximize the profit they gain from it, they are free to do so. Do you ever stop and think that American's aren't the only people on the planet, and it doesn't revolve around what is best for them? OPEC isn't there to give a shit about how much you pay at the pump, they are there to maximize how much money their member countries make.

Why is it that you don't have a problem with American corporations doing things to boost their profits, but you do have a problem with other countries protecting their industries?

#2 The current price of gasoline is much more tied to our low refining capability. United States refining companies are currently banking in incredible amounts because of refining margins. SA's own Valero made a shitload of money this past year, and I don't see that changing anytime soon. The incentive to build new refineries isn't there because they are making a lot of money with the current situation, so dont expect gas prices to drop anytime soon. It doesn't matter how much oil OPEC releases when it comes to current gas prices, because we can't turn it all into gas.

But if you don't want to take our word for it, ask Scott. He happens to work for a rather large refiner.

Nice Job Ex

[MannyIsGod]

Not only do mergers do that Ex, but they also lower the need for people that are doing the same job in both corporations. After the merger when things are consolidated many people are sent packing.

It also makes entry into the market by new companies much harder when you are dealing with a few monster corporations.

People argue for lower government regulation without realizing that less regulation always leads to monopolistic entities because that is what is best for the companies.

[exstatic]

Why is it that you don't have a problem with American corporations doing things to boost their profits, but you do have a problem with other countries protecting their industries?

Is there even such a thing as an American Corporation anymore? It's not like the governments of those countries are raking it in (well, OK, the Saudi royals own chunks of the companies). If you're so incensed by those oil companies making money, Clandestino, BUY SOME FUCKING STOCK.

Manny, I can understand why the existing players won't expand refining capability, but wouldn't that be a lucrative niche for a new player to get into?

[NameDropper]

I heard it was simply due to the beginning of the traveling season and even those gas stations who haven't felt the economic impact raised their prices simply because they can.

I've seen prices from $1.81 to $2.05 all here in SA.

[exstatic]

Travel season? It's March! That shit doesn't start until Memorial day.

I always shop for gas. Here's a link for a list of low prices, and a list of fucking pirates. :flipoff

san antonio gas prices (http://www.sanantoniogasprices.com/)

[scott]

one of the MAIN reasons prices are high is because of the supply shortage that OPEC has manufactured...

There is no shortage of crude oil... there is a worldwide shortage of light and/or sweet crude oil, something OPEC can't do anything about since their incremental supply is medium sour.

The reason for these so-called "sky-high" oil prices is driven by refining capacity, as mentioned earlier, product demand, a shortage of light sweet crude, and tightening environmental regulation in certain areas.

1. Refining capacity. It isn't that refiners don't want to build new refineries, its that they have become impossively expensive to build them. We'd have to see a sustained period of extremely high product margins ($5 gas, anyone?) to create the financial incentive required to justify the kind of capital expenditure needed to build a new refinery.

2. Product demand. Demand keeps going up, at a faster rate than refining capacity no less.

3. Shortage of light, sweet crude. Low density, low sulfur crude is a lot easier to refine. A few companies have made the niche with more complex refineries that are capable of processing the heavier, more sour crudes. You may note that these are the refiners who have performed the best recently. Heavier, more sour crudes are trading at record discounts to WTI, the light sweet benchmark crude in the US - and its because the demand is for the light sweet stuff. There is plenty of heavier sour stuff out there. OPEC pumping more won't budge WTI as much as it would widen sweet-sour discounts. It is always important to remember, all crude oil is not created equal. PS: becoming a complex refiner is not an easy, over-night process either. It requires major capital outlays (we are talking hundreds of millions of dollars here) for units like fluid catalytic crackers, hydrocrackers, deasphalters, cokers, hydrotreaters, etc. This is really where there is some potential for refining capacity expansion in the US. It doesn't necessarily add throughput (although it can), but it can increase your production as well as allowing flexibility on what feedstocks you can run.

4. Tightening environmental regulation. I'm all for clean air, but it does come at a cost. Tightening evironmental regulation has the effect of increasing the demand for light sweet (which we just talked about) because it is "cleaner" and easier to refine where as the heavier sour stuff takes more complexity to bring it to spec. Also, our environmental regulations reduce the number of available imports - another restraint on supply. As part of the supply-demand dynamic, some domestic producers may decide it makes more economic sense to make non-spec grades and export them rather than bring the product to spec and sell it domestically. These are the effects of environmentalism. Environmentalism is fine and dandy and I want clean air too - you just need to understand the financial consequences.

[Guru of Nothing]

This thread does nothing but get me in touch with my inner-liberal.

Two-words ->> Bike Paths. ... 10 seconds later I'm lost in thought how fucked-up urban design is throughout most of these United States.

Give me a job and a humble abode, with easy access to my merchants of choice - all via a bike path (worth noting, bikes could be racked on a Via Bus, but the bus routes must be up to snuff) and I'm happy.

Sigh.

[MannyIsGod]

This thread does nothing but get me in touch with my inner-liberal.

Two-words ->> Bike Paths. ... 10 seconds later I'm lost in thought how fucked-up urban design is throughout most of these United States.

Give me a job and a humble abode, with easy access to my merchants of choice - all via a bike path (worth noting, bikes could be racked on a Via Bus, but the bus routes must be up to snuff) and I'm happy.

Sigh.

I spent the day on my bike and Via going all over town and getting a good workout in the process.

[JoeChalupa]

It is out of my control so I just "pay at the pump" and move on.

[Clandestino]

I spent the day on my bike and Via going all over town and getting a good workout in the process.

in san antonio when you show up you look like a dirty sweaty mexican though...

[Clandestino]

regardless...the price of oil is still determined by output... anytime a threat to the oil is seen, prices raise...

i'm not saying that refining production has nothing to do with it.. i am saying that oil production also plays a major factor in the market prices of a barrel of oil.


The Organization of Petroleum Exporting Countries will likely raise its output ceiling by 500,000 barrels a day if prices stay at present levels, the oil cartel's president said Monday.

With OPEC already overshooting quotas by about 700,000 barrels a day, any such move would mostly have a psychological effect by signaling that the organization is formally ready to pump more in an effort to regulate prices.

Prices have shot up by nearly 20 percent in the past five weeks to around $54 a barrel in New York - a little more than a dollar shy of all-time records - putting pressure on the 11-nation organization to take action
...
Light, sweet crude for April delivery fell 88 cents to $53.55 a barrel on the New York Mercantile Exchange.

[Sec24Row7]

You can only pull wells so hard or you hurt your long term production.

OPEC is pretty much producing at capacity.

[Nbadan]

There's only one real explanation for rising oil prices - must be time to prime up for those 06 mid-term elections!

[Drachen]

when OPEC meets they agree to production levels... if one member were to raise levels of production then the price of oil could drop for all... that person's incentive for extra production would then diminish...therefore they all agree it is in their best interest to stick to barrels per day levels set in their meetings... if they did not collude on limits then we would have a true market price on oil...

what difference would it make if you had a job, but prices for normal goods were too high that you couldn't afford anything? there are always jobs. people need to make choices based on what jobs are out there or create new jobs of their own...


In the article that you posted, it shows that they are producing over said production goal.



Hamli did not specify how much the Organization of the Petroleum Exporting Countries is now producing, but a Reuters survey showed 10 members excluding Iraq (news - web sites) pumping 600,000 bpd above an official 27 million barrels per day (bpd) ceiling in February.


P.S. Thanks scott that was very informative.

[Clandestino]

In the article that you posted, it shows that they are producing over said production goal.


yes, but only a little over in order to make some extra money because the pbd is so high right now.

[exstatic]

So, invest in oil stocks and STFU, already. Jeez.

[Clandestino]

So, invest in oil stocks and STFU, already. Jeez.

stay out of the thread if you don't like it bitch...

[Nbadan]

Peak oil anyone?


With world oil prices north of $50 a barrel and rising, OPEC ministers meeting in Iran Wednesday will be grappling with a problem they haven’t confronted in the cartel’s 45-year history. In the past, OPEC tried to cool overheated prices by pumping more when supplies got too tight. But most OPEC producers say they’re already pumping as fast as they can. And despite the high cost of a barrel of crude, world demand shows no signs of slowing.

As a result, some OPEC ministers say, they’ve run out of options in trying to rein in the price of crude. Global oil demand has taken up most of the slack in extra OPEC capacity. Consumption is now believed by many analysts to be pressing up against the limits of what the world can produce. Saudi Arabia is the only country believed to have any surplus production left, and even then the Saudis are pumping close to 90 percent of capacity, according to the U.S. Department of Energy.

"There is not much we can do,” Algerian Oil Minister Chakib Khelil told reporters Tuesday in Isfahan, Iran, the site of Wednesday’s meeting.

"OPEC has done all it can do.” Qatar Oil Minister Abdullah al-Attiyah said. “This is out of the control of OPEC."

more...MSNBC (http://msnbc.msn.com/id/7190109/)

Given the rise of the Euro compared to the Dollar, most of the price increase we in the US have seen has NOT been seen in Europe. Gasoline Prices has risen in Europe (Almost all in the Second half of 2004) but no where near what it has in the US. Japan and China has kept their currencies tied closely to the US Dollar for trade purposes and apparently turned a lot of their Dollars into Oil (Both in a Strategic Reserve like the US has, but also in buying oil fields). Thus the price of oil for both Countries (and the rest of the Far East) has gone up in 2004, they have excess Dollars to deal with the increase (Through I see both countries dropping the Dollar if the Dollar takes a sudden dive OR the price of Oil goes through the roof i.e. Exceeds $100 to the Barrel). Remember there are 42 Gallons to a Barrel of Oil so the production costs of a gallon of gasoline at $100 a Barrel of oil is $2.38 a gallon plus State tax (27cents for Pa), the Federal Gasoline Tax (18.4) and the Cost of refining and distribution (24 cents a gallon, total non-barrel add on to a gallon of gasoline is $.694 per gallon. Thus the total price of Gasoline per barrel is $3.074 Dollars per Gallon at the pump).

My point here is if the Price of Gasoline goes up much higher people will stop buying it, bring about a situation like what happened in 1997 (i.e. a HUGE drop in demand which than leads to a huge glut of oil and a huge drop in price). OPEC fears such a situation for with the drop in price will come drop in profits and all of the Rulers of the major OPEC countries need almost all of their money from their oil to stay in power (Venezuela's Chavez is probably the only popular elected ruler' of any OPEC nation). OPEC can NOT afford such a drop and such a drop will occur if the price gets to high, thus OPEC's attempts to lower the price to something that will NOT encourage people NOT to buy oil.

A secondary reason is that most OPEC nations have extensive investment's in Europe and the United States and a too high a price of Oil, will force the US and Europe into a recession and these investments may go bad, thus many of the leaders of OPEC would suffer if the price of oil gets to high.

All told, OPEC wants the price high but no so high to discourage real use and at $2-3 a gallon you are almost at that point.

[Nbadan]

For those of you who may have missed it, just this week the U.S. congress recognized that Peak Oil isn't just a conspiracy theory anymore...


< Conservative Congressman Roscoe Bartlett, Chairman of the Projection Forces Subcommittee of the Armed Services Committee, gave an hour long presentation on Peak Oil to the US Congress on Monday. This is the full transcript. We hope to get a hold of the graphs used by Mr. Bartlett and will update this article to include them if they come to hand. -AF

A couple of Congresses ago, I was privileged to chair the Energy Subcommittee on Science. One of the first things I wanted to do was to determine the dimensions of the problem. We held a couple of hearings and had the world experts in. Surprisingly from the most pessimistic to the most optimistic, there was not much deviation in what the estimate is as to what the known reserves are out there. It is about 1,000 gigabarrels. That sounds like an awful lot of oil. But when you divide into that the amount of oil which we use, about 20 million barrels a day, and the amount of oil the rest of the world uses, about 60 million barrels a day, as a matter of fact, the total now is a bit over the 80 million that those two add up to. About 83 1/2 , I think. If you divide that into the 1,000 gigabarrels, you come out at about 40 years of oil remaining in the world. That is pretty good. Because up until the Carter years, during the Carter years, in every decade we used as much oil as had been used in all of previous history. Let me repeat that, because that is startling. In every decade, we used as much oil as had been used in all of previous history. The reason for that, of course, was that we were on the upward side of this bell curve. The bell curve for usage, only part of it is shown on this chart. That is the green one down here, the bell curve for usage. Notice that we are out here now about 2005. Where is it going? The Energy Information Agency says that we are going to keep on using more oil. This green line just going up and up and up is a projection of the Energy Information Agency. But that cannot be true. That cannot be true for a couple of reasons. We peaked in our discovery of oil way back here in the late sixties, about 1970. In our country it peaked much earlier than that, by the way. But the world is following several years behind us. And the area under this red curve must be the same as the area under the green curve. You cannot pump any more oil than you have found, quite obviously. If you have not found it, you cannot pump it. If you were to extend this on out where they have extended their green line, even if it turned down right there at the end of that green line, the area under the green curve is going to be very much larger than the area under the red curve. That just cannot be. We will see in some subsequent charts that we probably have reached peak oil.

<snip>

Chart 9. This is a very interesting chart. It is a little too busy, but let me try to explain what is there. The oil companies for reasons of pricing and regulations and so forth have had the habit through the years of underreporting initially how much oil they found. Then later when it was appropriate to their license to produce more oil, they would report additional oil. They never found any additional oil. By the way you may have noted that three times in the last roughly 3 weeks, oil companies have admitted that their estimates of the reserves were exaggerated and have downscaled the reserves that they said were there. If you took the original reporting of the reserves, you might be able to construct a curve, a straight line curve which said we are just getting more and more. But if you backdated that to the actual discoveries, then you get this curve. This curve is asymtoting at a bit over 2,000 gigabarrels, which is about what the world's experts say had been there. We have now pumped about half of that. We have about 1,000 gigabarrels remaining.
they simply reported oil they had found previously.

<snip>

What now? Where do we go now? One observer, Matt Savinar, who has thoroughly researched the options, and this is not the most optimistic assessment, by the way, but may be somewhat realistic, he starts out by saying, Dear Readers, civilization as we know it is coming to an end soon. I hope not. This is not the wacky proclamation of a doomsday cult, apocalypse Bible sect or conspiracy theory society. Rather, it is a scientific conclusion of the best-paid, most widely respected geologists, physicists and investment bankers in the world. These are rational, professional, conservative individuals who are absolutely terrified by the phenomenon known as global peak oil.

<snip>

Why should they be terrified? Why should they be terrified just because we have reached the peak of oil production? Last year, China used about 30 percent more oil. India now is demanding more oil. As a matter of fact, China now is the second largest importer of oil in the world. They have passed Japan. When you look at how important oil is to our economy, you can understand the big concern if, in fact, we cannot produce oil any faster than we are producing it now and there are increasing demands, as there will be, for oil. In our country, for instance, we have a debt that we must service. It will be essentially impossible to service that debt if our economy does not continue to grow. So there are enormous potential consequences, which is why he says that these people are absolutely terrified by the phenomenon known as peak oil.

Energy Bulletin (http://www.energybulletin.net/4733.html)

[exstatic]

stay out of the thread if you don't like it bitch...
:lol:rollin:lol:rollin:lol:rollin:lol:rollin:lol

I'm the bitch? You're the one that sees OPEC as some sort of boogeyman, when in reality, the oil companies are the ones who control the refining process. Your lack of comprehension of petro-politics is staggering, and anyone attempting to discuss this with you here is wasting their time. You've been OWN3D.

You can have your thread back now, biznatch.

[Clandestino]

:lol:rollin:lol:rollin:lol:rollin:lol:rollin:lol

I'm the bitch? You're the one that sees OPEC as some sort of boogeyman, when in reality, the oil companies are the ones who control the refining process. Your lack of comprehension of petro-politics is staggering, and anyone attempting to discuss this with you here is wasting their time. You've been OWN3D.

You can have your thread back now, biznatch.
biznatch? lol... how old are you? 15?

[MannyIsGod]

Irony.

[Clandestino]

Irony.

yes, it is ironic you would rather give rapists and murderers compassion, but would not give it to unborn babies/fetuses/whatever term makes you feel better

[MannyIsGod]

Who says I don't give Fetuses compassion?

[Clandestino]

thinking it is okay to kill them, but not murderers/rapists doesn't seem compassionate to me... maybe we have a different definition of compassion

[MannyIsGod]

I don't think it's ok to kill them, but I don't think you can make it illegal because they aren't seperate human beings yet.

Can you understand where a personal belief may not coincide with a legal one?