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.
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.without OPEC the market would truly be supply and demand. OPEC should be forced to disband...
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...
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 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.
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?regarding your question.. the globalization you are referring to allows us have cheaper prices...
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...
Except that they don't abide by their agreements,and member states break them ALL the time. ing Saddam invaded Kuwait because they were overpumping. Read the news once in a while. OPEC was the boogyman back in the 70s.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 with the merger acquisition mania, the compe ion 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 compe ive market forces.there are always jobs. people need to make choices based on what jobs are out there or create new jobs of their own...
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 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 load 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
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 en ies because that is what is best for the companies.
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 ING STOCK.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?
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?
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.
Travel season? It's March! That 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 ing pirates.
san antonio gas prices
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.one of the MAIN reasons prices are high is because of the supply shortage that OPEC has manufactured...
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.
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 ed-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.
It is out of my control so I just "pay at the pump" and move on.
in san antonio when you show up you look like a dirty sweaty mexican though...
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.
You can only pull wells so hard or you hurt your long term production.
OPEC is pretty much producing at capacity.
There's only one real explanation for rising oil prices - must be time to prime up for those 06 mid-term elections!
In the article that you posted, it shows that they are producing over said production goal.
P.S. Thanks scott that was very informative.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.
Last edited by Drachen; 03-15-2005 at 03:06 AM.
yes, but only a little over in order to make some extra money because the pbd is so high right now.
So, invest in oil stocks and STFU, already. Jeez.
stay out of the thread if you don't like it ...
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