Posted on 12/12/2004 9:16:21 PM PST by jb6
By David Winning, PA City Staff
Oil cartel Opec agreed today to scale back production in a bid to defend high prices and protect revenues.
At a meeting in Cairo, Saudi oil minister Ali Naimi said the total reduction of one million barrels a day will be implemented from the beginning of January.
Opec also agreed to meet again at the end of that month to review the impact of the cutback on prices, which have fallen sharply recently since hitting a new record in October.
Mild weather in the United States has led to a stronger than expected build-up in oil stocks across the Atlantic and Mr Al Naimi suggested prices may continue to fall.
“We have done everything to moderate the price,” the Saudi minister said, alluding to overproduction in recent months. “It is moderating and it will probably moderate more.”
Today’s decision means output will be scaled back to Opec’s quota of 27 million barrels a day.
Despite some pressure by other Opec nations to raise the bar on Opec’s price band – now at between 22 US dollars to 28 US dollars – Mr Al Naimi said the group decided to leave that marker unchanged for now.
But he suggested the 11-nation oil cartel could decide on further cutbacks even before crude prices fall below those levels.
“We will defend (market) stability by going up or going down,” he said.
The cut in production had been widely expected after Opec oil ministers publicly offered their support to such a move.
Kuwait’s Sheikh Ahmad Fahad Al-Ahmad Al-Sabah had estimated Opec’s overproduction at about 1.7 million barrels a day, although other ministers have put it at 1.1 million barrels.
The Opec meeting highlighted members’ concern about a possible oil glut in the second quarter of 2005 and prices that are now a quarter below their peaks above 55 US dollars a barrel.
With the US dollar at record lows against major currencies such as the euro, Opec nations were worried about the impact on their revenues from falling prices.
However, consuming nations have called on Opec to keep output high to underpin economic recovery.
Opec’s production total reaches more than 30 million barrels a day once Iraq is included. Iraq, which produces about 2 million barrels a day, has been exempted from quotas to enable it to rebuild its economy. s
The subtitle tells it all
(our friends the Saudies, screwing us again)
You had to figure they would cut back at some point.
They probably will again too.
Soros was pumping up the market this summer. It never should have approached 50 a barrel, much less 40....
Mark
Let's not forget that there are western oil companies involved as well.
The Saudis are out front and highly visable in the oil game, but behind them are banks and businesses who keep a low profile while making profits off of the guy who fills up at the pump.
By "screwing us" I assume you don't include those of us that have domestic oil leases in the family which are being started up again to offset the high cost imports.......
What's wrong with profit? You an anti-capitalist? You think the government should set prices? Why don't you buy less gas?
Trusting an islamic arab is like trusting a gypsy with your house keys.
I cant wait until we can sock it to these camel jockeys. I am serious this is out of control. I am all for power boats and big vehicles in general but enough is enough.
We need to find a way to survive without thier oil for 6 months to a year. That stuff will be selling for about $10 a barrel when we start buying it again.
I don't think that is what the poster you were responding to was suggesting (that profits per-say are bad) - But if you had any idea on on the energy markets work (and or the Oil industry) you would no at times, the U.S. consumer is getting royally screwed because it is not "capitalism" working alone....It is manipulated and Gov't regulations that are causing the higher prices on the end-consumer to begin with!!
And your suggestion to buy less gas is absurd!! (Yeah, tell that to the ten's of thousands of small businesses....where direct fill-ups is only a fraction of the cost they are eating due to higher energy / oil costs!).
Not even in the realm of possibility! -
I am growing frustrated that the GWB administration doesn't seem to have any influence whatsoever on OPEC - (or they are simply refusing to use it??).
Energy prices are really nailing small business (and even larger businesses to a lesser bottom-line standard).
I strongly disagree, hoss. America -is- an energy economy. "Learn to live without" and we're no longer who we are. Why should we change our entire basis to spite them?
And besides, if you crack a barrel of crude oil to make plastic and other polymers, you get something like 25 gallons of gasoline as a waste product. Do you not want gas, or do you not want anything that 3M or Dupont makes?
We need to find a way to live without OPEC, period.
Tell the enviro-whackos to take a hike and drill the ANWR and resume offshore drilling off the coast of California. Problem solved.
Agree with most of what you said but the above - Subsidizing something completely takes off the cost-benefit analysis needed to begin with -
Allow the markets to bring hybird cars to us - That is the only true test to if the hybird is actually worth the cost via the alternative of just paying high fuel prices.
Most of that 1mil bpd cut will come from the saudis. Saudi oil is sour crude, which is laden with sulfer and sucks for making gasoline. Sour crude sells for a heavy discount and most refineries can't process more sour crude anyways.
When the Saudis increased output by 1mil bpd back when the price was at $55/b it had zero effect on the price. So why would then cutting that 1mil bpd of production have any effect?
Won't have much of an effect IMO.
I'll keep this quote of yours, and send it back when gas reaches $4.00 a gallon.
And resume offshore drilling off the coast of California.
2) Subsidize hybrids and electric cars
Nah. Let the free market handle that.
3) Build as many nuclear power plants as it takes to make us energy independent.
Amen to that. We need to curtail coal, gas and oil-burning electricity plants.
4) Watch OPEC sweat knowing the world would follow in our example.
Better still, completely destabilize the entire Middle Eastern economy, thus depriving them of what political clout they have. Reassert American influence on the region starting with the annihilation of the death cult of Islam.
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