Posted on 03/10/2008 8:33:35 AM PDT by Froufrou
Oil prices will stay at current high levels for the rest of this year due to speculation and geopolitical tensions, Algerian state media on Monday reported OPEC President Chakib Khelil as saying.
Prices could retreat in 2009 with a recovery of the U.S. dollar in foreign exchange markets following the election of a new U.S. president, and as fundamentals reassert themselves as major market forces, he was reported as saying by government newspaper El Moudjahid and state news agency APS.
"Just like the current surge in oil markets, the (world economic) crisis, will last until the end of the year," he was quoted as saying by El Moudjahid.
"The oil market will stay above $100 during the current financial year, according to the assessment of Mr Khelil," APS said in a report on his remarks to Algerian reporters on Sunday.
It was not immediately clear which fiscal year APS was referring to.
Khelil, who is also Algerian Energy and Mines Minister, said the factors driving the market at present included "speculation, geopolitical tensions, particularly due to the Iranian nuclear affair and the crisis between Venezuela and ExxonMobil," APS reported.
The world economy could get some help with the arrival of a new U.S. president, and possibly a new economic policy, "and with this new situation it is very probable that the dollar will start to recover and thus permit a readjustment of the (oil) market," El Moudjahid quoted him as saying.
OPEC members meeting in Vienna last week decided to hold production flat, insisting markets were well supplied and blaming record prices on factors outside the group's control, including speculators and what Khelil called the "mismanagement" of the U.S. economy.
Speculators have piled into oil and other commodities as a hedge against the weaker dollar and inflation as the U.S. economy slows due to a credit crunch, the mortgage crisis and high energy costs.
Khelil said OPEC had left output unchanged because it wanted to assist global economic growth, El Moudjahid and APS reported.
The group made its decision in the knowledge that demand was expected to dip by 1.4 million barrels per day (bpd) in the second quarter of the year and that stocks in consuming countries were at comfortable levels, Khelil said.
"If we had increased our production given all these factors, you wouldn't have been able to miss the impact on prices," he said, suggesting prices would have slid.
"We left our output unchanged so as not to disturb the market further and to help the world economy resume its momentum of growth," El Moudhajid quoted him as saying.
Amen to that.
Oh..I’m not a pessimist but I think you’ll agree that the ambitious mind can justify even the darkest yearnings of the human heart.
I will send you a private message to keep you on my bright minded thinkers list. At a point in time, we’ll get the best and brightest together for some quarterly events and change the nation.
Sorry for the late reply, I've been out.
What you described above never happened.
I don’t know why your information fails to mention this, but I remember it pretty well.
It isn't my information, it is from the Department of Energy.
I thought you would be interested in a little more complete information.
The SPR Drawdown Plan, submitted by the Reagan Administration in late 1982, provided for price-competitive sale of SPR oil. The plan rejected the idea of conditioning a decision to distribute SPR oil on any “trigger” or formula. To do so, the Administration argued, would discourage private sector initiatives for preparedness or investment in contingency inventories. Many analysts, in and out of Congress, agreed with the Administration that reliance upon the marketplace during the shortages of 1973 and 1979 would probably have been less disruptive than the price and allocation regulations that were imposed. But many argued that the SPR should be used to moderate the price effects that can be triggered by shortages like those of the 1970s or the tight inventories experienced during the spring of 1996, and lack of confidence in supply availability. Early drawdown of the SPR, some argued, was essential to achieve these objectives.
The Reagan Administration revised its position in January 1984, announcing that the SPR would be drawn upon early in a disruption. This new policy was hailed as a significant departure, considerably easing congressional discontent over the Administration’s preparedness policy, but it also had international implications. Some analysts began to stress the importance of coordinating stock drawdowns worldwide during an emergency lest stocks drawn down by one nation merely transfer into the stocks of another and defeat the price-stabilizing objectives of a stock drawdown. In July 1984, responding to pressure from the United States, the International Energy Agency agreed “in principle” to an early drawdown, reserving decisions on “timing, magnitude, rate and duration of an appropriate stockdraw” until a specific situation needed to be addressed.
The Strategic Petroleum Reserve:
History, Perspectives, and Issues
http://digital.library.unt.edu/govdocs/crs/permalink/meta-crs-9965:1
page 14 of 18
Although Reagan submitted a plan in 1982 to do so then changed it in 1984, you can see from the stock levels that it was never carried out.
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