Opec says oil could hit $200

FT.COM ^

[Sub-Driver]

Opec says oil could hit $200

By Carola Hoyos in London

Published: April 28 2008 13:56 | Last updated: April 28 2008 13:56

Opec’s president on Monday warned that oil prices could hit $200 a barrel and there would be little the cartel could do to help.

The comments made by Chakib Khelil, Algeria’s energy minister, came as oil prices continued to hover above $110 a barrel, putting pressure on the already struggling US economy.

His comments suggest Algeria wants the Organisation of the Petroleum Exporting Countries to continue to resist calls by US and European leaders for the cartel to pump more oil.

Some US Democratic Senators have even threatened to cut off defense supplies to Opec members if the 13-member group failed to reverse its position.

But Mr Khelil blamed record oil prices on the weakness in the dollar and global political insecurity.

He told El Moudjahid, Algeria’s government newspaper: “I don’t think that an increase in production would help lower prices, because there is a balance between supply and demand and the stocks of gasoline in the United States have recorded a surplus and are at their highest level for five years.”

He added: ”The prices are high due to the fact of the recession in the United States and the economic crisis which has touched several countries, a situation which has an effect on the devaluation of the dollar, and therefore each time the dollar falls one percent, the price of the barrel rises by $4, and of course vice versa.”

But US senators, including New York’s Charles Schumer, pin the blame directly on Opec and Saudi Arabia, its largest and most powerful member.

[Sub-Driver]

he is correct about the supply and the demand...

[MNJohnnie]

Good! The problem isn't the supply of Oil, it that most of the Cheap oil was held by the Arabs. They are cutting their own throats. They are single item economies, the sooner they price themselves out of the market, the better for US.

[cameraeye]

The world goes round and round with no end in sight.
I can’t wait to get my rebate check. I think I’ll fill my oil tank before the check won’t fill my gas tank! God almighty can’t stop this now. Hope hugo is thinking how to raise it even more. Then the nation will collapse like the demoncrats want it to. That way we don’t feel guilty about having so much stuff to show off to the world. We will be just like the countries in Africa. Boy, I can’t wait till we are just like (pick a h@ll hole).

[2banana]

Yet the stock market climbs higher...

[Thermalseeker]

Yet the stock market climbs higher...

Pay no attention to the man behind the curtain......

[edcoil]

When your government does not allow you to make something and you have to ask terrorists for it, they can charge what they want.

[Red Badger]

But US senators, including New York’s Charles Schumer, pin the blame directly on Opec and Saudi Arabia, its largest and most powerful member.

But not on his friendly neighborhood Commodities Traders, though.....

[reagan_fanatic]

$200 a barrel will hit the U.S. economy hard. Very hard.

Thank you, enviromentalist wackos, for your successful efforts at blocking exploration and drilling in our own backyard, thus helping doom our economy to a recession and possibly even a depression. I hope you’re all pleased with your deep ignorance and blind stupidity.

[Yo-Yo]

I think it's more than just supply and demand that is influencing these record oil prices.

Euro vs. US Dollar

[econjack]

But US senators, including New York’s Charles Schumer, pin the blame directly on Opec and Saudi Arabia, its largest and most powerful member.

Of course, the fact that you and your buddies have made it impossible to build a new power plant, refinery, or drill for oil off shore 'cause it will ruin Teddy's view has nothing to do with the current problem. You put your collective heads together and the best "plan" you have is to point a finger at OPEC or increase taxes on the oil companies. Hey...Dufus! The oil companies earn 10% on gross sales by producing what I want. How does sending you more money via a windfall profits tax produce more oil? And don't give me this "we'll use the money to develop more alternative fuels". Yea, right. You passed an Alternative Fuel Tax in 1973 and I still have yet to see one drop of alternative fuels coming from those taxes.

How's this for a plan:

1) Reduce the gasoline blends required by the EPA and state laws from 38 to 3 (regular, high-test, diesel). As it is now, refineries have to guess which blend to produce.

2) Screw the snail darter. Reduce the environmental impact study requirements so they can be completed in 6 months instead of 8 years.

3) Open ANWAR

4) Allow more drilling off shore, in both the Gulf and both coasts. If this pi$$e$ off some tree huggers, too bad.

5) Suspend the federal taxes on all distillate fuels. This will have an immediate impact on fuel prices.

6) Give tax incentives to alternative fuels (e.g., coal gasification, shale oil, oil sands, switchgrass and other biomass). Do not subsidize ethanol from corn; it's inefficient even though you like it because it gets the farm vote.

7) Don't even threaten a windfall profits tax. That encourages companies to produce less, not more, oil...you idiots.

8) Leave the free market alone. Stand back and let it go do its thing. It can solve a billion simultaneous equations per second much better than you can.

(Stepping down from soapbox...)

[mywholebodyisaweapon]

Dear Econjack,

Regarding your eight-point plan:

Amen, amen, amen, amen, amen, amen, amen, amen!

Thanks for your post!

Body

[Sub-Driver]

oil is traded in dollars is it not......

[11th Commandment]

he is correct about the supply and the demand...

Unfortunately, he is correct about a lot of things.

He is correct about the gasoline supplies; so flooding oil onto the market would not help as refiners aren't going to equally pump excess gas into the market.

The weakening dollar is part of the problem; however, this is a catch 22. Increasing oil prices weakens the dollars since oil is a commodity, a classic inflationary model. However, the US did not help the situation by increasing agricultural commodity prices with corn ethanol requirements.

Speculation in the Market is a big issue. I have discussed this with experts who believe speculation is driving up the price of oil $30 per barrel. One expert noted to me that if one played the stock market like the future traders work oil, you would be in jail.

Domestic Oil production is needed to help strengthen the dollar. It will help the US control the price of a vital commodity. Don’t let the politician deflect the issue that the US can not produce enough oil to become energy independent; the issue is to control price and inflation.

[Post-Neolithic]

Current oil prices already have, no matter what the people in charge say. Most of the big vacation companies are seeing business drop anywhere from 40-60 percent. Airlines are going bankrupt left and right, some airlines are charging fuel surcharges that amount to more then the cost of the ticket.

I used to fly into Florida at least two times a month on Southwest. A round-trip ticket for two people, two weeks in advance, was around 240.00 in Sept . of last year, that same ticket is now over $500.00. Needless to say I don't do the twice a month thing anymore.

[Eric in the Ozarks]

How many times has Sen Schumer voted against drilling in ANWR ?

[econjack]

Man, I hate broken scales.

Al Gore used the same trick to present the infamous "hockey stick" to exaggerate global temperature increases. If you draw this graph like it should be, with the origin starting at 0.0 instead of 1.30, a truer picture emerges on the relationship. (It's fairly flat.)

I think the real problem is that we've ham-strung our domestic companies by not letting them drill off shore or in ANWAR. We've prevented them from building new refinery capacity by making it take 8 years to get the necessary permits. As if that's not stupid enough, now we're going to chase them away by threatening them with an excess profits tax. Really? A 10% return on gross sales is "excess"? By whose yardstick. I'll tell you...by the political yardstick that capitalizes on a stupid public who don't bother to understand the facts. Congress should INCREASE incentives for oil companies, not punish them with higher taxes.

Idiots...pure and simple...

[Red Badger]

Each and every time he could, most likely. The GOP should bring it back as an issue and force a vote. See how many of the donks cave........

[Red Badger]

I think it's more than just supply and demand that is influencing these record oil prices.

That's a "supply and demand" issue, too. Too many dollars in the "supply" and too little "demand" in the market.........

[Prokopton]

Thank you, enviromentalist wackos, for your successful efforts at blocking exploration and drilling in our own backyard, thus helping doom our economy to a recession and possibly even a depression. I hope you’re all pleased with your deep ignorance and blind stupidity.

The blame does not lie with enviro-whackos. The blame rests squarely on the ignorance and blind stupidity of our President and Congress and their general lack of any feeling of responsibility for the pain they cause Americans.

[11th Commandment]

Ironic that Florida's economy is very dependent on the freedom to travel visa vi snow birds and tourism. This freedom is subject to dependence on low energy costs. However, Florida's political establishment and elitist have been culpable in energy costs being driven up by its refusal to drill or explore for vast oil deposits. Floridians are being hit hard in the real estate market and they can thank themselves for that.