Posted on 05/21/2008 7:51:41 AM PDT by tobyhill
NEW YORK (CNNMoney.com) -- Amid increasing public outcry over record-shattering oil and gas prices, senators hauled company executives in to testify Wednesday to ask what's behind the recent runup.
The Senate Judiciary Committee called the hearing to explore the skyrocketing price of oil, which topped $130 a barrel earlier in the day. The committee is set to question executives from Exxon Mobil (XOM, Fortune 500), ConocoPhillips (COP, Fortune 500), Shell Oil Co. (RDSA), Chevron (CVX, Fortune 500) and BP (BP).
"Normal supply and demand says prices should be around $55 to $60 a barrel," said Sen. Patrick Leahy, D-Vt., chairman of the committee. "Prices should not skyrocket like this in a properly functioning, competitive market."
Before the hearing even began, a heckler in the crowd shouted: "Stop ripping off the American public - bring these oil prices down."
But a top executive from BP said the high prices are being driven by global forces.
"We cannot change the world market," said Robert Malone, chairman and president of BP America Inc. "Today's high prices are linked to the failure both here and abroad to increase supplies, renewables and conservation."
(Excerpt) Read more at money.cnn.com ...
Again more apples being compared to oranges. Computers and pharmaceuticals, VASTLY different industries than oil.
http://www.freerepublic.com/focus/f-news/2019641/posts
By the way, does anyone ever speculate on the availablity of pc’s or drugs?
You sound like Nancy Pelosi: let's sue OPEC / let's spend our time investigating evil oil executives. What's the difference?
Maybe if we provide more supply to the market prices will go down. There is oil available, why don't we try to go get it?
schu
I'm generally sympathetic to the oil companies, but this is B.S.
Oil demand rose 1.2% from 2007 to 2008, but prices have gone up over 100%.
Most of this is driven by speculators, many of whom are institutional in nature, and in fact many of those are governmental in nature.
Think about that.
Go read the articles I’ve posted. One of them specifically addresses the volume of African oil coming online.
There is plenty of oil available and more is coming online every day. There is no problem with supply, it’s the speculators and their big oil handlers that are causing this problem and nobody else.
If gas gets to $10 you won’t be driving around to eat more people. Just invite them over to your place. The last people we had over for dinner we cooked them medium rare.
http://online.wsj.com/article/SB121139527250011387.html?mod=hpp_europe_whats_news
Energy Watchdog Warns
Of Oil-Production Crunch
IEA Official Says Supplies
May Plateau Below
Expected Demand
By NEIL KING JR. and PETER FRITSCH
May 22, 2008; Page A1
The world's premier energy monitor is preparing a sharp downward revision of its oil-supply forecast, a shift that reflects deepening pessimism over whether oil companies can keep abreast of booming demand.
The Paris-based International Energy Agency is in the middle of its first attempt to comprehensively assess the condition of the world's top 400 oil fields. Its findings won't be released until November, but the bottom line is already clear: Future crude supplies could be far tighter than previously thought.
For several years, the IEA has predicted that supplies of crude and other liquid fuels will arc gently upward to keep pace with rising demand, topping 116 million barrels a day by 2030, up from around 87 million barrels a day currently. Now, the agency is worried that aging oil fields and diminished investment mean that companies could struggle to surpass 100 million barrels a day over the next two decades.
****
We have a supply mismatch with expected demand. That coupled with the fact that we have not and do not intend to drill in the US nor do we intend to build new refinery capacity and we have 50+ variations of gasoline depending on where you live and there are 1.5 billion people in China and India who want to improve their life and own a car and is it any surprise that we have $4.00 gas?
But no, let's sue OPEC and investigate oil executives. That will solve our problems.
schu
#1. It’s their first attempt, “The Paris-based International Energy Agency is in the middle of its first attempt to comprehensively assess the condition of the world’s top 400 oil fields.”, and you find them credible
#2. They’re french and you’re willing to believe them. Let me know how that works out for you.
Sure, go ahead, shred what little is left of the Constitution and our free market. We’re in a war we can’t afford to be free!!!!!
Yes I’m being sarcastic, because frankly your position is not only silly, it’s dangerous.
What is silly and dangerous is to let a few hundred people dictate what the rest of the world has to pay for oil and gasoline.
By the way, it’s not a free market when the control of it is in the hands of a relative few.
What’s silly and dangerous is thinking that there’s something special about now such that we need to turn oil into a government controlled market. That’s what you’re demanding, putting our government, which was recently and could again be soon topped by a Clinton, in 100% control of our oil supply. If oil is that important then the LAST people that should be in charge of it is the government. Never ever put the government in charge of anything important, because all they ever do is screw it up. Heck half our problem right now is because of how the government has blocked anyones ability to drill from huge known oil deposits in America, the very people that have MADE this problem are the ones you want to control the price to fix it.
Silly, and dangerous.
Either of you care to explain how the price of oil and gas has gone up 100% between 2007 and 2008 on a 1.2% increase in demand as pointed out in post 104?
Are you actually going to try and tell me, with a straight face, that a 1.2% increase in demand warrants a 100% increase in price.
It’s a market traded item, the price fluctuates. For most of the 90s it was probably under priced, and now it’s over priced. Look at how the price of gold has changed in the last few years with absolutely no change in supply or demand.
What I’m telling you is that your “fix” is silly and dangerous. Because it is.
How can something that costs $15, or less, a barrel to get out of the ground be underpriced at $40 barrel as it was in the 90’s.
The price of gold is significantly more complex than the price of oil. Currency valuations aren’t dictated by the oil standard, they’re dictated by the gold standard.
And I’m telling you that your “fix”, which as far as I can tell is to do nothing, is dangerous.
What I’m telling you is the price is set at a price to keep gas in the tanks of service stations for us to buy. If they were to drop the price say a dollar with the same amount of supplies they have now what would happen? You and I and everyone else would drive more right. Probably much more. So what would be the results with out increasing supplies? I will repeat what I said on the last post. You would have to stand in long lines for hours to buy the gas or we could ration gas. Hey, I don’t like any of the choices but thats what we are going to live with as long as congress does not allow new areas to be drilled in our country. No short term solutions.
There is plenty of crude in Africa, drilling any more in the U.S. isn’t going to solve a damn thing, short term or long term.
Where do you get the idea that it costs $15 a barrel to get out of the ground? Drilling is expensive work, drilling equipment is expensive, don’t forget the cost of finding the oil in the first place. Then there’s the problem that it’s a highly flammable liquid that occasionally lights the drill equipment on fire. Then you have to transport that highly flammable liquid around the planet on really expensive ships that sometimes run aground and make a huge mess. You can tell oil was undervalued in the 90s because so many companies abandoned well and ceased exploration for new wells. When companies pull out of a market then that market is undervalued. Many companies pulled out of drilling in the 90s, therefore oil was demonstrably undervalued.
Actually the prices of gold and oil and all the other commodities is very simple. The price is the latest amount that somebody was willing to sell for and found somebody else willing to buy.
My fix is the only fix that can actually accomplish anything: get our idiotic interfering shortsighted government OUT OF THE WAY. End ALL drilling bans on ALL deposits in America, sell those leases and let the drilling commence. That’s the only fix there ever has been.
****
The IEA monitors energy markets for the world's 26 most-advanced economies, including the U.S., Japan and all of Europe. It acts as a counterweight in the market to the views of the Organization of Petroleum Exporting Countries. The IEA’s endorsement of a crimped supply scenario likely will be interpreted by the cartel as yet another call to pump more oil — a call it will have a difficult time answering. Last week, the Saudis gave President Bush a lukewarm response to his plea for more oil, saying they were already adding 300,000 barrels a day to the market, an announcement that did nothing to cool prices.
“This is very important, because the IEA is treated as the world's only serious independent guardian of energy data and forecasts,” says Edward Morse, chief energy economist at Lehman Brothers. Examining the state of the world's big oil fields could prod their owners into unaccustomed transparency, he says.
Some analysts, however, contend that scarcity isn't the issue -- only access to reserves and investment in tapping them. "We know there is plenty of oil and gas resource in the world," says Pete Stark, vice president for industry relations at IHS. He says the difficulties of supply aren't buried in oil fields, but are "above ground."
****
Maybe more than name calling would help the discussion.
But it is much easier to just claim that it is all a conspiracy and the evil oil companies are taking advantage of us.
Childish and so frustrating.
schu
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