03-31-2004, 06:59 AM
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#1 (permalink)
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Apocalypse Nerd
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Gas Prices to Go UP UP UP!
Quote:
OPEC Rigging In Vienna
Dan Ackman, 03.31.04, 8:55 AM ET
NEW YORK - The Organization of the Petroleum Exporting Countries, or OPEC, meeting in Vienna today, is ready to go ahead with planned cuts in oil production, despite world crude oil prices that are already far higher than they were during the brief crisis periods leading up to the Iraq war.
Vienna is the capital of Austria, a member of the European Union, a body that has recently stepped up its enforcement of antitrust laws and has ruled against U.S. firms like Microsoft (nasdaq: MSFT - news - people ) and General Electric (nyse: GE - news - people ). But the OPEC Ministers go about their business freely in the ancient city, their business being the controlling of supplies and the rigging of markets.
According to U.S. Energy Administration data, U.S. energy consumption is down slightly in the last three years and petroleum consumption is up by less than 2%. Petroleum imports from OPEC have actually declined, but overall imports have increased to 56.1% of consumption in 2003, from 52.9% in 2000.
Oil prices are near 13-year highs. OPEC leader Saudi Arabia secured support from other cartel members for tighter oil supply curbs. The oil minister for Libya, a nation now seeking to re-enter world markets apart from oil, was quoted by Reuters as saying that OPEC nations were "mostly" in favor of pushing ahead with lower output quotas that were agreed to last month in Algeria for implementation April 1.
While Kuwait and the United Arab Emirates were arguing to delay supply curbs, the Saudis have carried the day with Iran arguing it was too late to reverse February's Algiers deal to cut output by one million barrels, or 4% per day, Reuters said.
"We are still expecting to maintain the cuts we decided in Algiers," said Algerian Oil Minister Chakib Khelil.
In the United States, crude prices are hovering at about $36.40, compared to $26.50 six months ago. Gasoline prices are also at record levels, not accounting for inflation.
With oil and gas prices soaring in a world economy where most commodity prices are falling, the Bush Administration is said to be pressing OPEC to reverse itself and raise exports, but it is meeting little success.
OPEC ministers are pointing to a seasonal drop in demand to justify existing policies. "More oil now will make a glut in the market and force prices to collapse, something we don't want," Saudi Oil Minister Ali Ibrahim Naimi told reporters in Vienna. "Throwing more oil on the market would be destructive for everybody."
Kuwait's oil minister, Sheikh Ahmad Fahd al-Ahmad al-Sabah, said it would be better for OPEC to wait to cut quotas until members gather in Lebanon in June, Bloomberg News reports.
The Saudi and Algerian ministers said prices are rising because of speculation in the market and not because of a shortage.
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http://www.forbes.com/business/2004/...31topnews.html |
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