This is the best news I have read in a long time. Without the Saudis, OPEC is broken. The Saudi’s are smart enough to know that OPEC is trying to kill the Goose that laid the golden egg! Maybe they are getting nervous about America drilling for its own oil and ending our dependence on foreign supplies.
This should drive oil prices down even further. Now we can pick and choose whom we get our oil from and we can even restrict oil purchase from certain rogue countries. What was once a Monopoly could turn to competitive pricing. This will be interesting to watch.
Saudi Arabia walked out on OPEC yesterday, saying it would not honor the cartel’s production cut. It was tired of rants from Hugo Chavez of Venezuela and the well-dressed oil minister from Iran.
As the world’s largest crude exporter, the kingdom in the desert took its ball and went home.
As the Saudis left the building, the message was shockingly clear. “Saudi Arabia will meet the market’s demand,” a senior OPEC delegate told the New York Times. “We will see what the market requires and we will not leave a customer without oil.”
OPEC will still have lavish meetings and a nifty headquarters in Vienna, Austria, but the Saudis have made certain the the organization has lost its teeth. Even though the cartel argued that the sudden drop in crude was due to “oversupply”, OPEC’s most powerful member knows that the drop may only be temporary. Cold weather later this year could put pressure on prices. So could a decision by Russia that it wants to “punish” the US and EU for a time. That political battle is only at its beginning.
The downward pressure on oil got a second hand. Brazil has confirmed another huge oil deposit to add to one it discovered off-shore earlier this year. The first field uncovered by Petrobras has the promise of being one of the largest in the world. The breadth of that deposit has now expanded.
OPEC needs the Saudis to have any credibility in terms of pricing, supply, and the ongoing success of its bully pulpit. By failing to keep its most critical member, it forfeits its leverage.
OPEC has made no announcement about any possibility of dissolving, but the process is already over.
The major fact is that the world runs on oil and OPEC knows it. OPEC keeps the price of oil rising and the world goes out of kilter like a spinning top that when you touch it as it spins begins to wobble crazily.
Throw together corrupt politicians and a constant supply of Global warming hysteria and the result is wrecked economies. The sad fact is that members of Congress have helped engineer this so that we would be dependent on OPEC for our energy needs. It is a problem borne solely of US political greed and corruption! We need to vote out all the incumbent bozos before we are forced into the second American Revolution!
OPEC President Chakib Khelil predicted that the price of oil will climb to $170 a barrel before the end of the year, citing the dollar’s decline and political conflicts.
“Oil prices are expected to reach $170 as demand for fuel is growing in the U.S. during the summer period and the dollar continues to weaken against the euro,” Khelil said today in a telephone interview. The leader of the Organization of Petroleum Exporting Countries also serves as Algeria’s oil minister.
Political pressure on Iran and the depreciation of the U.S. currency have caused a surge in oil prices, Khelil said. New York- traded crude has more than doubled in a year and touched a record $142.99 a barrel yesterday on the New York Mercantile Exchange.
OPEC ministers generally say that oil output is sufficient, even as Saudi Arabia, the biggest producer, pledged to pump an extra 200,000 barrels a day next month to calm the market. “The market is completely supplied,” Venezuelan Oil Minister Rafael Ramirez said yesterday. Libya announced possible production cuts, calling the market oversupplied.
The rising cost of crude is not linked to supply, Khelil said today. “There is more than enough oil in the market to meet the international demand,” added the OPEC president, who will take part June 30 in an international energy forum in Madrid.
Prices, which are up 38 percent this quarter, are heading for the biggest quarterly gain since the first three months of 1999, when oil traded between $11 and $17.
Declining Dollar
“The decisions made by the U.S. Federal Reserve and the European Central Bank helped the devaluation of the dollar, which pushed up oil prices,” Khelil said.
Oil may extend gains if the ECB boosts rates on July 3, further weakening the U.S. currency. The dollar has declined 15 percent against the euro in 12 months.
ECB President Jean-Claude Trichet reiterated June 25 that policy makers may increase the main refinancing rate by a quarter-percentage point next month to contain inflation. The Federal Reserve left the benchmark U.S. rate at 2 percent on June 25. On Sept. 18 the Fed began cutting rates to bolster an economy already reeling from the credit crisis.
Oil jumped to a new record high near $142 a barrel on Friday unabated even after Saudi Arabia’s pledge to pump out more supplies. There is just no logic to it all.
We were too blind to see that radical Islam was at war with us before September 11th. Is the same thing happening now in the form of an Oil Jihad?
There just may be an element of truth in this fictional “open letter” circulating around the internet
The OPEC minister may look you in the eye and say, “We are at war with you infidels and have been since the embargo in the 1970s. You are so arrogant you haven’t even recognized it.
You have more missiles, bombs, and technology; so we are fighting with the best weapon we have and extracting on a net basis about $700 billion/year out of your economy.
We will destroy you! Death to the infidels!
While I am here I would like to thank you for the following: Not developing your 250-300 million barrels per year supply of oil shale and tar sands.
We know if you did this, it would create thousands of jobs for U.S. citizens, expand your engineering capabilities, and keep the wealth in the U.S. instead of sending it to us to finance our war against you infidels.
Thanks for limiting defense dept. purchases of oil sands from your neighbors to the north. We love it when you confuse your allies.
Thanks for over regulating every segment of your economy and thus delaying, by decades, the development of alternate fuel technologies.
Thanks for limiting drilling off your coasts, in Alaska , and anywhere there is an insect, bird, fish, or plant that might be inconvenienced. Better that your people suffer. Glad to see our lobbying efforts have been so effective.
Corn based Ethanol. Praise Allah for this sham program! Perhaps you will destroy yourselves from the inside with these types of policies. This is a gift from Allah, praise his name! We never would have thought of this one! This is better than when you pay your farmers NOT TO GROW FOOD. Have them use more energy to create less energy, and simultaneously drive up food prices. Thank you U.S. Congress!
And finally, we appreciate you letting us fleece you without end. You will be glad to know we have been accumulating shares in your banks, real estate, and publicly held companies. We also finance a good portion of your debt and now manipulate your markets, currency, and economies for our benefit.
I am proposing a new program. I call it the “Barrel for a Bushel Program”.
Here is how it works:
OPEC nations sell oil for over $140.00 a barrel. OPEC nations buy U.S. grain at $7.00 a bushel. The solution to offset the high cost of oil is to sell U.S. grain to OPEC nations for $140.00 a bushel. If they can’t buy it, well, they can try eating their oil. It’s all about supply and demand.
I think the explanation for why the Democrats are always on the wrong side, choosing to keep oil in the ground and punish us with higher gas prices is finally coming to light.
The Truth about Oil in America is that we have over a trillion barrels. Why then would Democrats constantly be opposed to us using any of our own fossil fuel to lower prices here? There can only be one logical answer for this. The Democrats are being paid by OPEC leaders to stop development.
Let’s look at the facts. OPEC has money, a lot of money. OPEC and the Islamic Middle East really have only one thing the world wants and that’s oil. If we take away that oil revenue and allow the USA to become “energy independent”, or even not as needful or dependent on OPEC , then OPEC and the entire Islamic Middle East are in deep do-do.
So, the logical thing for OPEC to do is spread some of that oil-money around. Just buying them a little insurance, you know?
OPEC shrugs its shoulder at the fact that Americans pay $4 a gallon for gas. Why would they care? After all, it’s not like any one’s forcing American politicians to take this money.
Energy: With the price of oil spiking above $127 a barrel, the search for scapegoats has begun. Some point to the Saudis, OPEC’s No. 1 producer. Others blame the oil companies. We have a better candidate: Congress.
As President Bush traveled to Saudi Arabia to ask the House of Saud to open the oil spigots a bit wider, Congress showed once again how clueless it is when it comes to energy policy.
Underscoring its failure to grasp the nature of our current problems, the Senate Appropriations Committee on Friday refused to end its moratorium on oil shale development in Colorado.
“If we are really serious about reducing pain at the pump,” Colorado’s senior senator, Republican Wayne Allard, said, “this is a vote that would make a difference in people’s lives.” He’s right.
But the shale proposal went down to defeat with Allard and 13 other Republican members in favor and 15 Democrats opposed. Once again, Democrats were on the wrong side, opting to keep oil in the ground and punish you with higher prices as a result.
This was no minor thing. Estimates put the amount of oil locked in shale in both Canada and the U.S. at more than 1 trillion barrels. Pulling out even a tenth of that would quadruple our current reserves.
This is the same Congress that refuses to allow drilling in Alaska’s Arctic National Wildlife Refuge, which holds up to 20 billion barrels of crude, or offshore, where another 30 billion await.
Meanwhile, Brazil — which recently made a major oil discovery almost in sight of Rio’s beaches — announced that it has leased 80% of the world’s deep-sea offshore oil rigs. In other words, Brazil unlike the U.S., isn’t dithering as prices soar. It’s drilling.
If you think Congress’ decision-making on energy couldn’t get any worse, think again. While Bush was in Riyadh urging the Saudis to pump more oil, congressional Democrats were busy undercutting him, threatening to halt arms sales to our Mideast ally.
It was a politically peevish move with consequences both for U.S. energy security and the balance of power. If we don’t sell arms to Saudi Arabia, Russia will. The result would be a loss of American leverage with the Saudis, who, like many, feel threatened by a nuclear Iran and the menace of al-Qaida.
At least Bush convinced the Saudis to boost output 300,000 barrels a day. That helps. But we still have to do more ourselves.
The U.S. uses about 21 million barrels of oil a day. But only 8 million come from our own sources. That leaves a 13-million-barrel-a-day deficit that, at $126 a barrel, will cost us $600 billion to plug this year. That’s more than two-thirds of our total trade deficit.
Congress could reduce much of our oil shortfall by drilling for more on our own territory. This would lower prices and increase security. Yet, Congress seems dead set on doing the opposite.
With its failure to tap the vast supplies in ANWR and offshore, its passage of costly global-warming legislation and now its refusal to exploit our massive resources of oil shale, Congress has set us on a path to less energy, higher prices and weakened national security.
