Posted on 06/01/2008 5:04:50 AM PDT by decimon
ALGIERS — The weak U.S. dollar, speculation and the subprime crisis are the causes for the spiraling price of oil, OPEC's current president said Saturday.
Algerian Energy Minister Chakib Khelil told reporters the cartel will make no new decision on production levels until its Sept. 9 meeting in Vienna.
He notes that OPEC controls only 40 percent of world oil production, and says the high prices do not reflect market conditions but rather other factors linked to the weakening dollar, market speculation and the U.S. subprime mortgage market turmoil.
Oil prices recently reached $135 a barrel before falling to less than $130 Friday.
Oh sure - It's all caused by the destruction of the value of a dollar by the fed........not funny
Manipulation
The Asia Times, a publication readily available on the web, has published an informative and revealing article about what is causing the atrocious price of oil. I will be quoting directly from the Times in some instances.
I am by no means claiming to be some kind of financial advisor or that I know anything about the futures market, but I thought somebody should get the word out and let the public know one of the biggest reasons that gasoline and petroleum products are so high.
At least 60% of the price rise in oil comes from unregulated futures speculation by hedge funds and banks using London ICE Futures, New York Nymex futures exchanges, and uncontrolled interbank, and over the counter trading to avoid scrutiny by the feds.
This and a flaw in American law allows the speculators to pay only eight dollars in cash to hold the future on a barrel of $130.00 oil and borrows the rest. In other words, margin buying.
According to the Asia Times, there is actually plenty of crude oil available on the world market, they claim that the world is actually in over supply right now.
Yet the price goes relentlessly up and up due to the policies of the United States government to allow this kind of reckless speculation to go on.
We have all heard the stories about China’s demand for crude oil exploding; limiting the amount of crude available on the world market. But if the Asia Times has it’s facts right, this is simply not so.
In a short-term energy outlook, the US Government’s Energy Information Administration has concluded that China’s demand for oil would only increase about 400,000 barrels a day while the US consumption is expected to decline by 190,000 barrels a day due to the economic downturn.
China uses around 7 million barrels of oil a day while the United States uses over 20 million barrels
The Saudis are planning on investing a third more in their exploration and brought a new well on line in April that will soon add another 500,000 barrels a day to the world supply.
Brazil’s Petrobras field is thought to contain 8 billion barrels of oil and should be coming online in a few years.
The USA is sitting on top of billions of barrels of oil in the Western states, and eventually political pressure from an oil-starved nation will force politicians to go against the green crowd and allow the opening of US oilfields and the building of more refineries. At least that’s my humble opinion.
And yet the price spirals upward because a handful of greedy men are able to buy the futures of millions of barrels of oil for a pittance of a down payment, you can see why they are interested in keeping the price high. If the price drops below what they guaranteed for the futures and the margin gets called, a lot of super rich people could well go into bankruptcy.
There are many who think this artificial speculative oil bubble is about to pop and the sooner the better.
I’ll never forget what I saw during the oil crisis of the seventies when there were long lines at the service stations and the oil companies were claiming that the supply was low. I went across the Oakland Bay Bridge in California and there was an oil unloading port on the Oakland side of the bay and the bay itself was full of loaded oil tankers. Just sitting there full of badly needed crude, but evidently, not going anywhere until the price reached what the oil companies wanted it to.
I simply don’t understand the kind of man who can sit back and watch hard working poor people suffer, just to stuff a little more cash in his pocket.
Our Congress needs to act and make it impossible for futures speculators to set the price of oil behind closed doors in London and New York. And when this bubble bursts, you’re going to hear about more bailouts. Don’t give in. Let this greedy bunch of scoundrels bail themselves out.
Manipulating the stock market in this country is supposed to be against the law, and it should be.
Congresswoman Maxine Waters let it slip that she wanted to Socialize big oil by having the government take over its operation. In my book that’s downright dumb, the government can’t even run the Post Office well.
But Ms. Waters, I’ll tell you something you can do. You and the rest of your long on words, woefully short on action accomplices in Congress can check this one out and plug this dirty little hole.
But I’ll bet you didn’t even know about this, did you, Congress?
If you don’t, it’s a sign you’re not doing your job. And if you do, it’s a sign you’re not doing your job.
Get the message?
What do you think?
Pray for our troops
God Bless America
Charlie Daniels
bttt
Perfect description of a politician......
“The weak U.S. dollar, speculation and the subprime crisis are the causes for the spiraling price of oil, OPEC’s current president said Saturday.”
And keep in mind that the crude prices were still around $60.00 per barrel last Fall, so this recent run to $130.00 could not possiblly be a simple matter of supply and demand as some still want to say.
Probably the combination of factors being discussed, but it definitely needs to be investigated.
Gee, a blind man couldn't have seen THAT with his cane ...
The EIA short-term energy outlook is online. It also says the net world consumption will increase by 1,200,000 BPD. Non-OPEC supply is to increase by 600,000 BPD. The remained will need to be supplied by increased output from OPEC.
EIA, Short-Term Energy Outlook, Global Petroleum
http://www.eia.doe.gov/emeu/steo/pub/contents.html#Global_Petroleum_Markets
We have all heard the stories about China’s demand for crude oil exploding; limiting the amount of crude available on the world market. But if the Asia Times has it’s facts right, this is simply not so.
If we look at the actual data, we see that China oil demand growth is the cause of 1/3 of the world's oil demand growth for about 5 years running.
http://www.eia.doe.gov/emeu/international/RecentPetroleumConsumptionBarrelsperDay.xls
Gee, a blind man couldn't have seen THAT with his cane ...
I agree with his statement as limited to the market for oil. But, "...the weakening dollar, market speculation and the U.S. subprime mortgage market turmoil." refer to coincident markets.
I’ll never forget what I saw during the oil crisis of the seventies when there were long lines at the service stations and the oil companies were claiming that the supply was low. I went across the Oakland Bay Bridge in California and there was an oil unloading port on the Oakland side of the bay and the bay itself was full of loaded oil tankers. Just sitting there full of badly needed crude, but evidently, not going anywhere until the price reached what the oil companies wanted it to.Crude supply was never the core problem, not even during the '73 OPEC embargo or the 79/80 Iranian Rev/ Iran-Iraq war.
No, throughout the decade the problem was price controls on domestic crude and quotas on imports. Add to it refined price controls and limits on refining expansion, and you've got a line of tankers waiting around not to supply consumer pumps.
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