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CelticRaven
Outspoken Leader
USA
5023 Posts |
 Posted - June 06 2008 : 09:42:12
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Audit: Gov't could lose billions in royalties
By H. JOSEF HEBERT, Associated Press Writer
Yahoo! News
June 5, 2008
If oil and natural gas prices stay as high as they've been in recent months, the government could lose as much as $53 billion over the next 25 years in energy royalties because of an adverse court ruling, according to congressional auditors.
The Government Accountability Office said in a report released Thursday that the soaring price of crude oil and natural gas also means the windfall that companies will enjoy from the court ruling also could increase by billions of dollars.
In October 2007, a federal court ruled in a claim originally filed by Kerr McGee Corp. that the government cannot require companies that are exempt from paying royalties on oil and gas taken from federal land and waters to pay them if market prices reach a certain level.
The Interior Department has urged that the case be appealed but has left the decision to the Justice Department.
The GAO report said if the court case stands up, government losses could range widely, depending on oil and gas prices and the amount of production in the outstanding leases. The leases were issued from 1996 through 2000, but many of them last for up to 25 years.
The GAO said the losses to the U.S. Treasury could range from a low of $21 billion to a high of $53 billion over the life of the leases.
The $21 billion figure assumes low production levels, oil prices averaging $70 a barrel and natural gas prices at $6.50 per thousand cubic feet. The high figure of $53 billion assumes high production, $100 a barrel oil and gas price of $8 per thousand cubic feet. If prices remain even higher, the losses will be higher.
Oil for July delivery closed Thursday at nearly $128 a barrel on the New York Mercantile Exchange. Natural gas prices for July deliver settled at $12.519 per 1,000 cubic feet.
The case is based on a claim filed by Kerr-McGee, which was purchased by Anadarko Petroleum Corp., in 2006.
Anadarko had argued successfully that the Interior Department's Minerals Management Service had overstepped its authority when it imposed royalties on oil and gas taken from deep waters of the Gulf of Mexico under a royalty relief program enacted by Congress in 1995.
Congress at the time provided the royalty break for deepwater exploration to encourage energy development in those areas. The Interior Department contends it had the authority to lift that royalty relief once prices reached a certain level — prices that are far below what crude oil and natural gas is now costing.
Copyright © 2008 The Associated Press
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Laurie Gibson
"I'm finding myself extremely thankful that the public library system already exists. Imagine trying to get that one past congress." ~ Amanda Elend.
"Wearing a flag pin doesn’t make you a patriot any more than wearing a cross makes you a good [i.e., compassionate] Christian." ~ Carol V. Hamilton
"People place their hand on the Bible and swear to uphold the Constitution; they don't put their hand on the Constitution and swear to uphold the Bible" ~ James Raskin, a constitutional law professor from American University
"I distrust those people who know so well what God wants them to do, because I notice it always coincides with their own desires." ~ Susan B. Anthony |
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CelticRaven
Outspoken Leader
USA
5023 Posts |
Posted - June 06 2008 : 09:50:34
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Oil rises near $132 on price spike prediction
By ADAM SCHRECK, AP Business Writer
Yahoo! News
June 6, 2008
Oil prices shot up nearly $7 a barrel Friday, extending big gains from the previous day and racing toward an all-time high after a Morgan Stanley analyst predicted prices could hit $150 by the Fourth of July.
Light, sweet crude for July delivery jumped $6.27 to $134.06 on the New York Mercantile Exchange. Earlier, the contract rose as high as $134.68.
Friday's surge builds on a $5.49 gain Thursday, which was the biggest single-day price increase in the history of the Nymex crude contract. That spike came as the dollar fell in response to comments by the European Central Bank suggesting the bank could raise interest rates.
Prices pushed sharply higher Friday after Morgan Stanley analyst Ole Slorer said he expected strong demand in Asia that could drive prices to $150 by July 4. Shipments from the Middle East are mimicking patterns seen in the third quarter last year, when Morgan Stanley based its "oil price spike" predictions on Atlantic Basin draws, he said.
"We made the same call using the same parameters, but now we are starting from much lower inventory levels," Slorer said Friday.
"Asia is taking an unprecedented share" of Middle East exports to build up stocks, Slorer wrote in his report.
Meanwhile, U.S. gas prices at the pump continued to hover just shy of an average $4 a gallon, easing only 0.3 cent from Thursday's record. Drivers are now paying an average of $3.99 for a gallon of regular gas nationwide, according to AAA and the Oil Price Information Service; in many parts of the country, consumers are already paying well over $4.
Pump prices are bound to rise even further if oil sustains its advance. Retail diesel slipped a penny overnight to $4.76.
The dramatic reversal in what had been a weakening oil market began Thursday after ECB President Jean-Claude Trichet suggested the bank could raise interest rates and the euro climbed against the dollar. When interest rates rise in Europe, or fall in the U.S., the dollar tends to weaken against the euro.
Many investors tend to buy commodities such as oil as a hedge against inflation when the dollar is falling. Also, a weaker dollar makes oil less expensive to investors dealing in other currencies, and analysts believe the dollar's protracted decline has been a major reason why oil prices have nearly doubled in the past year.
The euro strengthened against the greenback Friday.
"Oil fundamentals had recently started to reassert themselves with worries about demand destruction, but Mr. Trichet chased them away and re-invited financials to the party," Olivier Jakob of Petromatrix in Switzerland said in a research note.
Earlier this week, Federal Reserve Chairman Ben Bernanke indicated that more interest rate cuts are unlikely in the U.S., sending the dollar higher and pushing oil prices lower.
Oil's decline from the record $135.09 hit May 22, though, has come largely on concerns about slackening demand, and the factors that slashed the prices by more than $10 are still present, analysts noted. They said they were uncertain whether Thursday's trading could be the start of a new surge higher or just an exception.
"The underlying oil fundamentals are, however, unchanged," Jakob said, pointing to worries about falling global demand.
In other Nymex trading, heating oil futures rose 21.54 cents to $3.8962 a gallon while gasoline prices rose 12.32 cents to $3.4577 a gallon. Natural gas futures rose 24.8 cents to $12.767 per 1,000 cubic feet.
In London, July Brent crude shot up $5.65 to $133.19 a barrel on the ICE Futures exchange.
Copyright © 2008 The Associated Press
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Laurie Gibson
"I'm finding myself extremely thankful that the public library system already exists. Imagine trying to get that one past congress." ~ Amanda Elend.
"Wearing a flag pin doesn’t make you a patriot any more than wearing a cross makes you a good [i.e., compassionate] Christian." ~ Carol V. Hamilton
"People place their hand on the Bible and swear to uphold the Constitution; they don't put their hand on the Constitution and swear to uphold the Bible" ~ James Raskin, a constitutional law professor from American University
"I distrust those people who know so well what God wants them to do, because I notice it always coincides with their own desires." ~ Susan B. Anthony |
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CelticRaven
Outspoken Leader
USA
5023 Posts |
Posted - June 06 2008 : 10:17:50
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Why oil prices will tank
Arguments that $4-a-gallon gas (or even higher) is here to stay are dead wrong. Housing's boom-and-bust cycle tells you why.
By Shawn Tully, editor at large
CNN Money
June 6, 2008
NEW YORK (Fortune) -- High-flying tech stocks crashed. The roaring housing market crumbled. And oil, rest assured, will follow the same path down.
Not everyone agrees. In an echo of our most recent market frenzies, some experts pronounce that the "world has changed," and that the demand spikes, supply disruptions, and government bungling we face now will saddle us with a future of $4, $5 or even $10 a gallon gasoline.
But if you stick to basic economics, it's clear that the only question is when - not if - prices will succumb.
The oil bulls are correct in their explanations of why prices have jumped. It's indisputable that worldwide demand has surged, chiefly driven by strong growth in China, India and the Middle East. It's also true that most of the world's reserves are controlled by governments in places like Russia and Venezuela that mismanage production, thus curtailing supply growth.
But rather than forming a permanent new plateau for prices - as the bulls contend - those forces are causing a classically unstable market that's destined for a steep fall.
In a normal oil market, the cost of producing the last, most expensive barrel of oil needed to satisfy worldwide demand sets the price for every barrel the world over. Other auction commodity markets work much the same way.
So even if Saudi Arabia produces at $4 a barrel, if the final, multi-millionth barrel required to heat houses and run cars costs $50, and is produced, for argument's sake, at a flagging field in West Texas, the world price is $50. That's what economists call the equilibrium price: It's where the price that customers are willing to pay meets the production cost, including a cushion, naturally, for profit or "the cost of capital."
But today, the sudden surge in demand and the production bottlenecks have thrown the market radically out of balance.
Almost exactly the same thing happened in the housing market. And both housing and oil supply react to a surge in demand with a long lag. In housing, the lag is caused by restrictive zoning and development laws, especially in coastal markets like California and Florida.
So when the economy roared back in 2002 and 2003, builders couldn't turn out homes fast enough for buyers armed with those cheap mortgages. As a result, prices spiked. They no longer bore any relation to the actual cost of buying and improving land, or constructing and marketing a new house (at some reasonable profit margin). Instead, frenzied buyers were setting the price.
Because builders were reaping huge windfall profits, they rushed to buy and develop land. And sure enough, those new houses were ready just as buyers were retreating to the sidelines because they could no longer afford to buy a home. That vast overhang of unsold homes is what's driving down prices today.
The story is much the same with oil, with a twist. A big swath of the market isn't really paying that $125 a barrel number you hear about seemingly every hour. In China, India and the Middle East, governments are heavily subsidizing oil for their consumers and corporations, leading to rampant over-consumption - and driving up prices even more.
But sooner or later the world won't keep paying those prices: Eventually, the price must fall back to the cost of that last barrel to clear the market.
So what does that barrel cost today? According to Stephen Brown, an economist at the Dallas Federal Reserve, that final barrel costs just $50 to produce. And when the price is $125, the incentive to pour out more oil, like homebuilders' incentive to build more two years ago, is irresistible.
It takes a while to develop new supplies of oil, but the signs of a surge are already in place. Shale oil costing around $70 a barrel is now being produced in the Dakotas. Tar sands are attracting investment in Canada, also at around $70. New technology could soon minimize the pollution caused by producing oil from our super-plentiful supplies of coal.
"History suggests that when there's this much money to be made, new supplies do get developed," says Brown.
That's just the supply side of the equation. Demand should start to decline as well, albeit gradually.
"Historically, the oil market has under-anticipated the amount of conservation brought on by high prices," says Brown. Sales of big cars are collapsing; Americans are cutting down on driving. The airlines are scaling back flights.
We've learned another important lesson from the housing market: The longer prices stay stratospheric, the worse the eventual crash - simply because the higher the prices and bigger the profit margins, the bigger the incentive to over-produce.
It's even possible that, a few years hence, we could see a sustained period of plentiful oil supplies and low prices, meaning $50 or below.
A similar scenario occurred following the price explosion in the 1970s and early 1980s. The price spike caused the world to cut back sharply on oil consumption. By the mid-80s, oil prices had fallen from almost $40 to around $15. They remained extremely low for two decades.
It's impossible to predict how the adjustment this time will take shape, just as it was in housing. There the surge in supply came in places the experts swore there was "no supply," and wouldn't be any. Builders found a way to extend vast tracts of homes into California's Inland Empire and Central Valley, and even build "in-fill" projects near the densely-populated coasts.
An earlier bubble is also instructive. In the early 1980s silver prices jumped from $10 to $50 on the theory that the world was facing a permanent shortage of silver. Suddenly ads appeared asking homeowners to bring their tea sets and jewelry to Holiday Inns for a big price. Silver supplies poured from seemingly nowhere, out of America's cupboards, of all places.
And so it will be with oil. We don't know where the new abundance will come from, from shale, or tar sands or coal or an OPEC desperate to regain market share. We just know that it will appear. With prices like these, it always does.
© 2008 Cable News Network
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Laurie Gibson
"I'm finding myself extremely thankful that the public library system already exists. Imagine trying to get that one past congress." ~ Amanda Elend.
"Wearing a flag pin doesn’t make you a patriot any more than wearing a cross makes you a good [i.e., compassionate] Christian." ~ Carol V. Hamilton
"People place their hand on the Bible and swear to uphold the Constitution; they don't put their hand on the Constitution and swear to uphold the Bible" ~ James Raskin, a constitutional law professor from American University
"I distrust those people who know so well what God wants them to do, because I notice it always coincides with their own desires." ~ Susan B. Anthony |
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CelticRaven
Outspoken Leader
USA
5023 Posts |
Posted - June 07 2008 : 08:04:32
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Energy chief: Flat production behind oil prices
By JOSEPH COLEMAN, Associated Press Writer
Yahoo! News
June 7, 2008
Nations should fight rising oil prices by cutting subsidies and vastly increasing investment in energy, while oil-producing countries need to ramp up output and divulge more information about how much they produce, the U.S. energy secretary said Saturday.
Samuel Bodman, attending two days of meetings in northern Japan among energy chiefs from Group of Eight industrialized countries and other top economies, said the surge in world oil prices was largely a simple problem of supply and demand.
Production has stalled since 2005 at 85 million barrels a day, while economic growth — particularly in China and India — has pushed demand ever higher, Bodman said before a meeting of ministers from the U.S., Japan, South Korea, India and China.
"We're in a difficult position where we have a lid on production and we have increasing demand in the world," he told a small group of reporters, dismissing the effects of speculation and unclear inventory levels and other factors on oil prices.
"I would devoutly hope we ... see a reduction of the use of oil in the world on the one hand, and an increase in the supply so we can see some mitigation in the pressure on price," Bodman said.
Oil prices made their biggest single-day surge on Friday, soaring $11 to $138.54 on the New York Mercantile Exchange, an 8 percent increase. That followed a $5.50 increase the day before, taking oil futures more than 13 percent higher in just two days.
While demand has increased as supply has stalled, analysts have also cited the decline of the U.S. dollar, fears about the long-term supply of oil, and aggressive speculation as factors in rising prices.
Bodman said he would likely urge China and other countries at the Japan meeting to slash fuel subsidies, which make gasoline cheaper for consumers — thereby giving them no reason to reduce consumption and allow prices to level off or drop. The International Energy Agency has estimated that oil subsidies in China, India and the Middle East in 2007 totaled some $55 billion.
At the same time, he urged nations to pay heed to an IEA report that the world needs $22 trillion investment in energy supply infrastructure by 2030 to meet rising demand, while developing alternative energy sources.
"We have a situation where we have these high prices and the only solution is to diversify your resources, diversify your sources of fuel," he said, listing nuclear energy, natural gas and renewable sources such as wind and hydropower.
Lack of transparency in the oil market has also been cited as a possible cause of higher prices. Bodman said that while the United States and host Japan have been "diligent" in disclosing production and consumption data, some other countries need to do more.
Proponents of such transparency, including the IEA, say greater disclosure of accurate statistics helps markets set prices that more precisely reflect supply and demand. Underreporting of production, for instance, can drive prices higher as traders think supply is lower than it actually is.
Rising prices were having a negative effect on world economies. The U.S. government, for instance, reported on Friday the nation's unemployment rate rose to 5.5 percent in May, a monthly rise of half a percentage point, the biggest in 22 years.
Bodman said economic troubles because of high prices would only hurt oil producers.
"It's not good for producing nations to see the U.S. struggling economically. They depend on us to be a significant engine in world economic activity," Bodman said.
Copyright © 2008 The Associated Press
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Laurie Gibson
"I'm finding myself extremely thankful that the public library system already exists. Imagine trying to get that one past congress." ~ Amanda Elend.
"Wearing a flag pin doesn’t make you a patriot any more than wearing a cross makes you a good [i.e., compassionate] Christian." ~ Carol V. Hamilton
"People place their hand on the Bible and swear to uphold the Constitution; they don't put their hand on the Constitution and swear to uphold the Bible" ~ James Raskin, a constitutional law professor from American University
"I distrust those people who know so well what God wants them to do, because I notice it always coincides with their own desires." ~ Susan B. Anthony |
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imobannon
Leader
USA
3594 Posts |
Posted - June 07 2008 : 10:54:51
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| great energy policy of the gop- it will be a big issue |
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Isaac M. O'Bannon - Norman (Veteran, Democrat)
imobannon2 (at) cox (dot)net
www.facebook.com/imobannon
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"A government can only be as rational as the people it represents." ~ Me
"Education and an open mind are essentially vaccinations against republicanism." ~ Me
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CelticRaven
Outspoken Leader
USA
5023 Posts |
Posted - June 08 2008 : 17:44:42
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Oil prices---and the resulting increase in fuel costs---should very much be a big, BIG issue in the upcoming stumping for the White House. Tulsa has been one of the places that has consistently made the list of where the cheapest gas in the U.S. is being sold yet this is a headline from yesterday's Tulsa World:
Tulsa-area tanks running on empty
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Laurie Gibson
"I'm finding myself extremely thankful that the public library system already exists. Imagine trying to get that one past congress." ~ Amanda Elend.
"Wearing a flag pin doesn’t make you a patriot any more than wearing a cross makes you a good [i.e., compassionate] Christian." ~ Carol V. Hamilton
"People place their hand on the Bible and swear to uphold the Constitution; they don't put their hand on the Constitution and swear to uphold the Bible" ~ James Raskin, a constitutional law professor from American University
"I distrust those people who know so well what God wants them to do, because I notice it always coincides with their own desires." ~ Susan B. Anthony |
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CelticRaven
Outspoken Leader
USA
5023 Posts |
Posted - June 08 2008 : 20:16:32
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This doesn't make me happy but it's not surprising either. OPEC countries are a business and they're in it to make a buck----even though they have more money than God as it is. I think the best thing that will come from higher oil and gas prices is that people in the U.S. are finally starting to rethink transportation now. They are beginning to ditch the gas guzzling SUVs and purchasing vehicles that get greater gas mileage or vehicles that use alternative fuels and are starting to use mass transportation more. I'd love to see our rail system expanded and upgraded. Seriously, why the hell don't we have high speed passage trains like Japan, China and several European countries? Well, I know part of the reason is the Americans' love affair with the automobile and another part is airline lobbyists have killed some projects.
OPEC sees no need to pump more after price surge
By Simon Webb
Yahoo! News
June 8, 2008
OPEC members saw no need on Sunday to pump more oil in response to last week's double-digit surge in oil prices to over $139 a barrel that top exporter Saudi Arabia described as unjustified.
More pain was coming for consuming economies hurting from record fuel costs as prices were likely to climb further, officials from the Organization of the Petroleum Exporting Countries (OPEC) said.
Oil soared more than $16 a barrel - over 13 percent - in a two-day rally on Thursday and Friday on weakness in the U.S. dollar and rising tension between Israel and Iran.
"I think there is enough oil in the market," Shokri Ghanem, head of OPEC member Libya's National Oil Corporation, told Reuters in a telephone interview.
Top oil exporter Saudi Arabia is the only OPEC member with capacity to boost output quickly and significantly.
But Saudi Oil Minister Ali al-Naimi and his Pakistani counterpart met on Sunday and agreed that the price rise was unjustified and unrelated to market fundamentals, the official Saudi Press Agency reported.
Consuming governments have put pressure on OPEC, supplier of more than a third of the world's oil, to boost output to ease the effect of high oil prices on their economies. Germany's government voiced its concern on Sunday about the impact of oil's rally.
"The increase of the oil prices is becoming a real threat to the worldwide economy," Germany's Economy Minister Michael Glos told Reuters.
$150 OIL?
OPEC blames factors beyond its control, including speculation and international political tension, for the price rises. Those factors could take prices even higher soon, said Iran's OPEC representative Muhammad Ali Khatibi.
"I forecast that by the end of summer the price of oil will reach $150 a barrel," Mohammad Ali Khatibi was quoted as saying by Iran's state broadcaster.
Iran is OPEC's second largest oil producer and the deepening dispute with the West over Tehran's nuclear ambitions has contributed to oil's rally.
Israel's deputy prime minister said in remarks published last week that an attack on Iran's nuclear sites looked "unavoidable," although a senior Israeli defence official said on Sunday the remarks did not reflect state policy.
Investors have bought oil on concern that an escalation in the conflict could disrupt Iran's exports.
But only a real threat to supply would stir OPEC to meet before its next scheduled gathering on September 9, an insider said on Sunday.
Nobody within OPEC was calling for a meeting before September, Libya's Ghanem said.
Rising oil prices have defied swelling OPEC supplies to physical markets. Iran said on Sunday it would export over 2.5 million bpd in June as shipments recovered from a 200,000 bpd lull in demand from refiners during April and May. Iran has large volumes of crude sitting in tankers offshore waiting for buyers.
Saudi Arabia has boosted output 300,000 bpd to pump 9.45 million bpd in June, and Oil Minister Ali al-Naimi said last month the kingdom was meeting all demand for its crude.
Iraq expects its exports to hit a five-year high in June.
Still, concern over long-term supplies and declining output from producers outside OPEC have also lifted the oil price. Ghanem said on Sunday that oil was getting more difficult and costly to produce and that global supplies were nearing their peak.
"The easy, cheap oil is over," he said. "Peak oil is looming."
Copyright © 2008 Reuters Limited
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Laurie Gibson
"I'm finding myself extremely thankful that the public library system already exists. Imagine trying to get that one past congress." ~ Amanda Elend.
"Wearing a flag pin doesn’t make you a patriot any more than wearing a cross makes you a good [i.e., compassionate] Christian." ~ Carol V. Hamilton
"People place their hand on the Bible and swear to uphold the Constitution; they don't put their hand on the Constitution and swear to uphold the Bible" ~ James Raskin, a constitutional law professor from American University
"I distrust those people who know so well what God wants them to do, because I notice it always coincides with their own desires." ~ Susan B. Anthony |
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crusty-rusty
Organizer
France
972 Posts |
Posted - June 09 2008 : 02:10:43
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India cut its subsidies, last week and it wasn't a popular move. Other governments face the same problem with cutting similar subsidies. It seems to be a very tough political move, which probably means most governments won't act until forced.
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All you need is love - The Beatles, Christ, Buddha, Lao Tsing, etc, etc. - how many more have to tell us?
One finds what one is looking for.
One's feeling of self worth comes from having something to give, not from being able to take whatever one wants.
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Edited by - crusty-rusty on June 09 2008 15:53:28 |
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CelticRaven
Outspoken Leader
USA
5023 Posts |
Posted - June 09 2008 : 18:28:06
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Saudi calls for talks; oil experts see no change
By DONNA ABU-NASR, Associated Press Writer
Yahoo! News
June 9, 2008
Saudi Arabia will call for a summit between oil producing countries and consumer states to discuss soaring energy prices, Information and Culture Minister Iyad Madani said Monday.
The kingdom will also work with OPEC to "guarantee the availability of oil supplies now and in the future," the minister said following the weekly Cabinet meeting, held in the seaport city of Jiddah.
Madani said that the kingdom has informed "all oil companies it deals with as well as countries that consume oil that (the kingdom) is ready to provide them with any additional oil they need."
"The Saudi Cabinet has instructed Oil Minister Ali al-Naimi to call for a meeting in the near future that will include representatives of oil-producing countries, consumers and companies that work in extracting, exporting and selling oil to look into the price hike, its causes and how to deal with it," said Madani.
The Saudi announcement comes just three days after the biggest single-day price leap ever, when oil surged more than $11 to surpass $139 per barrel.
Retail gas prices rose further above $4 Monday in the United States, the world's largest oil consumer, following the unprecedented price rally.
The kingdom will work to ensure there will be no "unwarranted and unnatural oil price hikes that could affect international economies, especially those of developing countries," said Madani.
"There is no justification for the current rise in prices," he said.
On Monday, light, sweet crude for July delivery fell $4.18 to $134.36 a barrel in volatile trading on the New York Mercantile Exchange.
"It's not a situation that's going to move the market today," said Phil Flynn at Alaron Trading Corp. in Chicago, suggesting that there it might have a more long term effect. "I do think a conference is warranted, we need to sit down."
Jim Ritterbusch, president of the U.S.-based energy consultancy Ritterbusch and Associates cautioned that such meetings have taken place in the past and could be more an effort to calm the market without taking concrete measures.
"It's not anywhere near as significant as if they called an emergency OPEC meeting," he said. "It seems to me to be more political than anything ... They're reaching their worry threshold."
The Saudis are concerned that sustained high oil prices will eventually slacken the world's appetite for oil, affecting them in the long run.
Investors last month shrugged off news that Saudi Arabia had increased production by 300,000 barrels a day after a visit from President Bush, who sought a major production increase.
Energy experts say most producers have little ability to expand output. The exception is Saudi Arabia, which is producing about 9.4 million barrels a day and has the ability to increase production by about 2 million barrels a day, but has not done so.
"In the current circumstances, every barrel that can be used is being used," said Addison Armstrong, director of market research at Tradition Energy. "Unless the Saudis and OPEC suddenly produce some oil that nobody has heretofore known about, then this meeting is likely to produce no meaningful outcomes."
The current president of the Organization of Petroleum Exporting Countries, Chakib Khelil, has said that the cartel will make no new decision on production levels until its Sept. 9 meeting in Vienna.
Copyright © 2008 The Associated Press
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Laurie Gibson
"I'm finding myself extremely thankful that the public library system already exists. Imagine trying to get that one past congress." ~ Amanda Elend.
"Wearing a flag pin doesn’t make you a patriot any more than wearing a cross makes you a good [i.e., compassionate] Christian." ~ Carol V. Hamilton
"People place their hand on the Bible and swear to uphold the Constitution; they don't put their hand on the Constitution and swear to uphold the Bible" ~ James Raskin, a constitutional law professor from American University
"I distrust those people who know so well what God wants them to do, because I notice it always coincides with their own desires." ~ Susan B. Anthony |
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CelticRaven
Outspoken Leader
USA
5023 Posts |
Posted - June 11 2008 : 22:59:33
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Subsidies: a big culprit in high gas prices
Gasoline would be cheaper if countries ended their oil subsidies and let markets rule.
Christian Science Monitor
June 11, 2008
In China, the government caps gas prices. Drivers there pay about half of what Americans pay. In many countries, oil prices are held artificially low, either by fiat or subsidy. The result? Consumption keeps rising, boosting global prices. The rest of the world – the part now racing to conserve – ends up paying more than it should.
Unfair?
Yes, say global actors such as the International Monetary Fund (IMF), which is calling on governments to let consumers face market prices in order to kick-start conservation and reduce official spending.
About half of humanity, from India to Chile, now benefits from cut-rate petroleum prices. In 2008, these countries will account for all the growth in world oil demand, or an additional one million barrels a day, according to Deutsche Bank. Their consumption will be the highest in eight years.
And these subsidies will cost as much as $100 billion in 2008, or twice as much as last year, estimates the International Energy Agency. That would be money better spent on reducing oil use – what's called "demand erosion" – than encouraging it. And sadly, it is the rich who benefit the most. The IMF says the top one-fifth of households in income receive 42 percent of fuel subsidies because they are the heaviest users.
Shielding consumers from the real costs of an oil-based economy only makes it more difficult for them to face the coming end of the oil era.
For wealthier nations that generally shun subsidies, the price of oil – still over $130 a barrel – is quickly altering lifestyles.
As onerous as it is for Americans to bear $4-a-gallon gasoline, the results are encouraging. Mass transit use is way up and oil demand is falling. For the first time since 1979, the number of miles driven has dropped. And General Motors is weighing an end to production of the Hummer as buyers flee such gas-guzzling vehicles.
A few nations that do subsidize fuel are feeling the financial pinch on budgets and moving to reduce subsidies or end price caps, despite street protests against such moves. Most of them are in Asia, the region that will account for 70 percent of the increase in oil demand this year.
In China, oil demand is estimated to rise 5 to 10 percent this year, but the government has resisted calls to end price controls. A few other countries – Chile and South Korea – are now moving toward subsidies to appease political pressures.
The biggest culprits are oil exporting nations, especially in the Gulf. They continue to throw petrodollars at both fuel subsidies and big projects that consume oil.
In Europe, political pressures are building to reduce fuel taxes, similar to a call by John McCain to suspend the federal gas tax for the summer. Such moves would be a mistake. Fuel taxes help send the right price signals for conserving oil as well as reducing greenhouse gases that cause climate change.
In Congress, bills to combat global warming would raise costs for oil users, even possibly adding a dollar to gasoline prices. But proposals by lawmakers to relieve those costs with subsidies to consumers would only defeat the purpose of reducing oil demand.
Governments that try to create a false economy for oil are not revealing the truth to their people.
© 2008 The Christian Science Monitor
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Laurie Gibson
"I'm finding myself extremely thankful that the public library system already exists. Imagine trying to get that one past congress." ~ Amanda Elend.
"Wearing a flag pin doesn’t make you a patriot any more than wearing a cross makes you a good [i.e., compassionate] Christian." ~ Carol V. Hamilton
"People place their hand on the Bible and swear to uphold the Constitution; they don't put their hand on the Constitution and swear to uphold the Bible" ~ James Raskin, a constitutional law professor from American University
"I distrust those people who know so well what God wants them to do, because I notice it always coincides with their own desires." ~ Susan B. Anthony |
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CelticRaven
Outspoken Leader
USA
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Posted - June 15 2008 : 15:46:25
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UN chief: Saudi to boost oil production
UN chief says Saudi Arabia plans to increase oil production by 200,000 barrels a day
Yahoo! Finance
June 15, 2008
RIYADH, Saudi Arabia (AP) -- Saudi Arabia plans to increase its oil production by 200,000 barrels a day next month, the kingdom's oil minister told U.N. chief Ban Ki-moon on Sunday, according to Ban's spokesman.
The U.N. secretary-general met with Oil Minister Ali al-Naimi in the port city of Jiddah during a one-day trip to the world's largest oil producer.
Farhan Haq, a spokesman who is traveling with Ban, said in an e-mail that the U.N. chief said al-Naimi told him Saudi Arabia would increase oil production by 200,000 barrels a day from June to July. In May, the kingdom increased its production by 300,000.
By July, production should be at 9.7 million barrels a day, Haq said.
Ban also said Saudi Arabia understands that the current price of oil, which topped $139 per barrel earlier this month, is not normal, according to the official Saudi Press Agency.
"The king believes that the current oil prices are abnormally high, and he is ready to restore prices to their appropriate levels," SPA quoted Ban as telling reporters in Jiddah. The report carried by SPA was in Arabic, and it did not say what language Ban spoke in.
Saudi Arabia is concerned that sustained high oil prices will eventually slacken the world's appetite for oil, affecting the kingdom in the long run.
The kingdom has called for a meeting of oil producing and consuming countries on June 22 in Jiddah to discuss ways of dealing with soaring energy prices.
The New York Times reported on Saturday, citing unnamed analysts and oil traders briefed by Saudi officials, that a production increase of about 500,000 barrels per day was to be announced following the meeting.
On Saturday, al-Naim's adviser told The Associated Press that the minister would address the production increase reports the next day. But on Sunday, the adviser, Ibrahim al-Muhanna, said there was no meeting scheduled.
Further attempts to reach al-Muhanna by phone later Sunday went unanswered.
Saudi Arabia, the world's largest oil producer, is concerned that sustained high oil prices will eventually slacken the world's appetite for oil, affecting the kingdom in the long run.
Crude prices have reached record highs, surpassing $139 per barrel on June 6 after surging nearly $11 in the biggest single-day price leap ever.
The prices had receded by Friday, with the benchmark light, sweet crude for July delivery falling $1.88 to settle at $134.86 on the New York Mercantile Exchange. In London, July Brent crude lost $1.84 to settle at $134.25 on the ICE Futures exchange.
The current president of the Organization of Petroleum Exporting Countries, Chakib Khelil, has said that the cartel will make no new decision on production levels until its Sept. 9 meeting in Vienna. OPEC ministers often follow the lead of the Saudis when discussing whether to increase production to take the pressure off rising prices.
Copyright © 2008 The Associated Press
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Laurie Gibson
"I'm finding myself extremely thankful that the public library system already exists. Imagine trying to get that one past congress." ~ Amanda Elend.
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"People place their hand on the Bible and swear to uphold the Constitution; they don't put their hand on the Constitution and swear to uphold the Bible" ~ James Raskin, a constitutional law professor from American University
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