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Home Front: Economy
OPEC asks US to use more oil reserves
2004-10-27
OPEC wants the United States to dip further into its strategic petroleum reserve to help reduce world oil prices. "We have asked them (the United States) to use their oil reserves to help cool down the prices," OPEC President Purnomo Yusgiantoro, who is also Indonesia's mines and energy minister, told reporters. He said the Organization of Petroleum Exporting Countries would discuss the issue further with the United States, but did not elaborate. He didn't say whether the United States had responded to the request. The United States has just under 300 million barrels of crude in its emergency stockpile, and Washington's move early this month to loan out 4.2 million barrels of it had no noticeable impact on prices.

Purnomo also has asked OPEC members to increase production "to give a signal to the market that we aren't short of supply." Light, sweet crude for December delivery hit a record high of US$55.67 a barrel Monday on the New York Mercantile Exchange on supply concerns ahead of winter in the U.S. and continued healthy oil demand from China. Unrest in key oil producing countries has also fuelled the rise in crude prices in recent months, which is underlined by limited excess capacity. It hovers about 1 per cent above the world's daily consumption of 82.4 million barrels per day, leaving little wiggle room if there is a production outage.
Posted by:Mark Espinola

#17  Dip into strategic reserves, hell!

Dip into ANWR.
Posted by: Barbara Skolaut   2004-10-27 11:27:20 PM  

#16  Look, I'm saving gas!

I do that every time I scoot around town on my motor-sickle. :)
Posted by: Bomb-a-rama   2004-10-27 8:42:42 PM  

#15  I'd like to know who is highly leveraged in the oil market derivatives, in the fashion of the market manipulation that Soros specialized in and where he made made his billions.

Soros has, after all, announced that he is willing to use his entire fortune to defeat Bush. Raising oil prices to slow down the world (and US) economy may have seemed like a good plan one year ago?
Posted by: Kalle (kafir forever)   2004-10-27 8:00:26 PM  

#14  Zhang Fei, I second your comments. A project I interned on involved figuring out how to get bituminous coal into a gas turbine's burner cans. it boiled down to tacking on an additional 25-40% on the cost of a power plant
(N.B. mostly for the emissions controls!!!).

The funny part was that the cost differential in fuel alone would have made up the difference in approx 5 years, but Lord hve mercy on the people who try to get approval for the first one. NIMBY dosent even come close. Its almost as easy to get approval for a nuke plant.

And on a purely personal note, as someone who drives a small compact tiny honda civic, it would be nice to not have to so often dodge the [expletives deleted] who drive their oversized SUVs while yakking on their cell phones. Alone. Those ID10Ts would prolly not even notice running over someone unless the dragging noise got through to them.
Posted by: N Guard   2004-10-27 7:06:22 PM  

#13  Today some major profit taking took place in the 'energies'. On the strategic energy reserves; even if Washington released some or most of our stored 'emergency' oil reserves, it still have to be refined & would only amount to a few days, a week's worth of lower prices, then the market would return to the real picture. As 'Bomb-a-rama' stated, "What happens when it needs to be filled up again" and I would add, what happens in a real national security emergency?

Another item, Opec speaks with forked tongue. This Opec schlub in the news item above says 'open America's reserves', while last night Bloomberg's British desk on TV reported another top Opec man, a Mr. Rahman, stated he foresees $80 a barrel oil in 2005. Right now Opec oil producing states & other non-Opec major producers such as Canada, Norway, etc, are getting almost double returns in relation to this time last year for each barrel of crude oil. In one year crude as risen some 84%.

The guys at the top of each Opec nation play the energy markets too, both sides, bullish or bearish they gain and so do their brokers. Saddam did the same for years. The Iranian mullahs have been earning money by the barrel fulls....to further global jihad. Mullahs have brokers/traders too.

Zhang, At the end of the war in Europe, America 'obtained' the Nazi's then secret coal gasification plans, soon after, in the very late 1940's & early 1950's Washington ordered the constructed of coal gasification plants in Western states. They remain there today, if required. Will the Left squawk about pollution on the coal issue....again? Today's cleaner burning methods are a far cry from the old days.

A global switch off oil can not be done overnight. The terrorist enemy is absolutely cognizant of Western economics and will keep up the pressure. Sabotaging Iraq's pipelines & other oil targets should serve as a preview to what these madmen would love to do to Saudi Arabia's oil lifeline, coupled with other Gulf oil sheikdoms exporting oil to the 'infidel' energy deficient nations of the world, such as Japan, Spain, Italy, let's not forget France among many others.

Mrs. D, I hope all the postings have shed further light on the general topic. Good point on the Saudis.

Look, I'm saving gas!
Posted by: Mark Espinola   2004-10-27 7:04:18 PM  

#12  I think oil producers are starting to worry. A lot of countries are considering switching to using other sources of fuel for power plants, etc. Because of heavy capital costs, once the switch occurs, oil demand falls permanently. Coal gasification plants are now being looked at, now that the price of oil is in the stratosphere. Plants that convert coal into gasoline are also being examined. Ironically, the cure for oil dependency is high oil prices. Only when oil prices skyrocket and stay high for some period of time, does it make financial sense to plough the tens of billions of dollars in capital equipment investments needed to switch to other power sources. I, for one, welcome these higher oil prices. In time, they will help destroy the developed world's dependence on oil as an energy source, and with it, the oil producers' finances and ability to export their dysfunctional values.
Posted by: Zhang Fei   2004-10-27 4:54:29 PM  

#11  We could only hope, Mrs. D. I think he means they will trip over themselves to help out the good ol' USA (sarcasm).

:)
Posted by: Jules 187   2004-10-27 4:33:43 PM  

#10  You mean like when the Marines have to go into eastern Arabia to restart the oil fields because the Sauds have lost control of their family inheritance?
Posted by: Mrs. Davis   2004-10-27 4:27:50 PM  

#9  OPEC wants the United States to dip further into its strategic petroleum reserve to help reduce world oil prices.

What happens when it needs to be filled up again?
Posted by: Bomb-a-rama   2004-10-27 4:25:53 PM  

#8  Lot's of words here, but they boil down to demand exceeds supply. Price rises. We need to get used to it. For all the other quibbles you have, they will be resolved by rising prices.
Posted by: Mrs. Davis   2004-10-27 10:32:16 AM  

#7  Just saw your posting 'Old Fogey'(love the name :) I would like to speak to you later on. Great posting! You are on the money!
Posted by: Mark Espinola   2004-10-27 10:27:44 AM  

#6  In the last year there are a number of reasons. This is the short list, not in any particular order of events.

Hurricanes effecting oil offshore rigs in the Gulf of Mexico.

China's massive energy appitite.

The world-wide lack of 'light sweet crude oil' Civil strife in Nigeria, Venezuwla.

Terrorism in leading OPEC exporters such as Saudi Arabia & Iraq.

Energy market 'fear factor' & greatly incresed trader speculation.

A big reason is mandated federal EPA 'reformulated gasoline' (RFG)which is specially processed & blended to reduce the emission of pollutants such as hydrocarbons, toxics, and nitrogen oxides. RFG is not cheap process to make considering the various blends for numerous major cities across the nation. The costs are passed on. California has it's very own Phase 2 Reformulated Gasoline.

The U.S. just doesn’t have enough refining capacity to convert crude oil into RFG gasoline.

Taxes - taxes & more taxes. Check the pump for this information. Federal excise taxes are 18.4 cents per gallon, and state excise taxes average 19.96 cents per gallon.

I have to run ...I can add more if you like later on. Happy motoring :)

Posted by: Mark Espinola   2004-10-27 10:25:58 AM  

#5  Only certain grades of crude oil are in short supply such as Brent, Saudi Light and certain Gulf Coast crudes. There is plenty of the heavy high sulfur crudes. The crux of the matter is that you can push more of the light grades through the refineries achieving high output of light distillate fuels such as gasoline and diesel. The heavy grades are refined at a lower through-put rate with lower percentages of light distillate produced. To use the heavy crudes effiencly, the refinery must be built to order, ie larger desulfurization units, cat crackers and reformers. Sorry for geek speak, just not room to fully explain.
Posted by: Old Fogey   2004-10-27 10:22:30 AM  

#4  So why has the price of oil risen?
Posted by: Mrs. Davis   2004-10-27 9:38:33 AM  

#3  Tom, the next time I see him I shall pass that on ...word for word.. @#$%....and throw in a few ##^*%! for good measure. :)

Mrs, I would say depending on the type/grade of refined products, in some geographic areas there are 'tight' supplies, but no real global shortages ....at this time. If it's an extra cold winter, demand could rise considerably, causing further spikes in price for the entire energy complex.
Posted by: Mark Espinola   2004-10-27 9:25:22 AM  

#2  "to give a signal to the market that we aren’t short of supply."

No supply shortage, just irrational exuberance.
Posted by: Mrs. Davis   2004-10-27 8:46:07 AM  

#1  The reserve should be measured in days, not barrels, and it's not a lot of days. And it's ours. And we're not even an OPEC member. Tell OPEC President Purnomo Yusgiantoro to go @#$% himself.
Posted by: Tom   2004-10-27 8:36:29 AM  

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