Analysis: The OPEC view on high prices
Riyadh, Saudi Arabia (UPI) Nov 16, 2007
When the price of oil shoots up, the world's consumers put the bulls-eye on the producers' cartel. OPEC Secretary-General Abdalla Salem El-Badri told United Press International the target should be a swath of factors holding the price above $90 per barrel, but not OPEC's supply of oil.
"They look at us because we are supplying the world with 40 percent," said Badri, a former Libyan deputy prime minister and head of the National Oil Co. "So that's why they are looking to us."
The heads of state of OPEC's members meet in Riyadh this weekend. During a symposium of oil ministers and global energy experts this week, ahead of the third such OPEC summit, Badri refuted claims the steady $90-plus per barrel of oil is OPEC's fault for not producing enough oil and not investing enough to boost future production capabilities.
In too simple of terms, high prices would bring in extra income for producers; likewise, low prices give consumers a pocketbook break.
But there are residual effects. The Organization of Petroleum Exporting Countries was stuck most recently in the 1990s with oil at such a depressed price it had no incentive to invest in adding production or capacity.
And consumers usually slow their consumption when prices get to high and look for alternatives to oil.
Badri, spending time with UPI on the sidelines of the summit, called for more producer-consumer cooperation on finding a supply, demand and price equilibrium.
"What OPEC is trying to do is have a stabilized market and we are looking into the market, looking into the supply and demand, and looking into the inventory," he said. "And we cannot see any fundamental problems (with supply)."
U.S. Energy Secretary Samuel Bodman, in Istanbul Friday, reiterated his call for OPEC to increase production.
OPEC, which averaged just over 31 million barrels per day last month, according to the global energy information firm Platts, is not expected to increase its production quota this weekend and has been mum on any moves in its Dec. 5 meeting in Abu Dhabi, United Arab Emirates.
"There is no shortage of oil in the market," Badri told a news conference earlier this week.
He said there was an excess supply of speculators and traders, however, playing off real and perceived threats to the global supply of oil, and a bottleneck in U.S. refineries, which is boosting the price.
And the U.S. dollar, which most of the oil is traded in, has a shrinking purchase power. According to an index published by the U.S. Federal Reserve, the dollar has decreased in value by nearly 16 percent since November 2005 compared with other major currencies.
"These are the causes for the high oil price," he said Friday.
Consuming countries wrap high prices and oil-rich geopolitical turmoil into calls for greater energy security, and reactions such as the U.S. Congress' proposed "NOPEC" legislation and a renewed focus on renewable energy and alternative fuels.
Badri is championing OPEC's response for supply security -- not in "quantity, but at least a trend of the demands so we can invest."
OPEC has slated $150 billion to increase capacity by 5 million bpd by 2012.
"The growth of demand last year was 1.3 million bpd and the next year will be about 1.3, 1.4 million bpd, so the demand is modest," he said, adding OPEC has been talking with the European Union on squaring supply-demand security. "We need to see how much demand as we go in the future, so we can supply the world with that demand."
Email This Article
Comment On This Article
Powering The World in the 21st Century at Energy-Daily.com
Washington (AFP) Nov 17, 2007
The United States hopes to fill American roads with hydrogen-powered cars in two decades, but the clean fuel must be cheap and practical to make before it can replace oil, US experts say.
|The content herein, unless otherwise known to be public domain, are Copyright 1995-2007 - SpaceDaily.AFP and UPI Wire Stories are copyright Agence France-Presse and United Press International. ESA Portal Reports are copyright European Space Agency. All NASA sourced material is public domain. Additional copyrights may apply in whole or part to other bona fide parties. Advertising does not imply endorsement,agreement or approval of any opinions, statements or information provided by SpaceDaily on any Web page published or hosted by SpaceDaily. Privacy Statement|