CNDI Oil DARegents
Oil prices are and will stay high
Clifford Krauss July 2, 2008 “Clifford Krauss has been a New York Times correspondent since 1990. He currently is a national business correspondent based inHouston. He covered the State Department, Congress and the New York City police department before serving as Buenos Aires bureau chief and Toronto bureauchief. He is author of "Inside Central America: Its People, Politics and History," (1991). He has published articles in Foreign Affairs, GQ and Wilson Quarterly,along with other publications. ““Oil Demand Will Grow, Despite Prices, Report Says”http://www.nytimes.com/2008/07/02/business/02oil.html?ref=business
World demand for oil should continue to climb,
despite the doubling of oil prices and weakening economic growth, according toa report released Tuesday by the International Energy Agency. That should mean tightening supplies, decreasing the odds thatdrivers will get much relief at the gasoline pump.
The Paris-based agency, which advises governments of the industrializedcountries, predicted that oil consumption would decline slightly in the United States and other developed countries over thenext couple of years.
Americans, the report said, are beginning to drive more fuel-efficient vehicles and taking mass transit when itis available.
But the small decline in oil demand in the industrialized countries will be more than offset by an estimatedincrease in demand of 3.7 percent a year from 2008 to 2013 in developing countries, particularly in Asia, the Middle Eastand Latin America.
“The report is only further confirmation of the inability of global supply to catch up with risingdemands,
Chris Ruppel, an energy analyst at Execution, an institutional brokerage firm. “After five years of record increases in oil prices, producers are stillunable to sufficiently expand output. It means we are in for rough times.” The report said energy consumption was increasing in developing countries because of increased trade, growing internal markets and strong commodity prices. But subsidies that typically shield gasoline consumers in developing countries, the reportsaid, are also important in sustaining strong demand, particularly in oil-producing countries. By 2013, oil demand in developing countries will account for nearly 49 percent of total global demand, the report said, compared with 36 percent as recently as 1996. Demand will rise the most in China, as it has since 2004. “China willaccount for almost a third of the world’s annual demand increase in the 2008-2013 period,” the report said. That projection is based onInternational Monetary Fund predictions of double-digit annual economic growth rates in China for the foreseeable future. The global picture for oil production is little better. The agency’sforecast for oil production capacity actually declined by about 3 percent for 2012 from what it forecast a year ago. High prices have stimulated exploration and fielddevelopment, but the agency projects an increase in annual global production capacity of 1.5 million to 2.5 million barrels a day by 2010 from current levels, or roughly twice the current production in the Gulf of Mexico. After that, the agency expects annual growth below one million barrels a day from 2011 to 2013. Thosemodest increases result from project delays and exploding costs for many oil field projects around the world, declining production in major fields in Mexico and the North Sea, and political turbulence in Nigeria and other producing countries. There are some bright spots for supplies; at least 250 major new field or fieldexpansion projects are expected to begin production in the next few years in non-OPECcountries alone. Spare capacity in OPEC countries is projected to rise from2.5 million barrels a day in 2008 to more than 4 million barrels a day in 2010, although that will still be less than 5 percent of global demand. Production growth isrobust in Brazil, Kazakhstan, Azerbaijan and Iraq. But the agency predicted that the tight markets would keep prices high. And it discounted the impact of speculation, which has been blamed by many politicians in the United States recently for the spike in prices. “Blaming speculation is an easy solution which avoidstaking the necessary steps to improve supply-side access and investment or to implement measures to improve energy efficiency,” the report said
OPEC will increase supply in response to the plan and decrease the price
Southeast Farm Press ‘1
12/19But just when it appears something will in fact be done toward increasing domestic energy supplies, getting serious aboutalternative sources, and making a long-term commitment toward reducing our dependence on foreign oil — well, miraculously, prices go down. OPEC magnanimously increases supply, refineries begin humming, and once again thoughts of a national energy policy fade like the Cheshire cat.Only the cat's grin is left. And the cat is OPEC and the energy industry. They've seen it all before. They know they have only towait; that we in the United States have a short memory, and that as long as they toss us a sop of energy “bargains” from time totime, we'll moan and groan and pay their price the rest of the time.3