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OPEC can't keep oil price down

a_unique_person

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http://afr.com/articles/2005/03/18/1111086004998.html

While OPEC ministers were being feted by Iran's president on Wednesday with Persian food and Kurdish music, traders in the oil pit of the New York Mercantile Exchange sent them an unexpected message.

Hours after the Organisation of Petroleum Exporting Countries, which was meeting in Isfahan, Iran, decided to lift its production ceiling by 500,000 barrels a day, prices in New York rose to a new high.

On Thursday, US time, crude oil futures rose sharply, with the April contract hitting a record $US57.60 a barrel on the New York Mercantile Exchange before closing down US6¢ at $US56.40 a barrel.

Crude prices have risen about 50per cent in the past year. Some analysts believe $US100 a barrel would be a possibility if supplies were disrupted by an event such as another war in the Middle East.

For OPEC, the situation is paradoxical. The group is uncomfortable with today's high prices. The OPEC president said he did "not accept this", while Saudi Arabia, the cartel's most powerful member, favours oil at $US40 to $US50.

But there is not much OPEC can do. Its 11 members are pumping close to 29 million barrels a day and do not have much more production capacity left to tap. Saudi Arabia, which has been pumping 9.5 million barrels a day since the beginning of the year, can add another million barrels or so, but the oil is mostly heavy crude, which is less in demand because it is harder to refine.

All the rest of OPEC can do is count record revenues and plan expansions. But some countries - including Iran, Indonesia, Venezuela and Libya - are struggling to meet production quotas.

All the signs are there, production has peaked, and demand is still growing. The market certainly seems to recognise that. The Iraq invasion was a futile roll of the dice to secure a supply of oil, but 200Billion has been blown on achieving nothing.
 
a_unique_person said:
http://afr.com/articles/2005/03/18/1111086004998.html



All the signs are there, production has peaked, and demand is still growing. The market certainly seems to recognise that. The Iraq invasion was a futile roll of the dice to secure a supply of oil, but 200Billion has been blown on achieving nothing.

Interesting train of logic, AUP.

Assuming the Iraqi invasion was, in whole or in part, an attempt to secure a supply of oil and...

Assuming your chosen source is correct that oil could reach $US100 a barrel if another 'middle east' war broke out and...

Assuming our efforts suceed in growing democracy in the middle east (which, as of now, appears to be the case) and...

Our continued strong presense in the middle east discourages war then...

How can you suggest that the 200billion was blown on nothing? Seems to me we get not only a more secure supply of oil but also the bonus of a possible democratic middle east.
 
It's simple, Rob. If the USA goes to war in the middle east and oil prices drop, then it was all an evil conspiracy to get oil. If the USA goes to war in the middle east and oil prices rise, then it was the stupid Chimp Bushitler messing around with armies without thinking of the obvious consequences to energy prices.

Simple, wasn't it?

More generally, you must remember that if the USA does X and then Y happens that is good for the USA, X was an evil conspiracy to screw the rest of the world for the USA's narrow interests; but if the USA does X and then Y happens that is bad for the USA, then X was a stupid blunder due to the stupid, short-sighted fanaticism of the bible-thumping convervatives.

Hope that help.
 
Skeptic said:
It's simple, Rob. If the USA goes to war in the middle east and oil prices drop, then it was all an evil conspiracy to get oil. If the USA goes to war in the middle east and oil prices rise, then it was the stupid Chimp Bushitler messing around with armies without thinking of the obvious consequences to energy prices.

Simple, wasn't it?
Why would the US want to gain control of cheap oil? Surely controlling expensive oil is more attractive? Considering the ruling clique that currently gets to define "US interests", one would have to be simple to assume they want cheaper oil.
 
Skeptic said:
It's simple, Rob. If the USA goes to war in the middle east and oil prices drop, then it was all an evil conspiracy to get oil. If the USA goes to war in the middle east and oil prices rise, then it was the stupid Chimp Bushitler messing around with armies without thinking of the obvious consequences to energy prices.

Simple, wasn't it?

More generally, you must remember that if the USA does X and then Y happens that is good for the USA, X was an evil conspiracy to screw the rest of the world for the USA's narrow interests; but if the USA does X and then Y happens that is bad for the USA, then X was a stupid blunder due to the stupid, short-sighted fanaticism of the bible-thumping convervatives.

Hope that help.
Yes, it really does. One simply cannot win for losing. Every result is wrong simply because Bush was part of the cause. Critical thinking at its finest.
 
CapelDodger said:
Why would the US want to gain control of cheap oil? Surely controlling expensive oil is more attractive? Considering the ruling clique that currently gets to define "US interests", one would have to be simple to assume they want cheaper oil.

It works either way. The US gains control of expensive oil...or it brings down the price of oil it needs to keep its economy going. No matter how you slice it, it can be made to seem as the end result of some conspiracy or another.
 
CapelDodger said:
Why would the US want to gain control of cheap oil? Surely controlling expensive oil is more attractive? Considering the ruling clique that currently gets to define "US interests", one would have to be simple to assume they want cheaper oil.
Hi Capel,

American industry is fueled (literally) by oil. Please find a single product that does not require oil to some degree? Nearly every product produced in the United States and or is consumed in the United States either contains some degree of oil and or required oil in its manufacture and delivery.

When the price of oil goes up the cost of all other products go up. Profits must be cut or consumers must pay increased prices without an increase to the bottom line of Business. Only businesses associated directly with the production, distribution, marketing and sales of oil benefit. And even they don't always benefit.

If oil prices rise too high many businesses will go bankrupt. Rising oil prices could drive our economy into a very serious recession. Even oil producing companies fear such sharp increases. If prices rise to quickly demand will be curtailed. If 15% of Americans made long term reductions in their consumption of oil then there could easily be a long term glut in oil production (see the late 70s and 80s) and many oil companies would be hurt.

No, such increases in oil prices are in no one's long term interests except commodity brokers of course.
 
Actually the truth is quite simple.

It is not about making a profit of oil, it is about preventing anyone from denying the US oil. And Iraq has such a nice position on the map.
 
RandFan said:
Hi Capel,

American industry is fueled (literally) by oil. Please find a single product that does not require oil to some degree? ...
Who cares about industry if you make your money out of oil? You're assuming that the people who decide current US policy represent US industry, or even the US people as a whole. I don't make that assumption. They may believe that they do, but we all know how easy it is for people to believe what suits them. Some may not believe it, of course - it's hard to be sure given the skills of the persuasion industry. Some may have a supra-national world-view more akin to mine than yours, and may be using nationalism to promote their own interests. It wouldn't be the first time that happened.
 
CapelDodger said:
Who cares about industry if you make your money out of oil? You're assuming that the people who decide current US policy represent US industry, or even the US people as a whole. I don't make that assumption. They may believe that they do, but we all know how easy it is for people to believe what suits them. Some may not believe it, of course - it's hard to be sure given the skills of the persuasion industry. Some may have a supra-national world-view more akin to mine than yours, and may be using nationalism to promote their own interests. It wouldn't be the first time that happened.
I'm not sure what to say Capel,

I can't understand the above statement.

Bush and the Republicans are lobbied hard from all points of industry. He received a lot of support from the business sector for his reelection. Bush doesn't have the support of Unions or Education or the traditional Democratic organizations. He gets his support from Business. I can't imagine that they would do that if Bush was so insulated from them that he only cared about oil. If you are interested there is a plethora of information on the internet of Bush's efforts on behalf of US industry.

You can make what ever assumption you want. I suppose no president has ever represented US industry or the American people if that is what you want to assume. I find no evidence to assume that a Republican president doesn't care about US industry. On the contrary I see him pushing hard for industry in many areas. Perhaps you didn't know about Bush's efforts on behalf of the Steel industry. Bush Turns Protectionist for Steel Companies Perhaps you didn't know of Bush's efforts on behalf of US Trade BUSH ADMINISTRATION OFFICIAL LEADS U.S. INDUSTRY DELEGATION TO GENEVA, BRUSSELS maybe you don't know that Bush has been critisized for being too much of a protectionist for US industry George W. Bush, Protectionist

Then the Bush administration, in cahoots with the lobbyists—as on steel and logging—had the Commerce Department declare that Vietnam, as a "nonmarket country," was "dumping" catfish in America. They did this by claiming that the industry sells below cost (which, by the way, is great in any case!).

Textiles is another case. Like the steel industry a few years back, the US textile industry is claiming that it has fallen on hard times, not because of inefficiency, they claim, but because of cheap foreign imports from China. Now, textiles certainly rank among the most protected industries in the US, but it hasn't helped. The industry does indeed continue to struggle because it demands more for its product than the world market will bear.

After all, the great crime of which China stands accused is selling at low prices. All the prattle about "slave labor" and "human rights" problems is designed to mask this core complaint, as well as mask the goal of keeping clothing prices high for American consumers. In short, the smear campaign against the Chinese textile industry has about as much merit as the claims made against Vietnamese catfish.

The trade data tell the story. From two years ago, China's market share in textiles has grown from 9 percent to 45 percent. Four products in particular are in dispute: bras, gloves, knit fabrics, and dress gowns. The industry is pushing for a quota on all four. Will the Bush administration go along? The deputy assistant secretary of commerce says yes. If so, American consumers are going to be denied the benefits of the international division of labor, and thus fleeced.

A recent case concerns South Korean computer chips. The market for computer chips was once dominated by American companies, but now everyone has gotten in on the act, which is one reason innovation and prices continue to improve. In particular, South Korea hosts Hynix Semiconductor, which makes a wonderful dynamic random access memory chip, or DRAM. The problem is that this pits the company against US chip maker Micron Technology, which claims that Hynix is competing unfairly by benefiting from government subsidies.

What's the answer? In a free market, the answer is to improve one's product and become more efficient.

But when a protectionist administration is in charge, there's an easier route: file a complaint with the government and hope to skew the market in your favor. That is exactly what American chip makers have done, and they have swayed the International Trade Commission, which has approved antidumping duties of 45 percent, or perhaps as high as 65 percent, against South Korean chips.

Micron defends its action by invoking the old tired cliché about free vs. fair trade: "These actions validate that Hynix received billions of dollars in illegal subsidies, reaffirms that free trade must also be fair trade and demonstrates our government's commitment to enforce trade laws." How interesting that Micron finds the company that it tried to buy only last year to be so morally objectionable today.

The irony is unmistakable: claiming that its foreign competitors unfairly benefit from government help, the domestic competitor seeks and achieves special government help to keep its profits high! It is the ultimate hypocrisy. Who pays? The entire technology community, which is marginally more insulated from international competition, and US consumers, who must pay higher prices for computers as a result. South Korea is now appealing to the WTO for redress.

Finally, let us address the drug reimportation controversy. Everyone knows that pharmaceuticals are far cheaper around the world than they are in the US, due mainly to stringent patent laws that prohibit free-market competition and guarantee producers huge profits. However, these same companies also compete in real market conditions, by exporting their drugs to foreign countries at a profit.

These same drugs have been coming back into the US market and selling for much lower prices, which has given rise to demands that re-importation be blocked—at the very time when the Bush administration is imposing more medical socialism to lower the retail price of drugs!

The issue is very simple from the point of view of free trade. Should Americans be able to buy American-made prescription drugs from other countries at cheaper prices than they would have to pay in the US? Of course, the answer is yes. All that free traders are asking is that US firms be willing to let Americans buy US drugs at market prices when they are imported from other countries. The only possible reason to pay more would be if you want to dump vast sums of money on the US drug industry for no good reason. Consumers might want to—they can send Eli Lilly a fat check—but they shouldn't be forced to.
Now you can argue, as the author does, that protectionism hurts American industry in the long run but you can't argue that Bush is ignoring American industry. That is just demonstrably untrue.
 
One more thing, increases in oil will hurt the steel, logging, textile and fish markets that Bush has worked so hard to protect. How do you reconcile the notion that Bush wants to get rich at making oil and work to protect these industries? It just doesn't wash. Now don't get me wrong. Bush could very well want to make money at oil (you haven't proven this claim BTW and I'm assuming you won't beyond some wink, wink, nudge, nudge notions) but he knows better than to flush the whole economy down the drain to make himself rich. You can believe other wise but the evidence belies your belief.
 
Mycroft said:
It works either way. The US gains control of expensive oil...or it brings down the price of oil it needs to keep its economy going. No matter how you slice it, it can be made to seem as the end result of some conspiracy or another.

Exactly. Seems like an inevitable conclusion to me, too.
 
Skeptic said:
It's simple, Rob. If the USA goes to war in the middle east and oil prices drop, then it was all an evil conspiracy to get oil. If the USA goes to war in the middle east and oil prices rise, then it was the stupid Chimp Bushitler messing around with armies without thinking of the obvious consequences to energy prices.

Simple, wasn't it?

More generally, you must remember that if the USA does X and then Y happens that is good for the USA, X was an evil conspiracy to screw the rest of the world for the USA's narrow interests; but if the USA does X and then Y happens that is bad for the USA, then X was a stupid blunder due to the stupid, short-sighted fanaticism of the bible-thumping convervatives.

Hope that help.

It may help if you actually study some mathematics and logic one day. The actual decision to go to war for oil was never guaranteed to either work or fail. If the prices went up or down, it does not matter. Oil was a major factor in the reason for the war.
 
The actual decision to go to war for oil was never guaranteed to either work or fail. If the prices went up or down, it does not matter.

Congratulations. You just made the "it was a war for oil" claim into religious dogma, imprevious to falsification no matter what happened to oil prices (or to anything else, for that matter).
 
Skeptic said:
The actual decision to go to war for oil was never guaranteed to either work or fail. If the prices went up or down, it does not matter.

Congratulations. You just made the "it was a war for oil" claim into religious dogma, imprevious to falsification no matter what happened to oil prices (or to anything else, for that matter).

Maybe you do need to get into some more serious study, instead of all those 'soft' areas like music and the arts.

Your logic in that statement was breathtakingly illogical.
 
Clearly higher oil prices hurt the US (and world) economy but the energy portion of the US economy is rapidly declining (14% in 1980 to 7% today), its impact is declining.

This temporary increase in oil prices could be a good thing in the long run. If consumers and business start buying more efficient stuff (e.g. cars and factories), this is good in the long term. High prices also encourage research into other energy supplies.

Also, remember when oil prices fall (and they will fall), it will be a short term boost for the economy.

CBL
 
RandFan said:
I'm not sure what to say Capel,

I can't understand the above statement.
My point is simple. It's disconcerting that your assumptions may be so deep-rooted you can't register a point that questions them. Constant vigilance and all that.

My point is that sectional interests - in this case, oil interests - may be defining so-called national interests. That may be down to naivety, the "What's good for GM is good for America" effect. Policies which benefit them, their families, most of the people they mix with socially can easily be mistaken as beneficial for all. They may also be more cynical reasons. If that were the case - and it surely should be considered - how would things look any different?

Bush and the Republicans are lobbied hard from all points of industry. He received a lot of support from the business sector for his reelection.
And, with his rich-oriented tax policies, he pays them back handsomely. They might have discounted the down-side of sectional policies against that very clear and present benefit.
Bush doesn't have the support of Unions or Education or the traditional Democratic organizations.
His protectionist policies are aimed at changing that. Not that he really needs them, as it turns out.
He gets his support from Business. I can't imagine that they would do that if Bush was so insulated from them that he only cared about oil. If you are interested there is a plethora of information on the internet of Bush's efforts on behalf of US industry.
The effectiveness of which can be seen in the trade deficit.

You can make what ever assumption you want. I suppose no president has ever represented US industry or the American people if that is what you want to assume.
It's a mistake to think that there is any one best set of policies that balances everybody's interests with exact justice. There are all kinds of trade-offs : capital/labour, primary production/manufacturing, trade/ production, polluter/polluted, finance/debt-peons, and so on. Plenty of room for sectional interests to intrude, especially if they are strongly concentrated at the centre of power. Which is, I think, the case with oil in the current administration.
I find no evidence to assume that a Republican president doesn't care about US industry. On the contrary I see him pushing hard for industry in many areas.
I don't buy the assumption that Bush is anything other than voter-friendly beefcake. I see no evidence that he has the slightest experience or understanding of industry (and I do mean that personally). There's plenty of evidence in neo-con literature that they don't care about US industry. There's a whole New Economic Paradigm, New Empire, New American Century. You must have heard. Industry justs leads to unions, and is best left to foreigners.
Perhaps you didn't know about Bush's efforts on behalf of the Steel industry.
Given the 3,000 jobs they cost just half-a-mile awy from me, and thousands more at Llanwern in Newport, funnily enough, I did. I also read the business pages.
... maybe you don't know that Bush has been critisized for being too much of a protectionist for US industry
Maybe you're a bit loose with the "maybes". I thought I came across as keeping up with worldly matters. I'm very well aware that protectionism has been one of the great constants of US history. Protection of steel waned very quickly when the US car manufacturers weighed in - something that the Bush team apparently hadn't reckoned on. Not much understanding of industry being demonstrated there.

Now you can argue, as the author does, that protectionism hurts American industry in the long run but you can't argue that Bush is ignoring American industry. That is just demonstrably untrue.
What does the trade deficit demonstrate? "White House Sends Someone on Jolly to Geneva" doesn't really get it done, does it? Things like a healthy, educated population, a good science and research base, a financial system that understands the needs of industry, tax-policies that encourage productive investment get it done.

Having a President who questions evolution and seems at his most comfortable among blissed-out believers in his god-given mission doesn't get it done either. It doesn't help when said President probably doesn't understand what's being done in his name. But his Saudi friends no doubt approve, and he's more in tune with them than with the average steel-worker. (Ooops, class politics creeping in there ...)
 
CapelDodger said:
My point is simple. It's disconcerting that your assumptions may be so deep-rooted you can't register a point that questions them. Constant vigilance and all that.
On the contrary, you are the one who seems to be unwilling to accept the evidence. It's disconcerting that you only respond with rhetoric when I have firmly rebuted your claim.

My point is that sectional interests - in this case, oil interests - may be defining so-called national interests. That may be down to naivety, the "What's good for GM is good for America" effect. Policies which benefit them, their families, most of the people they mix with socially can easily be mistaken as beneficial for all. They may also be more cynical reasons. If that were the case - and it surely should be considered - how would things look any different?
This makes no sense with your earlier claim that the Administration only cares about oil

And, with his rich-oriented tax policies, he pays them back handsomely. They might have discounted the down-side of sectional policies against that very clear and present benefit.
This makes zero sense. When oil prices go up all of the other industries suffer.

His protectionist policies are aimed at changing that. Not that he really needs them, as it turns out.
I'm sorry but this is incoherent. He needed business before his reelection and he needs business if he wants the Republicans to succeed.

The effectiveness of which can be seen in the trade deficit.
You can argue whether or not he has succeeded. The problem is that his protectionist policies belie your premise that Bush only cares about oil

It's a mistake to think that there is any one best set of policies that balances everybody's interests with exact justice.
Not a clue why you are making this argument. I don't disagree with it. It does not counter any of my arguments. It does not support your premise that the Bush administration only cares about oil

There are all kinds of trade-offs : capital/labour, primary production/manufacturing, trade/ production, polluter/polluted, finance/debt-peons, and so on. Plenty of room for sectional interests to intrude, especially if they are strongly concentrated at the centre of power. Which is, I think, the case with oil in the current administration.
You fail to make any link. You are simply stating rhetoric and then making a claim. Could you please make an argument in support of your premise?

I don't buy the assumption that Bush is anything other than voter-friendly beefcake. I see no evidence that he has the slightest experience or understanding of industry (and I do mean that personally). There's plenty of evidence in neo-con literature that they don't care about US industry. There's a whole New Economic Paradigm, New Empire, New American Century. You must have heard. Industry just leads to unions, and is best left to foreigners.
More rhetoric. Could you please make an argument. I'm not really interested in your rhetoric at the moment. Don't get me wrong. I might be interested in having a discussion if you would first focus on the issue at hand.

Given the 3,000 jobs they cost just half-a-mile awy from me, and thousands more at Llanwern in Newport, funnily enough, I did. I also read the business pages.
Then why on earth would you claim that Bush only cares about oil. It simply does not make any sense.

Maybe you're a bit loose with the "maybes". I thought I came across as keeping up with worldly matters. I'm very well aware that protectionism has been one of the great constants of US history. Protection of steel waned very quickly when the US car manufacturers weighed in - something that the Bush team apparently hadn't reckoned on. Not much understanding of industry being demonstrated there.
So what?

{sigh} Look, I don't like Bush's protectionist policies. I'm not arguing that they are good or bad. I point them out for one reason and one reason only. It IS clearly demonstrable that Bush cares far more about US industry and trade than oil.

What does the trade deficit demonstrate?
It is not relevant.

1.) It does not refute my argument.

2.) It does not support your argument.

"White House Sends Someone on Jolly to Geneva" doesn't really get it done, does it? Things like a healthy, educated population, a good science and research base, a financial system that understands the needs of industry, tax-policies that encourage productive investment get it done.

Having a President who questions evolution and seems at his most comfortable among blissed-out believers in his god-given mission doesn't get it done either. It doesn't help when said President probably doesn't understand what's being done in his name. But his Saudi friends no doubt approve, and he's more in tune with them than with the average steel-worker. (Ooops, class politics creeping in there ...)
More rhetoric and no argument. I'll be waiting for an argument but I'm guessing I shouldn't hold my breath.

I'm sorry but what a waste of time that was. Can't you just support your premise (prove your claim) or at the least rebut my argument?

Finally, could you skip the rhetoric? It's getting old.
 
Yup, boy those were the good old days when Saddam was undercutting the oil market to bribe the folks at the UN with Oil-For-Food vouchers. Yeah, gas was cheap and we all had SUVs. You know though, sometimes I kind of feel bad that he used the money to build palaces and prisons for the children of people he wanted to torture. Oh well, they were only Iraqis.
 
I should like to paint a target on me-wee-self at this time. I'll mostly sit back and let the arrows penetrate my logic, or lack there of. My reasoning is a follows...

Iraq really was partly because of oil, but not necessarily, completely, as a direct cause.

Probably Silly Train of Lister-Logic:
We need (to the point of reliance) oil.
We buy oil.
Middle East is a prime & somewhat necessary source of oil.
We (and many, many others) trade resources (in the form of dollars/etc) for oil.
Middle East governments have accumulated/continue to get those resources and become...resourceful!

...this is our starting point; where Bush enters stage left (or right, as the case my be). History has it's place, to be sure, terrible mistakes, near and far, can be illustrated, but this is the situation as it currently exists...

Middle East uses those resources to undermine and very seriously threaten our our (and other's) security/ government/etc.

...obvious (I think) train of logic follows...

We (and others) attempt to alter Middle East politics such that it does not undermine our (and other's) security.

Failing is not an option. If we do not "democratize" or otherwise placate this resourceful and seemingly determined political/cultural existance, then life sucks for us incredibly moreso than life sucks for them if we succeed.

Ready, aim, fire.
 

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