OPEC president: Oil cuts likely if no price rally

[Pale Blue Dot]

Source: Yahoo Finance

ALGIERS, Algeria (AP) -- OPEC nations could further reduce oil output if moves last month to slash production do not bolster plummeting oil prices, OPEC president Chakib Khelil said Saturday.

Khelil, who is also Algeria's energy minister, said an OPEC report would show by the end of the month whether all cartel members have enforced the daily 1.5 million barrel reduction decided in October.

He said he hoped the production cut would raise and stabilize prices at a level manageable for both oil-exporting countries and consumer nations.

Reasonable prices should range "between $70 and $90 per barrel," said Khelil, who currently holds the rotating presidency of the Organization of Petroleum Exporting Countries.

Oil prices have traded at around $60 a barrel this week. On the New York Mercantile Exchange, light, sweet crude for December settled at $61.04 a barrel on Friday, but the contract dropped below $60 in overnight electronic trading for the first time in 19 months. That was down dramatically from record highs of more than $140 a barrel in July.

Read more: http://finance.yahoo.com/news/OPEC-president-Oil-cuts-apf-13510172.html

[glowing]

1. What's wrong with cheaper oil? Why are they trying to manipulate the price.

Wasn't it like $40.00/ barrel back in the day? I guess the green, does mean something to these guys... Just think.. if we are energy efficient and do not have to rely on foreign oil for our energy needs in 10 yrs, all that fighting in the deserts of the ME will have NO meaning.

[Junkdrawer]

2. Why do you think Rockefeller sold Aramco to the Saudis in 1972?

If Rockefeller manipulated oil prices, anti-trust laws would kick in.

But the "Saudis" are beyond US anti-trust laws.

Clever, no?

[louis-t]

8. Why? Sole purpose of OPEC existence is to control production

to keep price stable (read 'high').

[Psephos]

21. Because they are greedy and don't care about you in the least. n/t

[Lucky Luciano]

22. $40/barrel was considered extremely expensive before

fuckface invaded Iraq.

Before the invasion, OPEC said that $25-$35 was a reasonable price. I will grant that it should maybe be $40-$50 now that India and China consume significantly more than they did 6 years ago, but still...come on...$70-$90? OPEC can blow me.

[ben_meyers]

3. Reasonable prices should range "between $70 and $90 per barrel?

Based on what criteria? The price, absent market manipulation by OPEC and speculators, is what someone is willing to pay for your product.

It will be fun watching Obama beat these jerks down and put them in their place, no more Mr. Nice Guy!

[customerserviceguy]

5. The only thing that will beat the jerks down

is for us to slow down (or even stop) importing their oil. Alternative technologies are the best way to accomplish that!

[dantyrant]

6. OPEC has little control over price.

Ever since the bubble was blown (on wall street, by design), they've had very little effect. All they can do is jawbone(ie talk) and try to cut production. OPEC has been saying all along that they are not responsible for high prices. And they're right. High prices were caused by NY and London. Not OPEC, and not China/India... or at least, not to the extent suggested by all the screamers on CNBC.

I know it's habit to blame OPEC, because its something voters love to hear. Hillary did so during the campaign, and she knew OPEC wasn't at fault.

[Tandalayo_Scheisskopf]

4. Finny:

Every time they have tried something like this, both historically and recently, it has come to naught or less than naught. In fact, continuing down this path could well cause OPEC to spin apart. These countries need cash flow. If the world is in a grip of a recession, they will get excactly nowhere by exacerbating the recession and staunching their cash flow. Saudi Arabia, for all it's manifold faults, understands this and could be the pivot point for OPEC's going to bits. It is the smaller producers, like Libya, Venezuela and Iran, who are advocating for this. Each has an idealogical reason for their actions and desires, as well as, in the case of Venezuela, economic reasons. In VZ's case, funding their social revolution was predicated on other oil economic models, and they think they can strong-arm the world indefinitely. VZ also wants to demonstrate their power and ability to bring the US to heel on their terms, so as to make themselves some sort of exemplar in SA and the third world. Chavez has done many good things, but there is a dangerous streak of ego-centrism there.

Fat fucking chance.

If they keep this up, they are gonna be looking at a world economy that will only need much more time to crawl from the wreckage, they will have real wreckage of their own, and the real possibility of $20/barrel oil. Again.

[Fearless]

7. So now they're openly admitting that they price fix?

This has got to be illegal somehow. Right?

[Andy823]

9. The "bubble" has burst on oil!

The high prices we had this year had to do with speculators trying to make one last big killing in case the republicans were not in control next year. Well we all know that didn't happen, and the price has been dropping like a rock. I also agree with the other posters that we need to really get alternative energy sources in full swing so we can stop being dependent on other countries for energy needs. Big oil companies made "record" profits once again this hear, the biggest in history, and they have made record profits since Bush took office. They are hoping that the lower prices will stop any investment into renewable sources of energy, and we can' let that happen. Low prices at the pump are good for consumers, but if we don't come up with new sources of renewable energy, we will be right back in the same boat we were earlier this year, with gas prices over 4 dollars and up to 5 in some areas.

OPEC can try and cut output to raise prices, but they are making a lot more now at 60 dollars a barrel than they were back when Bush took office, it's just the "greed". Once they got a taste of 149 dollar a barrel oil, they want more.

[geomon666]

10. Jesus H. Christ!

They've just openly admitted to price fixing. "If you won't charge more, we will." Greedy fucking pigs!

[Lucky Luciano]

23. Of course they price fix. That is why a cartel gets formed in the first place.

they have been open from the get go.

[Dover]

11. I'm confused. First we're told that reserves are dwindling and countries

are scrambling to secure supplies with the suppliers. Now suddenly no one WANTS oil/gas?

Have we and other countries colluded to purposely cut imports in order to force prices down?
If so, it seems that can only be a temporary fix. We'll have to dig into reserves. And they will just counter that by cutting back supplies further to increase price.

OR is this a result of removing market speculators from the equation?


AP
11/3/2008, 1:34 p.m. EST
...Looking back, it appears speculators led by loosely regulated hedge funds drove oil prices to artificially high levels. Analysts report those same hedge funds have helped bring prices down as they sell what they can to cope with the global credit crisis.

http://www.mlive.com/newsflash/index.ssf?/base/news-59/1225737555259400.xml&storylist=newsmichigan

At any rate, it seems oil/gas is the new weapon of choice.

[Career Prole]

12. On the bright side...

Oil left underground does only good for the environment. If they cut production it will spur the necessary move to development of alternate energy. With our new administration that will be the probable reaction.
With our old administration (or a Gramps McCain/Caribou Barbie administration) OPEC production cuts would have led to more threats, more lies, and more wars.

[Dover]

15. True, although if there is a production crisis then it's also possible that

it might force us into less sustainable quick-fixes like more coal, nuclear, etc...at least initially... until a more sustainable model and infrastructure can be put into place.

It's a tightrope balancing act.

I sure hope we invest heavily in r&d AND currently available alternative solutions so we can avoid a long interim use of 'old' energy sources, and create plenty of incentives for individuals to equip themselves with sustainable technology and energy efficient solutions.

[Dover]

13. Obama unveils clampdown on oil speculators

Jun 22, 2008

WASHINGTON (AFP) — White House hopeful Barack Obama attacked energy speculators Sunday, outlining new regulatory proposals that his campaign said would slash record-high oil prices and help hard-pressed consumers.

The Democrat attacked the so-called Enron loophole, a 2000 deregulation of oversight by the Commodity Futures Trading Commission that critics say opened the way to a speculative free-for-all in the oil markets.

"For the past years, our energy policy in this country has been simply to let the special interests have their way -- opening up loopholes for the oil companies and speculators so that they could reap record profits while the rest of us pay four dollars a gallon," Obama said in a statement.

"My plan fully closes the Enron loophole and restores common-sense regulation as part of my broader plan to ease the burden for struggling families today while investing in a better future," the Illinois senator said...>

http://afp.google.com/article/ALeqM5jNJjgKkHGZkk3FAyRTqcgpJx_kdw

[magellan]

14. They're going to be really bummed when dollar inflation hits

Hits more, I mean. You can't print money the way the Treasury's been doing since 2005 to pay for Bush**'s war and tax cuts and to hide the rising trade deficit and not pay the piper.

[Dover]

16. Well many wanted to move away from the 'petrodollar', and knew the consequences.

Declining dollar translates to rising prices (for us) as per our exchange rate.


http://en.wikipedia.org/wiki/Petrodollar_warfare

[magellan]

20. One thing is for certain

We've only had a taste of high gas prices -- a hint of the heartburn to come. The mess Bush** is leaving behind is way bigger than most Americans realize.

I wonder how much Obama has been told so far about this....

[Zorra]

17. Uh-oh. Here comes the global corporate post-election oil price hike.

Bet they're really gonna punish us for not electing republicans. And if our new President Obama regulates oil speculation, the oil globalists will really sock it to us.

We absolutely have to wean ourselves off dependence on oil, or they will always control us economically, hence politically as well.

We really need to get the alternative energy systems going ASAP so these global corporate scumbags can't hold a gun to our heads anymore.

[benld74]

18. Translation:WE WANT MORE OF YOUR MONEY and since

the cowboy won't be in charge any more, we're going to raise your rates.

[Dover]

19. Well, if the dollar is worth half of what it used to be valued at, then oil prices would double.

So perhaps it simply comes down to the falling value of the dollar relative to the exchange
rate.

It has been very convenient and lucrative to have oil priced in 'petrodollars', but that is changing.

Most oil sales throughout the world are denominated in United States dollars (USD).<1> Because most countries rely on oil imports, they are forced to maintain large stockpiles of dollars in order to continue imports. This causes demand for USDs to remain high, regardless of economic conditions in the United States. This allows the US government to gain revenues through seignorage and by issuing bonds at lower interest rates than they otherwise would be able to. As a result the U.S. government can run higher budget deficits at a more sustainable level than can most other countries.

It also means that the price of oil is more stable in the U.S. than anywhere else, since importers do not need to worry about exchange rate fluctuations. Since the U.S. imports a great deal of oil, its markets are heavily reliant on oil and its derivative products (jet fuel, diesel fuel, gasoline, etc.) for their energy needs. The price of oil can be an important political factor; American administrations are quite sensitive to the price of oil.

Political enemies of the United States therefore have some interest in seeing oil denominated in euros or other currencies. The EU could also theoretically accrue the same benefits if the euro replaced the dollar. However, the European economy could also be seriously damaged if the euro were to appreciate significantly against the dollar or other world currencies.

http://en.wikipedia.org/wiki/Petrodollar_warfare

[dipsydoodle]

24. Sound reasoning.

.

[excess_3]

25. the electric car is coming .n/t