Pressure cooker for oil

[Tom Yossarian Joad]

By SUDEEP REDDY / The Dallas Morning News

If war in Iraq was supposed to yield a more reliable supply of oil for the world market, it didn't work out that way.

The petroleum picture at the beginning of 2004 bears a startling resemblance to the situation a year ago. Inventories remain low, and crude prices are still over $30 a barrel.

Only minor relief is in sight, analysts say. As the world economy gains strength, rising oil demand is expected to keep supplies tight.

The oil market survived major disruptions in 2003 in the Middle East, South America and Africa, but with consequences felt in almost every corner of the globe.

More: http://www.dallasnews.com/sharedcontent/dallas/business/stories/0104dnbusoilwrap.136ad.html

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[Bad Thoughts]

1. Iraqi oil supply in danger

At least part of the answer is that environmental improvements need to be made to the Iraqi oilfields before they can be tapped extensively. This NY Times article from November should give a good summary of what the problems are, claiming that more investment will be reqired.

[Tom Yossarian Joad]

3. Welcome to DU....

They've archived the article unfortunately.

[Bad Thoughts]

4. Sorry, ...

... I don't have access to the article either. It comes from November 30, 2003.

[Dogmudgeon]

2. Well, smack my a** and call me 'Dubya'!

We've known since 1997 at least that Saddam and our own/owned petrology "experts" had over-estimated the amount of Iraqi oil by at least a factor of three. Now we've got the pumps running again, and ... oopsie!

I suspect that the timing of all this is in response to a very uncomfortable fact -- that right about now, oil is going to become progressively more expensive to pump out of the ground, since we've used up all the easily-tapped oil. No, it doesn't mean that "all the oil is gone," it simply means that we will have to work (as in, pay) to bring it to the surface.

What better way to keep the price of oil artificially low for a little while than to have an entire world market crunching its numbers based on a big lie?

This, too, is part of the PNAC plan. We will take complete control of the world's oil supply, and then we will break the bad news. That way, when we have to make big changes in the way we live, Team Bush can implement that dictatorship they're so keen on.

Conspiracy -- or sound business sense?

--bkl

[midnight armadillo]

5. Higher prices increases supply

Higher oil prices increases oil supply since wells that are less productive will become profitable to operate again.

This only works to a point, it is possible to spend more energy extracting oil than you can get from the oil :-)

[peterh]

6. This is very true….

Greed tends to be a very reliable variable among a host of variables that are factored into various forecasts….short-term & long-term. The lure to capitalize is often to great even for the most discipline. Case in point:
OPEC's output ceiling since Nov. 1 is 24.5 million b/d
OPEC will have produced 27.74 million barrels a day in December (this figure includes Iraqi production which is not included in the official ceiling of 24.5)…
Excluding Iraqi production…. OPEC-10 produced about 1.34 million b/d over quota in December

One should also take into account that OPEC’s world market share has dropped to 35%, compared to a long-term average of 42% and there are rumblings that OPEC would like to recapture some of the lost share.

But….with the continued level of instability that we have in the ME, that particular premium that gets factored into the price, isn’t likely to decrease anytime soon.