Saudi oil: “you will definitely see it”
An important figure in the OPEC era of the 1970s has stood up for Saudia Arabia’s manhood. A Thursday CNN story reports (update 11/25/2004: replacement link for that story) that according to former Saudi oil minister Sheikh Ahmed Zaki Yamani,
consumers all over the world were suffering the fallout of a buying bonanza by hedge funds, who for the moment see the energy market as the best place to make a fast return.
By contrast, OPEC is doing its best to get prices down as it frets that spiraling energy costs could hurt global growth….
“Prices are already too high. There is additional supply available from OPEC — you will definitely see it,” he said.
Saudi Arabia has at least one million barrels per day of spare capacity above its current production of around 9.5 million bpd, giving the world supply system some slack, he said.
This is in sharp contrast to statements earlier this week by OPEC’s current president who said, “The oil price is very high, it’s crazy. There is no additional supply.”
In Thursday trading, on bad Yukos news and new skepticism about OPEC’s supply abilities, oil returned to record territory after a late-day slump on Wednesday. Stocks were hit by the oil news on Thursday as well, with the Dow taking a 1.6% bath.
Today could be another wild one. A refinery fire in Texas likely will cause a gasoline price spike. Meanwhile, crude is pushing $45.
The wild swinging of oil prices and rhetoric concerning the oil supply clearly has ramped up this summer. In the Bloomberg story linked above, a frenzied analyst is quoted:
“This market is a runaway freight train”, said David Aleman, managing director of Axis Trading Co. in Beverly Hills, California. “There are so many different stories and they all seem to be bullish. A lot has to do with fear of the unknown”.
All this is still seen by the vast majority of American citizens through the frame of entitlement to unlimited energy supplies. Boy will a lot of people be surprised when it becomes clear that limits have been reached.
Note: The new ASPO Newsletter for August is available. It contains a wealth of information and opinion about the larger world oil/gas situation.
August 6th, 2004 at 16:28
Having been one of those folks who turned down the thermostat, eschewed air conditioning and appreciated it when Jimmy Carter put on his sweater and told us to conserve voluntarily now for better energy and human rights future around the globe, I’ve deplored the wanton policies that won out over his sensible ones back in the 80s. So here we are. One bright spot is that I believe Kerry has been preparing for this day and how to negotiate our way toward a future that was rejected when voluntary but has now become necessity.
August 6th, 2004 at 19:30
Yes. There is a definite link between “wanton”, spigot-wide-open energy polices; and human rights and war. In 1991 I published some fairly extensive comments about the energy backdrop behind the first Gulf War. That article has been posted here.
August 6th, 2004 at 20:02
Oh, I’ve had a pretty extensive post in process on the Kerry energy plan — and it is a significant, solid plan. It’s “balanced”, in that oil/gas drilling (everywhere except ANWR, is a big feature that isn’t exactly an environmentalist’s dream. BUT, there will be a point where everyone’s going to realize that oil/gas development is a necessary evil. Personally I’d rather have a Kerry administration in charge where, unlike spigots-wide-open Cheney, some effort at demand control will go hand-in-hand.
August 9th, 2004 at 06:44
I’ll be interested to read your post on the Kerry plan. And thanks for the link to your article on the 1st Gulf War.
August 10th, 2004 at 15:51
cs, you’re welcome. As of this morning (Tuesday), I’m still trying to digest the new energy plan release from Kerry/Edwards that appeared last Friday. Initial impression: There is plenty here to horrify an environmentalist, public lands advocate, nuke activist, or critic of government subsidies to big-time agribusiness. Some of it is just plain bromide: eg “Make America independent of Middle East oil” (nothing they propose will come even close to doing that, short of the pie-sky promise of the futuristic “hydrogen economy.” On the other hand, there are concrete, positive steps toward sound public policy on energy efficiency, conservation, and energy tech job creation. So there is some realism here, and we’re gonna need that worse than ever by the end of President Kerry’s first term in January 2009.