NYT: Oil Prices Rise Amid Signs of OPEC Cuts (Bodman will be in touch)

[DeepModem Mom]

Oil Prices Rise Amid Signs of OPEC Cuts
By JAD MOUAWAD
Published: October 5, 2006

The oil market was unnerved today by speculation OPEC was considering cutting its production to stem a recent decline in oil prices.

After jumping as much as 2.5 percent early on, oil prices narrowed their gains this afternoon.

A decision to cut production is still being discussed by oil ministers from the 11 members of the Organization of Petroleum Exporting Countries, which are considering whether to hold an emergency meeting in coming weeks, an OPEC delegate said.

Some news organizations, including The Financial Times and Reuters, citing unidentified OPEC delegates, said the organization planned to cut production by one million barrels a day, a reduction of nearly 4 percent from its current level of 27.6 million barrels. Most of the cut would come from Saudi Arabia, although most other OPEC members would also pare their output.

But there were conflicting reports from various representatives of OPEC’s member nations, including Kuwait, who said no agreement had been reached. OPEC’s president, Edmund Daukoru, said the group was considering an emergency meeting this month to decide on its output levels ahead of the next scheduled meeting in December....

***

A move by OPEC to curb oil production is certain to draw angry reactions in Washington, where falling oil and gasoline prices had been seen as a rare bit of good news for the Bush administration less than five weeks before the midterm elections. Energy Secretary Samuel Bodman said he would be in touch with OPEC representatives to drive that point home....

http://www.nytimes.com/2006/10/05/business/06opeccnd.html?hp&ex=1160107200&en=5edce472ed633fe7&ei=5094&partner=homepage

[David Zephyr]

1. Yep. Soon as the election passes, prices will rise.

This is why utility companies have not lowered their rates in spite of energy price declines. They know that they will only be going right back up and soon.

[The_Casual_Observer]

3. Nobody is talking about the winter heating oil demand yet.

They are putting that off until after the elections.

[scarletwoman]

2. As Spock would say, "Fascinating." And I say, "Raise the price, OPEC!"

I am absolutely and unequivocally willing -- as a single mother putting a kid through college who makes less than $24,000/year -- to take the financial hit of higher oil prices if it means weakening the hold on power of the bush* regime and the GOP.

As far as I'm concerned, it's the least I can do toward saving my country from fascism, and I'll do it willingly and happily.

sw

[Ignacio Upton]

4. Sadly, you're right

I don't want oil prices to go back up to $78, but having them at $68-$70 would be good for us. It's unfortunately that in spite of Bush's failures, there's a segment of the electorate that will vote for him based on oil prices by themselvs.

[Javaman]

9. Hell, I want it up to 100 bucks!

Until this country gets a rude ass wake up call, living in a fantasy land ain't going to fix anything.

If oil got that high you would see in a heart beat a demand for a real energy policy, solar panels and wind turbines would drop in price and the return of real public transportation would be taken seriously.

As long as we keep the price of oil below 70 bucks, nothing is going to change.

How much do you hear in the news now about hybrids, solar, wind or other forms of converting? nothing, as soon as prices dropped it all vanished off the radar.

[ShockediSay]

5. Please reply if you don't think drop in oil prices is due to election

& BusCo OilCo contributors trying to get Repugs re-elected

[Telly Savalas]

6. Then why are they raising them before the election?

[pampango]

13. The alternative conspiracy theory is that Bush/GOP/Big Oil has given up...

on this election and is already boosting the price of oil and gas, so that they can line their pockets with the obscene excess profits that result.

The secret to this whole conspiracy theory flexibility is to check out the day's market price of oil, then go into your files and pull out the appropriate theory. I can predict that if OPEC cuts back production or a hurricane suddenly shows up in the Gulf or the rebellion in the oil-producing region of Nigeria flares up again, the price of oil will go up and then the oil profiteers are at work. If the opposite happens and he price of oil goes down, electoral conspiracies will rule the day.

Bush has screwed up enough real things in the country and world for us to focus on, without giving him paranormal powers to control the tides, the direction of the wind, and how fast my grass grows. Some stuff just happens.

[bhikkhu]

7. And there remains the possibility that this is "spin" on the inevitable

That is, if, as is often rumored, the production capacity of various old middle east fields is in decline, then what is the best way to explain this decline without giving ammunition to peak oil theorists? Claim that production must be cut to prevent a supply glut. In fact, the middle east and all other regions as well have been producing flat out for the past year, reaping record profits. But production has been flat - no significant increase for a year, and the decline of aging fields under modern extraction methods, if the North Sea is a model, can be quite rapid.

[maseman]

8. B*** can't really change the price of gas

except the US reserves stuff. OPEC has the control of fuel. Now I'm sure B*** has friends at OPEC he can call and might be able to influence, but he doesn't have the direct control.

Prices always fall after labor day and before the Winter heating season. It has been a mild fall so far (my heat went on last night for the first time). Our fuel went from $1.97 to $2.15 overnight. When that pump reads anything over $2 people are pissed.

[GliderGuider]

12. Careful, don't confuse the prices of gas and oil

Even though one is made from the other, there are a few different factors in play that influence their prices. For example, gasoline prices may have been influenced by Goldman Sachs recently changing the makeup their main commodity index (the GSCI), de-weighting gasoline quite heavily. This would have forced many American funds that track that index to sell three quarters of their gasoline futures, thus possibly depressing the US market.

The global oil market, by contrast, is very hard to manipulate on the purchase side. Only the oil producers can influence the prices very much, and then only be withholding production since there is virtually no no excess production capacity left in the world. That means that producers can force prices up from a market equilibrium, but can't really force them down.

[GliderGuider]

11. Sing it, brother!

There's a better than even chance that this is exactly what's happening. Do you follow The Oil Drum?

I fully expect the upward trend in oil prices to resume shortly, and I don't think this little price dip has anything at all to do with the US election. My take is that the recent drop was an overreaction to the various "fear premiums" (hurricanes, war with Iran) coming out of the price. Demand doesn't seem to be dropping overall - US demand is off 1.3% comapred to last year, but China is still hustling along, and filling their own SPR into the bargain. I do think we'll see a resumption of the upward pressure in a month or so, just in time for the speculations about Bushco price manipulation to hit fever pitch. In the long run this dip has no significance whatever. With all four of the world's largest oil fields in decline, Cantarell set to crash by 75% by 2008, North Sea production dropping by 15% per year and half the world's crude oil already gone, the probability that these declarations of "voluntary production cuts" are a smokescreen is quite high.

[bhikkhu]

16. Not so much Oil Drum as Energybulletin.net

More variety in digest form.

[LeftHander]

10. I think this proves that the administration is manipulating oil prices..

The oil prices started falling coming into the election after being ARTIFICIALLY inflated for months. U.S. oil companies have had record profits for months.

Now with prices "mysteriously" falling. OPEC steps up and says...WAIT a minute we like the high prices you made...so they cut production to show us all who is really in control of prices. Not the weather, not the "good news" in Iraq...not fat oil compnay execs. No those that control the spigot control the real prices.

The American people have been played like a fiddle by the GOP and their rich oil soaked backers.

The sooner we seperate money from those that represent us the better.

[allisonthegreat]

14. perfect explanation...agreed!

[bhikkhu]

15. That would presume that "those who control the spigot" back *.

As the are chiefly in the newly-plunged-into-chaos middle east, I doubt it.

It would also presume that "those who control the spigot" are more concerned with US politics than their own profit margins, which is also highly unlikely.

The more probable fact is that the "spigots" have been left wide open for years now, and no longer flow as abundantly. Political machinations are secondary to geological realities - only the spin remains.