OPEC Wants Oil Price `Solution' From Saudi Meeting

[Divine Discontent]

Source: Bloomberg

June 11 (Bloomberg) -- OPEC wants a ``solution'' to end record oil prices and an examination of the role of speculators when governments of consuming and producing countries meet later this month in Saudi Arabia, OPEC's secretary general said.

Heads of state from the Organization of Petroleum Exporting Countries, their counterparts from importing nations and bank executives have been invited to attend the June 22 meeting in Jeddah to discuss record energy costs that Saudi Arabia, the world's largest oil exporter, says are ``unjustified.'' A previous gathering of world energy ministers in Rome two months ago didn't solve the issue, OPEC Secretary General Abdalla el-Badri said.

``This one is different. This one is specifically to tackle the high oil prices, why they are high, who is to blame,'' el-Badri said today in an interview in London. ``Is this a real shortage in the market, or speculation, or the dollar? What is wrong?''

Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=anNboAkSKHGs&refer=home

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:rofl: sure... they love Lil Boots, he's the greatest thing to happen to them.



New Obama Items & Anti-Bush/McSame items!
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[Bok_Tukalo]

1. I will go with "the dollar"

<OPE>

[Hydra]

2. Ya, OPEC's got to be loving this

And Bush is too- each time oil jumps, the oil stuck beneath the sands of Iraq gains in value, of which we expect to take 75% of.

[David__77]

3. Oil prices aren't too high.

Where are they getting this? Oil is crucial from an economic standpoint, and demand has greatly increased with economic development in China and elsewhere. What's the mystery?

[nebula]

4. BS

it has little to do with supply and demand when oil companies are taking in 40 billion in profits per year since Bush took office.

[Terry in Austin]

5. Bzzzt! Point goes to David

> it has little to do with supply and demand

Factual error.

[nebula]

6. Wrong

well over half of what you pay at the gas pump is pure profit for the oil companies.

[Divine Discontent]

9. Shhhh! some don't want the truth to be know

and some are even either paid to spread that viewpoint, or, reap a financial gain if it keeps going up... My bro and I were talking about this - the gas companies make a rather hefty profit from gas. I know many people decry it, but I think we should sometimes have nationalized gas because all the profit margin should be wiped away - I know it's a huge mess to change it all, but we're letting these SOB's run the country otherwise...

[Terry in Austin]

10. ooo - the truthiness is SO in you!

And those cursed scoundrels who get paid to disagree with you!

M'kaaaaay...

:tinfoilhat:

{Damn, where's my check, anyway?!}

[Divine Discontent]

11. ha!

well, at least it's interesting to note, I replied to him, and yet you responded...

your check is never coming, just so you know - they lie. LOL

[Terry in Austin]

13. Nailed me!

Now, I gotta go kick some deadbeat speculator butt...

[Psephos]

15. Got a source for that? n/t

[nebula]

17. Exxon alone netted $40 billion in profits last year.

according to CNN Money. And that's just EXXON by itself.

I don't even want to ask what the industry as a whole took in.





"Exxon also set an annual profit record by earning $40.61 billion last year - or nearly $1,300 per second in 2007. That exceeded its previous record of $39.5 billion in 2006.

In the fourth quarter, the company said revenue rose 29.5% from a year ago to $116.64 billion."

http://money.cnn.com/2008/02/01/news/companies/exxon_earnings/

[Angleae]

18. Wrong again

1 barrel oil appx $135
1 barrel oil = 42 gal (48 gal refined)
1 gal refined product (gas) = $2.81
Appx price retail $4.03 (yes some places are higher, but this is average price nationwide)
Difference of $1.22 to pay employees, taxes, licences, transportation costs, storage costs, distrubution costs, etc.

50% profit my ass

[nebula]

8. High School Economics lesson

Attributing the sky high fuel prices to supply and demand...implies a substantial shortage of supply that would justify a sharp increase in price. but there has been no indication of shortage of supply, no problems with supply anywhere. no gas lines, no rationing, Shell and Exxon aren't losing any money, etc. nothing that would indicate any problems with meeting the demand.

there has been only a steady, sharp increase in price with no accompanying drop in supply. therefore, the current skyrocketing fuel prices cannot be attributed to a a supply and demand problem.

[Terry in Austin]

12. College economics lesson

You need to quantify generalities like "sky high," and watch the straw men -- yes, gas lines and rationing have occurred in cases of extreme shortage, such as those in the 1970's, but the absence of them is not good evidence of adequate supply.

there has been no indication of shortage of supply, no problems with supply anywhere.

That assertion is not supported by anything you say. Make a case -- don't just make pronouncements. In fact, there's a strong case to the contrary.

Now. Demand for oil is a rate. Roughly 85 million barrels per day. It increases every year, on an average of 1.5%.

Supply is also a rate, and in order to avoid a shortfall, it must match or exceed the rate of demand. It turns out that the rate of oil production -- supply -- has been flat, not increasing, since 2004. In fact, it has been slipping a little, the difference being made up by reserves and "stunt" liquids -- condensates, syncrude, ethanol, etc.

Read all about it. Check the EIA. Numbers are your friends. If you know any sources with numbers you think are better, then by all means share them with us.

So -- we've got some numbers saying that oil supply is flat (at best), creating a situation where supply does not expand in response to price increases. Meanwhile, demand is growing at 1.5%. Something's got to give in order to restore equilibrium.

That's where demand destruction comes in. The price goes up enough to make people use less.

Crucial question: how much is "enough?" It turns out that the answer is not just a matter of opinion or guesswork. Economists quantify it with a factor known as price elasticity. The price elasticity for oil is around -.07, which means that it will take a 100% price increase to reduce demand by seven percent. Fully double the price for a mere seven percent reduction in demand -- oil is very inelastic.

We can leave it as an exercise for the student to calculate the "proper" price for oil, given the data on supply, demand and elasticity. Yes, you will find that it's somewhat under this week's price. The rest is undoubtedly trader shenannigans. A few percentage points' worth of ill-gotten gains, yes, but that's not the main story.

The main story is this: worldwide decline of oil supplies. Permanently. We've got a major habit that we're having to kick. Get used to it. Good luck.

[nebula]

14. What a bunch of meaningless mumbo jumbo.

am I supposed to be impressed? lol.

[Psephos]

16. good post n/t

[bluesmail]

7. It costs billions to plan and execute a World War. n/t

[Javaman]

19. secret recording from meeting found!

OPEC member: so we made enough now to convert our whole nation over to solar, right?

other OPEC member: yes! and not only that, we will have enough power left over to sell to the US!!!

OPEC member: suckers!!!