US energy chief: Low oil production drives price

[maddezmom]

Source: AP

JIDDAH, Saudi Arabia - The U.S. energy secretary says insufficient oil production, not speculation, is driving soaring crude prices.

Secretary Samuel Bodman's comments Saturday on the eve of an energy summit in the Saudi port city of Jiddah set the stage for a showdown between the U.S. and conference host Saudi Arabia.

Saudi Arabia has largely blamed speculation in the oil markets for the record prices.

Bodman says oil production has not kept pace with growing demand for oil, especially from developing countries like China and India.



Read more: http://news.yahoo.com/s/ap/20080621/ap_on_re_mi_ea/saudi_oil_summit;_

[ixion]

1. if demand is out-stripping supply, WHY ARE THERE NO LINES?

where are the shortages that one would expect?

Not there. Much like a 'jobless' recovery, this is a "supply-side" problem with limited demand. :eyes:

[Mojorabbit]

3. Because people are

priced out of the market? In the 70's there was a panic mentality. I remember it. This is more like a slow boiling of the frog. Gas thefts are up which also happened in the 70's. I think it is a mix of supply and speculation personally.

[customerserviceguy]

10. It's been a long time since the 1970's oil price shocks

and even though I was there, it is difficult to remember the details of those times. Oh, I remember waiting in lines, and the flag system and all that, but I don't really remember the details of what government was doing or not doing.

Perhaps someone here has read a good book on it, nearly thirty years passing since the last of the crises in 1979-80 is a pretty good distance from which to get perspective. I'm really interested in why there were panic mentalities in the 73-74 and the 79-80 time frames, while there doesn't seem to be one at this point. I'm also interested in the differences between the way the Republican administration of Nixon-Ford handled things, versus the way the Carter administration did it.

[FarCenter]

22. There was emphasis on carpooling, setting up vanpools, etc

Filling stations would only pump 5 or 10 gallons into your tank in order to server more customers.

People could buy on even or odd days, depending on whether your license plate number was even or odd.

And companies were helping employees set up vanpools and car pools. This might be good to reemphasize these days, although it is probably easy enough to do on the internet.

[htuttle]

5. There have been shortages -- just not in the US

Right now, petroleum is effectively 'rationed' by it's high price. There are a lot of people who'd like to have more oil, but can't afford it. But if they could afford it, there wouldn't be enough to go around.

[Hannah Bell]

15. consumption is down in the us & europe, but up in africa, s. america, asia,

middle east:

http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/reports_and_publications/statistical_energy_review_2008/STAGING/local_assets/downloads/pdf/oil_table_of_world_oil_consumption_barrels_2008.pdf

total world consumption increase only 1.1%.

where are these "shortages"?

[tama]

27. The shortages are

where demand is up and not met by supply. In parts of Africa, S. America and Asia. Lot of stories about shortages and lines in China and elsewhere.

[Hannah Bell]

34. "lots" uh-huh.

[robinlynne]

7. In the US, demand has decreased!

[Mojorabbit]

11. Wait till winter

I read that the heating oil stocks are at an all time low.I think that is when the real pain will start.

[Psephos]

16. Actually, US oil demand has declined by half a million barrels/day

Which is about 3% less than a year ago. The demand decline will continue throughout this year.

Meanwhile, gasoline consumption in 2008 will be less than in 2007 - the first time that's happened in 17 years.

There are tons of news stories on this. Here's one:

http://www.theautochannel.com/news/2008/06/20/090539.html

[belpejic]

12. Hmmm

Wonder why production is so low. Yes, there's a demand side issue, but if I understand correctly Iraq has just recently returned to its pre-invasion level of production. The Saudis are just getting on the clue train, and everyone in Central and South America is maxed out. Russia's adding to its coffers while it still can--they'll be tapped out in a few years.

[tama]

28. PO plateau

Russia has announced that it is peaking - extremely bad news for the oil addicted. Many areas in decline , decline so severe that new production coming on line can with great difficulty maintain the current level - peak plateau. More areas about to decline soon, e.g. Russia as mentioned. That means global production is about to start declining very soon.

But it's even worse than that. The producing countries have little problem to increase their consumption and that is what most of them are doing, which means even less oil available for global market. In fact, net exports of oil - what is available for global market and what dictates the supply side of the prices - has been in decline since 2005:


http://netoilexports.blogspot.com/

[Subdivisions]

20. Are you not aware that there are fuel riots happening all over the

world?

http://news.google.com/news?sourceid=navclient&ie=UTF-8&rlz=1T4GGLR_enUS264US264&q=fuel%20riots%20protests&um=1&sa=N&tab=wn

There is demand all over the joint that is not being met. We don't see lines here because we're willing to pay higher and higher prices to maintain our fat-ass lifestyles so it comes here by the millions of barrels every day.

Remember this: For every gallon of gas you burn, someone somewhere doesn't eat. Or worse.

[belpejic]

24. Very aware of it

I'm simply suggesting that oil producing countries haven't opened up the spigots, b/c they don't have to. No amount of handholding by the Chimp with Saudis will convince them to not ride this wave as long as possible.

[Hannah Bell]

35. Prices, not lack of supply.

Consumption has gone UP in the developing world - supposedly poorer, which would theoretically mean they'd be least able to pay the price.

Consumption has gone DOWN in the developed world, & that's where most of the protests are occurring. "Riots" is mostly hyperbole.

But nowhere are people unable to get supply.

[tama]

26. There are

in China and lot's of other places. That is how unmet demand manifests.

In US there is so far only demand destruction as increase in prices manifests as decrease in consumption - with loads of slack to cut.

[htuttle]

2. It's obviously both

I think the high price is due to demand exceeding supply AND speculation on top of that.

If there weren't buyers for all of the oil available on the market, then speculators wouldn't risk so much on high-priced oil. No oil futures speculator wants to get stuck having to actually take delivery of a few thousand barrels of oil and keep it in a warehouse or something. As it is right now, they can be assured that someone will be willing to buy their oil contract almost no matter what they paid for it.

[tama]

29. speculation = futures market

And the futures market predict higher and higher prices, causing the predictions to materialize - leading to demand destruction in USA and rest of OECD. Not much, but certainly better than "curing" the oil addiction by going totally cold turkey.

[L0oniX]

4. Again ...WTF is with Kuwait? We went to war for them and what are we getting for it?

:evilfrown:

[bronxiteforever]

6. Big Oil Mouthpiece-like a Mafia Lawyer -Bodman is evil incarnate

Pollution

Sam Bodman, CEO of Cabot during the coltan boom, was appointed in December 2004 to serve as President Bush’s Secretary of Energy. Under Bodman’s leadership from 1987 to 2000, Cabot was one of the U.S.’s largest polluters, accounting for 60,000 tons of airborne toxic emissions annually.<1>-see wiki entry on Cabot Corporation

Genocide

The UN report further alleges that Cabot purchased coltan from the DRC during the war. While Cabot has denied these allegations, a report by the Belgian Senate states that Eagle Wings Resources International had a long‑term contract to supply Cabot with coltan.<4> These actions taken by Cabot were said to be against the Organization for Economic Cooperation and Development’s (OECD) “Guidelines for Multinational Enterprises,” a set of international standards for responsible corporate behavior. <5> The conflict in the DRC, in which warlords and militias have funded themselves by control of the mining industry, has led to the deaths of more than 5 million individuals.<6>-see wiki entry on Cabot

"Boston-based Cabot Corporation allegedly purchased coltan from the DRC during the war. While Cabot has denied these allegations, a report by the Belgian Senate states that Eagle Wings Resources International had a long‑term contract to supply Cabot with coltan. Current Deputy Director of the Department of Treasury, Samuel Bodman, was CEO and Chairman of Cabot from 1997-2001."
http://www.foe.org/new/releases/84drccomplaint.html

[elocs]

8. I don't think there is enough oil for the billions in India and China to consume as we do here.

Supply now may be diminished simply by the millions more who are consuming oil and the amount of that consumption compared to 30 years ago. Also, there is no oil embargo to generate the type of panic buying there was during the Carter years. I think the rapid increase in the price of gas has caused people to cut back the amount they buy, thus lessening the impact of any diminished supply.

The bottom line is that the world does not have enough natural resources, not just oil, for the billions of people in India and China to have the kind of lifestyle that we in the West have enjoyed for decades. If in the U.S. we use 25% of the world's natural resources with our portion of the world's population, the pie is not big enough for India and China to have the same. That is a sad and simple fact of life.

[Schema Thing]

9. It's in the speculators', and the American Oil Co.' interest to have

people believe that the problem is supply. That way they can continue to make money with speculation, and use fear as a wedge to get what they want (leverage and positioning for the huge changes coming in the next 50 years).

[Barrett808]

13. The supply shortfall is real and will accelerate through the rest of this century:

http://www.theoildrum.com/tag/overview

[msongs]

14. repub bush liar spouting the buzz words - that is all catapulting the propaganda nt

[aint_no_life_nowhere]

17. Yup, it's all just a big magical coincidence

that the dollar has lost half its value in the last few years while oil has more than doubled in price. It's all a big coincidence that the real estate bubble and financials markets have burst, while commodities have become one of the few profitable areas of investment where speculators have flocked to invest.

Just big coincidences here, nothing more.

[tama]

30. Not coincidences but symptoms of something larger

Which is growth based system facing the physical limits of growth and systemic crisis of capitalism.

In other words, End Of The World As We Know It.

[alfredo]

18. How can you tell when a capitalist is lying?

[bulloney]

19. Seems to me Bodman is diverting attention from the speculators that are really causing the problem.

I've read that anywhere from 45 to 60% of the ownership of oil stocks is held by speculative investors.

When it gets that distorted, there's no supply and demand in the equation.

[belpejic]

25. And they want to play

B/c of misguided US foreign policy. Who wouldn't want to speculate when the US is waving its johnson at every oil producer from the Iranians to the Venezuelans? We need new foreign policy, one that relies on diplomacy rather than saber rattling.

[bulloney]

21. It's not just gasoline and diesel fuel.

Plastics and other products are made from oil. But, I don't hear any talk about getting away from plastic-based products due to dwindling oil supplies. If anything, more things are being made from plastics. Look at the beverage containers, computer parts, car parts and on and on.

[tama]

31. What not?

Asphalt is made of oil. Car tires are made of oil. Everything is moved from A to B with oil. Western consumerist practically eats oil.

[FarCenter]

23. US = 25 barrels annually per preson, China = 2 barrels

US has about 300 million and China about 1,300 million.

So the US uses about 7,500 million barrels and the Chinese about 2,600 million barrels.

There is no particular reason why each person in China should not consume the same amount of energy as someone in the US.

If the Chinese consumption rises to 25 barrels per capita annually, you need another 23 x 1,300 million barrels a year. That is 29,900 million barrels per year or just over 81 million barrels per day of added production.

But world wide production is only about 85 million barrels per day and it is not increasing because old fields are declining as fast as new ones are coming on stream.

BTW, you can do the math for India (and the rest of the world) on your own.

[tama]

32. How many planets?

Don't know exactly, but lets say the current population with current consumption levels is already about 4x in overshoot, with ecological footprint requiring four Earths.

Meaning US alone, consuming about quarter of everything, has ecological footprint requiring one Earth only to himself.

[radfringe]

33. shortage mem?

just more crap from the bushies being used to justify give oil companies more land/off shore area where they won't drill

why won't they drill on acreage they already have? excuse: environmentalist groups blocking..

well if these groups are blocking, then what good does it do to give more acreage to oil companies - environmentalist will block those too

this is just more crap from the bushies and repubs - grabbing all they can while the grabbing is good