SAFE Calls for Government Action Due to OPEC Refusal to Increase Oil Output
Saudi oil minister Ali Naimi today announced that the Organization of Petroleum Exporting Countries (OPEC) will not increase output before the group's meeting in Abu Dhabi on December 5th. U.S. Energy Secretary Samuel Bodman had requested that the cartel, which ships 40% of the world's daily oil supply and possesses 75% of recovered oil reserves in the world, immediately increase production.
SAFE said that the world system for distributing oil is an anti-free market, collusive cartel in which up to 90% of all oil and natural gas reserves are held by government subsidized or owned oil companies that are controlled by those governments, denying free market principles to the oil industry through practices that would be considered illegal in the United States.
"Given these realities, Americans must accept that market forces alone will not solve our oil problems. Instead, government must spur and, in some cases, require private-sector responses. In light of this market failure, government intervention is not merely desirable -- it is essential," said Robbie Diamond, SAFE's founder and president.
In trading on the New York Mercantile Exchange on Wednesday, the price of crude oil rose after a two-day drop. The price increase was fueled by traders' speculations that U.S. inventories are down as the nation heads into the winter season and the fact that the Dollar fell against the Euro in currency trading.
Crude oil for December delivery rose 1.4 percent to $92.41 per barrel in after-hours electronic trading. Crude oil futures prices hit an inflation-adjusted record $98.62 on November 7th.
OPEC has expressed displeasure with the high costs of oil but Saudi oil ministers say they cannot do anything about it because right now oil prices are not reacting to the forces of supply and demand, but rather to a lot of speculation and the current devaluation of the Dollar.
OPEC Secretary General Abdalla Salem el-Badri has stated that OPEC will not begin pricing oil in any currency other than Dollars during the Dollar's fall and will not use oil pricing for political ends.
New York crude oil futures that are purchased closest to delivery are more expensive than the prices for contracts for later delivery. This is called "backwardation". During the first half of the year the oil market was in a state of "contango", where the price of oil for future delivery is higher than near-month prices; this condition encourages distributors to increase their stockpiles.
Original Newswire Source:
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Published by Brant McLaughlin
I am a Writer driven by endless curiosity and a deep desire to waste time creatively. View profile
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5 Comments
Post a CommentEven the most rosy-cheeked oil executive isn't misinformed enough to say that there is a 100 year oil supply, so change will have to come alot sooner..and regardless of your speculation, there isn't enough oil in North America to become dependent without drastic reductions in usage. If America would have stayed with the commitments began by President Carter instead of letting Reagan reverse them, we would not need OPEC now, and we would be much closer to being less dependent on oil.
Who said anything about destroying a revenue stream? I said oil-independent--that is, not needing to ship it in from anywhere outside North America.
Yup, but there is money in oil and a lot of it and when money is involved there is very little incentive to destroy that revenue stream.
True, Nick, but it's going to take us another 100 years or so--and that's fine. First things first: make ourselves completely oil-independent from OPEC. If we got our priorities straight, we (North America) could become totally oil-independent within a decade.
Great article! This is one of the reasons why we must do away with oil.