OPEC Has No Extra Oil Available!

Prices are at a record high,..Yukos may be disassembled,..Pipelines in Iraq being blown up at a regular rate,..and OPEC has no extra oil to help lower prices.

Not to mention that the northern hemesphere's are begginning to stock up for the colder weather down the road.

Guess what this means,...Even Higher Prices !! Without any short term lowering expectations.



Crude Oil Futures Rise to Record Highs on Production Capacity Woes

Concerns are mounting that the Organization of Petroleum Exporting Countries and other major oil producers won't be able to plug the supply gap quickly enough.

On Tuesday, OPEC president Purnomo Yusgiantoro said the cartel could not immediately increase output to help bring prices down.

Meanwhile, Yukos remains mired in a yearlong scandal over claims that it owes some $6.4 million in unpaid taxes dating back to 2000. Russia's Tax Ministry said Tuesday it was considering an additional audit of the company for 2001.

This would be the eighth consecutive week and comes as the Northern Hemisphere starts to stock up on winter fuels.

American refineries are running near flat-out, with operating rates at a record 97 percent of capacity.


edit - title

[edit on 4-8-2004 by smirkley]

OPEC President Purnomo Yusgiantoro said on Tuesday the cartel had no spare oil to hand to dampen prices.
"The oil price is very high, it's crazy. There is no additional supply," Purnomo told reporters in Jakarta.

Interesting that this guy doesn't call these facts "crazy"

- Yusgiantoro continues to be the president of OPEC and Indonesia continues to be a member,
- although Indonesia is now in the process of rapidly increasing the OIL IMPORTS ...

Amid all the bad news for Yukos, one item that contrasts is:
"Court Rules Collection of Court Bailiffs� Fees from Yukos as Unlawful"
www.mosnews.com...

Could mean nothing. Could mean courts are independent in Russia, and that Yukos still has a chance. Could mean the Russian gov just wants to weaken Yukos so it can take it over without soldiers marching into their corporate HQ. But since this happened before the new tax probe, could mean this angered the Russian gov and provoked the new probe...

Interesting also about Russia & Yukos is the appearance that this is the ONLY variable available right now that can make/break short term prices. Probubly long term also.

What the government of Russia does, can affect the whole picture, where as everything else internationally seems to be at a constant as far as the effects of availability.

Originally posted by smirkley
What the government of Russia does, can affect the whole picture, where as everything else internationally seems to be at a constant as far as the effects of availability.

How do you see Iraq and maybe Venezuela fitting into your last statement? (Not trying to be sarcastic or negative, it's a sincere question)

Well honestly, I expect Iraq to be perpetually intermitten and unstable for some time, and really cant be counted on a for a 'quota' of production. Hit-n-miss at best.

Venezuela, although one of the biggest producer's, basically just needs a stable government. There has been much oil production investment on infrastructure, but output seems to be predictable. (short of any more strikes in the workforce)


An interesting article I just found...

The death of cheap crude

"Because of the way the market works, what was previously a minor strike in Nigeria or a commercial row in Russia is now a straw that will break the camel's back.

"Once you are producing flat-out, there is nothing you can do about disruptions. Once a slight imbalance occurs, then traders, who are there to make money, will price oil accordingly."




[edit on 4-8-2004 by smirkley]

The sooner we can give up using oil the better we will be and another benefit is not being so dependant on arab countries that are semi hostile to the west.

its quite interesting how OPEC can't increase oil supply but they are sure making a killing right now! I believe oil went over US$44 a barrel!

If i was OPEC nations, i would recognise by now that oil is a finite resource and i would be trying to get maximum price per barrel. But I also do recognise how damn hard it is to find new supplies since all the major oilfields in the world have been found.

thanks,
drfunk

OPEC has always been seen by the west as a greedy organization the true is that for years the OPEC has been warning the rest of the world about oil crisis, perhaps one of the reasons of this is to increased prices.

We have to understand that Oil is the only resource these countries have and they are manipulating the market.

If we the west find alternative energy sources this producing oil countries will not have another source of mayor income and the consequences will be either to lower prices or the oppress people in these countries will take over the governments and probably the situation in the middle east will turn worst than already is.

OPEC don't set the price of oil nor are they manipulating it.

It's the oil futures markets which is speculative pushing up the barrel price with an almost 30% terror dividend.

Oil is sold months even years ahead and it is these futures which are bartered.Anyone who bought a 6 month future last January is making the big bucks right now.

One other point.OPEC,which appears to have reached it's output capacity,does not have the same monopoly as it was did with other fields coming into the market place.

And remember,Texas oil barons are doing well out of this too and probably had more to do with the circumstance that have pushed prices up than the Saudis


[edit on 4-8-2004 by John bull 1]

It's the oil futures markets which is speculative pushing up the barrel price with an almost 30% terror dividend.

Perhaps that is the reason why they have been warning about oil crisis for years.

They may not control prices on gas but they control production.

[Edited on 4-8-2004 by marg6043]

Interesting, how much difference half-a-day makes.

Talk about an about face, with the barrel price correcting, after release of the energy report today.

Plus OPEC suggested they may tap into their reserves and release it into the markets.


hmmmmm

From The Wilderness is also reporting this story: Suspicions confirmed, OPEC has little spare capacity.


The Oil Crunch is definiteley here. DEBKA File (A Middle East Watch Site) is predicting $50 dollars per barrel before the winter.

Immediate prospects for prices to level out are not good. The threat of sabotage hangs over Saudi infrastructure, including pipelines. The Iraqi oil industry, which exported 1.5 barrels per day in July, remains an uncertain factor given the state of security in the country. Other big oil players like Venezuela, Nigeria and Norway are also in the grip of unrest and strikes.

A new factor that could have a harmful effect on oil prices is the possible imposition of UN sanctions on another major world producer, Iran, which is steadily progressing towards a nuclear weapons capability. Source

[edit on 8/4/2004 by Gools]

Originally posted by Gools
From The Wilderness is also reporting this story: Suspicions confirmed, OPEC has little spare capacity.

This really is not new news. Only the Saudi's have an "excess" roduction capacity that they can ramp up in 30 days, but its only a small percentage increase.

According to this news release from May, Bush upped the amount of oil being diverted into the Strategic Petroleum Reserve to 300,000 barrels per day.

If he cuts back, it may ease oil prices a little.

wyden.senate.gov...
In light of a recent report that the Administration�s current policy on filling the Strategic Petroleum Reserve (SPR) is driving gasoline prices higher, we urge you to reconsider the Administration�s position on SPR fill and either halt filling the SPR or cut back the current filling rate.

Last week, Oil Daily reported that the Administration�s current policy of filling the SPR at a rate of 300,000 barrels per day had contributed to record high gasoline contract prices on the New York Mercantile Exchange. The current SPR fill rate reported by Oil Daily also calls into question your statement on February 2, 2004 that �We don�t subscribe to the notion that some have raised that somehow this tiny amount of oil going into the SPR is having a huge impact on prices. I don�t think it is . . . �. Given the fact that the current SPR fill rate is double the 150,000 barrel per day rate when you made that statement and that market observers are now finding that the current, much higher rate of fill is in fact increasing gasoline prices, we urge you again to halt filling or defer currently contracted deliveries to the SPR. If the Administration is unwilling to halt filling or postpone deliveries to help bring down prices for U.S. gasoline consumers, we urge that, at a minimum, the Administration cut back on the current rate of fill.

"A Crude Brood

I'm getting kind of nervous
About the rising price of crude,
Each week it seems to jump a notch,
What is one to conclude?

Our middle east suppliers
Don't inspire lots of trust.
Can we feel safe with these bozos,
Might they one day just combust?

Should we look for new alternatives
Is that the thing to do?
Should we practice conservation?
No one seems to have a clue.

Then an oil firm in Russia
Goes bankrupt and stops its pumping,
Or a pipeline outside Basra
Get blown up, its contents dumping.

Things like this could lead to gas lines,
An economy unglued.
I'm getting kind of nervous
About supplies and costs of crude."

By: Michael Silverstein, WallStreetPoet.com, August 2, 2004

From: www.financialsense.com...

The prinicipal problems for oil required in the U.S. are incredibly easy to fix, but no one has the political will to do so.

First we need more oil refinery capacity in the United States. Refineries are not producing available oil at maximum output but environmental concerns prevent more refineries from being built.

The other problem is that, although known oil reserves are available in the Gulf of Mexico and a tiny area in Alaska, environmentalists and the politicians who back them prevent companies from drilling.

The claims that OPEC countries are now producing almost as much as possible are correct. The other half of the "truth" is that more oil is available if the public has the political will to produce and refine it. The oil industry is the most high-tech operation on the globe. Oil reserves may now be found by satellites and oil drilling is more complex and efficient than NASA.

I'm concerned that our country must first see the results of the oil crisis first hand before anything can be done. The bad news is that at least a decade will be required before that buried oil can be brought to market. We can start now or start too late.

Which do you want?

(Retired professor of economics.)

A collection of 27 articles on the looming energy crisis can be found at this link: Energy Crisis Coming Sooner Than Expected.

The articles discuss everything from the Saudi supply, the Yukos crisis, the natural gas crisis, terrorism concerns, the situation in Venezuela etc.

Lots of reading but well worth it IMHO.

P.S. I will also post this in my Conditions Ripe for Recession/Depression? thread which also contains more background.

There hasnt been a new refinery built in the US in 28 years. In fact many have been closed. There has been money available from both international and national sources, but there is apparently no interest from any companies in doing so.

You would think at $2.00 per gallon of gas, there would be enough profit to build a refinery or two, but then again, that would increase supply and maybe even lower prices (current profits).


New refineries aren't built in U.S. anymore


edit-added link


[edit on 4-8-2004 by smirkley]

Originally posted by smirkley
You would think at $2.00 per gallon of gas, there would be enough profit to build a refinery or two, but then again, that would increase supply and maybe even lower prices (current profits).

[edit on 4-8-2004 by smirkley]

Sorry, I don't understand that last bit.

• without influence of OPEC and large oil companies oil's market would be perfectly competitive
• OPEC acts as a cartel by manipulating the oil supply and fixing (indirectly) the price
• But oil companies are always seeking new reserves, paying huge amounts of money for exploration for that purpose. There was a scandal/crisis with Royal Dutch/Shell because they were overstating their reserves holdings... I can agree that oil companies could make secret agreements to manipulate oil prices, but I can't see them agreeing to put caps on their own reserves holdings (it's actually a parallel of the OPEC nations in a way -- they may agree to restrict supply, but Saudi Arabia can't tell Iran to stop developing oil fields or pipelines). I would think that Royal Dutch/Shell would be eager to make new acquisitions give recent events. I don't think this assumes any benevolence on the part of the oil companies, but simply that they are looking out for themselves.