As the worldwide demand for energy increases, and oil prices rise, many venture capital firms have begun to focus on the alternative energy sector. Historically, crude oil or petroleum prices in the United States have been affected by a variety of global factors. With the Global Oil Crude prices dropping, Venezuela could be in super big economic trouble.
Opportunity or user cost is largely dependant on the firm or cartel’s future speculations of the discount rate, future reserves, long run price elasticity of oil demand, and rate of economic growth. This is the primary reason why the oilsands have generated significant interest, the volume of reserves will meet Alberta’s appetite for oil revenues and America’s appetite for oil consumption for years to come. According to Wikipedia, “Chávez’s stance as an OPEC price hawk has raised the price of oil for the United States, as Venezuela pushed OPEC producers towards a higher price, around a barrel.
High crude oil prices get passed on to the consumer in the form of higher gasoline prices. Like gasoline and diesel prices, heating oil prices depend to a large extent on the supply and price of crude oil. Today, trading in oil futures on the floor of the New York Mercantile Exchange (NYMEX) increasingly drives crude oil prices in the US.
There are several factors that have contributed to the high oil prices we are experiencing today. OPEC also realizes that it is pushing the envelope on high oil prices and they realize that if they do not keep these prices low, the new technologies and research and development dollars will be thrust into the market and propel a future without oil. If OPEC fails to keep prices low for sweet crude oil then in the future they stand to lose out.
Being the only South American country belonging to OPEC, Chavez is suspected of conspiring to keep oil prices peaking for his own obvious political and economical gain. You see this is only one aspect to the many behind-the-scenes issue in only one sector of retailing which is hurt. This is illustrated by the fact that Boeing lowered its annual growth rate predication last week owing to the impact high oil prices were having on its business.
I applaud President Bush and the administration for looking into possible price gouging because I believe that someone needs to curtail the mass media hysteria, which is pointing fingers at the oil companies for participating in the free market system and delivering to our nation our overwhelming desire for gasoline. It does seem strange that for two consecutive years, the large multinational oil companies have had greater earnings, and free cash flow than in any period in history. What’s British Petroleum’s excuse for not maintaining the pipeline in a period of unprecedented earnings power, and monstrous unrestricted FREE CASH FLOW?
Why would BP be this dumb in their managerial policies? They have allowed a massive, and important pipeline to experience corrosion to the point where it has to be shut down? Listen up, when airlines fly a 747 airplane; each and every plane has to have its oil changed every so many miles or hours. George Bush has passed laws and paved the way for Big Oil to have its biggest paydays ever. After all the United Nations attempts at fair resolutions are done and the hard line political impasse, we will be at War with the nation which is building nuclear weapons to give to terrorists and is threatening the Western World while starting an OPEC trade war for oil prices.
One way you can help bring down oil prices is to keep the environmentalists from blocking all the new refineries, planned pipelines, power plants and natural gas distribution infrastructure. In the meantime however, freight forwarding companies are watching the rising cost of oil carefully and building these prices into new industry forecasts. With the situation in Iraq getting no more stable than it was twelve months ago and the unpredictability of weather patterns the future for oil prices seems uncertain, and we all know that markets do not like uncertainty.
Regardless, right now there are no soon foreseen oil commerce problems and so the price of oil and therefore gas at the pumps should be dropping and the consumer should be seeing a little relief.
Uma is an avid reader and writes on a variety of subjects – Family, Business, Politics, Religion, Health, Education, Sports – with a view to share knowledge and help citizens of this world live a harmonious happy life. STAY HEALTHY. Open to sharing at prawnsl@hotmail.com
Indonesia’s Energy Minister, Purnomo Yusgiantoro, is unhappy with the modest production cut, from June 1, of 2 million barrels per day, adopted by the Organization of Petroleum Exporting Countries last week. He intends to demand further reductions at the June 11 get-together in Qatar.The deal struck is so convoluted and loopholed that actual output declines may amount to no more than 600,000 bpd, assuming, miraculously, full compliance. Quotas were first raised before the war to 27.4 million bpd – a theoretical level, not met by actual supply. Crude prices, entering a period of seasonal weakening, dropped further on the news.With Nigerian and Venezuelan crude recovering from months of strife, this downtrend may be temporary. Global excess capacity is a mere 1 million bpd – one fifth its prewar level. As North American and North Sea production declines, the importance of Gulf producers soars.OPEC’s eleven countries – Algeria, Indonesia, Iran, Iraq (suspended in 1990, following its invasion of Kuwait), Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela – control one third to two fifths of global oil output and three quarters of the far more important residual demand – traded between net consumers and net exporters. Residual demand is set to double by 2010.Still, OPEC – led by Saudi Arabia, now off the US buddy list – faces fundamental problems that no tweaking can resolve. Iraq, in the throes of reconstruction and under America’s thumb, may opt to exit the club it has founded in 1960 and, thus unfettered, flood the market with its 2.3 to 2.8 million bpd of oil. Iraqi production can reach 7-8 million bpd in six years, completely upsetting the carefully balanced market sharing agreements among OPEC members.This nightmare may be years away, what with Iraq’s dilapidated and much-looted infrastructure and vehement international wrangling over past and future contracts. All the same, it looms menacing over the organization’s future.Far more ominous perils lurk in Russia, the second largest oil producer and growing. Though the cheapest and most abundant reserves are still to be found in the Persian Gulf, Central Asia and Russia are catching up fast. Ali al-Naimi, the Saudi oil minister may be forced out of office by this apparent crumbling of the organization’s stature.This would be unwise. Naimi is widely credited with engineering the tripling of oil prices to more than a barrel between 1998 and 1999. As the informal boss of the state-owned Saudi oil behemoth, Aramco, he has already introduced postwar output cuts. The oil market is so volatile that even marginal production shifts affect prices disproportionately. Naimi is a master of such manipulation.Saudi Arabia regards itself as the market regulator. It keeps expensive, fully-developed, wells idle as a 1.9 million bpd buffer against supply disruptions. It is this “self-sacrificial” policy that endows it with tremendous clout in the energy markets. Only the United States can afford to emulate it – and even then, the Saudi Kingdom still possesses the largest known reserves and sports the lowest extraction costs worldwide.OPEC is, therefore, not without muscle. Saudi Arabia had punished uppity producers, such as Nigeria, by flooding the markets and pulverizing prices. Yet, the organization is riven by internecine squabbles about market shares and production ceilings. Giants and dwarves cohabit uneasily and collude to choreograph prices in what has long been a buyers’ market. These inherent contradictions are detrimental. If OPEC fails to recruit another massive producer (namely: Russia) soon – it is doomed.Paradoxically, the Iraq war is exactly what the doctor ordered. OPEC’s only long-term hope lies in a geopolitical shift, the harbingers of which are already visible. Russia may join the cartel, disenchanted by an imperious and haughty USA – or the Europeans may “adopt” OPEC as a counterweight to the sole “hyperpower” newfound energy preeminence.America announced its intention to pull out its troops stationed in Saudi Arabia. As this major producer is thrust into the role of the “bad guy” – it acquires incentives to team up with other “pariahs” such as France and, potentially, Russia. Controlling the oil taps is a sure way to render the USA less unilateral and more accommodating.US interest are diametrically opposed to those of oil producers, whether in OPEC’s ranks or without. The United States seeks to secure an uninterrupted supply of cheap oil. Yet, a consistently low price level would go a long way towards reducing Russia back to erstwhile penury. It would also destabilize authoritarian and venal regimes throughout the Middle East.This unsettling realization is dawning now on minds from Paris to Riyadh and from St. Petersburg to Tehran. As the United States looms large over both producers and consumers, the ironic outcome of the Iraqi war may well be an oil crunch rather than an oil glut.
About the Author
Sam Vaknin is the author of Malignant Self Love – Narcissism Revisited and After the Rain – How the West Lost the East. He is a columnist for Central Europe Review, PopMatters, and eBookWeb , a United Press International (UPI) Senior Business Correspondent, and the editor of mental health and Central East Europe categories in The Open Directory Bellaonline, and Suite101 . Visit Sam’s Web site at http://samvak.tripod.com
U. S. May Join Opec. 1/4 Of World’s Untapped Oil Reserves In Artic.
Article by Tom Attea
Recent exploration of sediment deep beneath the Artic Ocean has led geologists to estimate that approximately 1/4 of the world’s untapped oil and gas reserves are located there. After evaluating the impact of the news, the U. S. may seek membership in OPEC.
President Bush, smiling and joking with King Abdullah of Saudi Arabia at a press briefing in Nome, Alaska, stated, “Since it looks like we’ve got about as much oil off Alaska as our good friend the King here has in the Saudi desert, it seems like a pretty good idea for America to consider membership in OPEC. The least you can say is, maybe then we’ll have more influence on prices at the pump.”
King Abdullah, who flew in to tour the newly oil-rich region with President Bush and Vice President Cheney, commented, “Until now, I thought a country had to have a lot of sand to have oil. Now, I see it can also have a lot of snow. If America wants to join OPEC, we will be very happy to consider the application. But, of course, we only have one vote.”
Reaction across the Middle East was not unmixed, even in Saudi Arabia. A member of the nation’s delegation to OPEC, speaking on condition of anonymity so he could remain in the employ of the King, cited Allah’s usual ways to man in terms of the oil trade, saying, “The eternal wisdom of Allah has provided that no part of the world is able to have more oil than Saudi Arabia. But our King likes to visit George Bush at his ranch in Crawford or wherever he is, so if we see enough gushers blacken the Artic Ocean, I suppose we will bring ourselves to consider U. S. membership.”
The Iranian representative was, expectedly, evasive while definite. “If the U. S. wants to join OPEC, we may say no or yes, never or maybe, later or now. There is, of course, more likelihood that we will say yes or maybe sooner if the U. S. agrees that our proud and progressive Islamic nation has the right to develop nuclear weapons for peaceful purposes.”
When asked about possible opposition to U. S. membership in OPEC, President Bush made no maybes about his intentions, turning to the King first, and saying, “Excuse me for saying this, but you how I’m always forthright.” Then he turned to the reporter, and stated, “We have a backup plan. If the other nations who control OPEC vote against American membership, we intend to form an oil cartel with Canada, which, like our own state of Alaska, borders on the Artic Ocean. Greenland, which also has a presence there, has indicated interest in the cartel, which, by the way, we’ve given the working name of APEC, with the “A” standing for “Artic.” I also plan to invite Russia, which, as you know, borders on the other side of the Artic Ocean, to consider the benefits of membership in APEC.”
Vice President Cheney, flashing his usual fleeting acidic smile at the King, took his turn at the skillful conduct of international relations, adding, “It’s quite a relief to know we’ve got as much oil up north as we do, and frankly, I kind of like the idea of APEC. So just let me say that, with all due deference to the King, the choice for OPEC is clear. It’s their cartel or ours.”
Environmentalists were widely distressed. A leading researcher of the multinational team that extracted the deep cores which indicated the vast reserves said, “It’s disheartening to think that our discovery of how much oil and gas lie under the Artic has led to a desire to extract it. I would have thought everyone would just appreciate the wisdom of leaving it there. Now, I shudder to think how much the combustion of the reserves will contribute to global warming, which, unfortunately, will make it even easier to pump out the oil, since there won’t be any ice left to get in the way.”
Eskimos generally applauded the news, with many expressing an eagerness to trade in their traditional garb for Arabian dress. One Eskimo confided, “If you want to know the truth, I like global warming. We’ve had it cold long enough.”
Everyday Americans at the pump were ecstatic about the prospects of a domestic oil glut. “Wow, just think,” an American SUV driver, who was at a gas station pumping out his wallet, said, “if the U. S. is part of OPEC or forms its own cartel, I might even be able to keep my gas guzzler.”
About the Author
Tom Attea, humorist and creator of http://NewsLaugh.com, has had six shows produced Off-Broadway and has written comedy for TV. Critics have called his writing “”delightfully funny” and “witty” with “good, genuine laughs.”
Brazil’s recent announcement that it could soon be joining OPEC has sure caused a lot of anxiety among the experts. According to CNN, “analysts” are troubled that putting Brazil’s big new oil finds under the Organization of Petroleum Exporting Countries’ banner could result in even higher oil prices.Just who are these “analysts?” Either they are going to need to cram and restudy on Economics 101, or they are horribly lacking in understanding about how OPEC works or they have hidden information that even God and Einstein were never let in on.The analysts’ fears seem to fit with the viewpoints of some that OPEC is some kind of supernatural monster. This commotion is a bunch of hooey; I believe it’s originates in a miscomprehension of the causes and consequences of the gasoline lines of the 1970s. That episode put fear into the populos and into the experts: If oil exporters can disrupt our lives once, then what’s to stop them from doing it again? Surely not the normal rules of economics, maybe not even the laws of physics. HA!!! Such sillyness from grown people!The OPEC countries are notable for the myopic focus on the profit axiom. Their wealth and well-being depend solely on oil revenues. Even Saudi Arabia, one of the few countries that could cut its production, is unlikely to cut much or for long. It would simply cost them too much to do so.Let’s do a hypothetical calculation, something the “experts” seem to have avoided doing. Say Brazil gradually moves up to contribute 1 million barrels per day to the world market. Just to prevent a sudden drop in prices , the Saudis would be required to sacrifice about billion annually in revenues. Even for Saudi oil sheikhs that’s a lot of money.The outcome of Brazil joining would most likely be to diminish OPEC than enhance the oil cartel’s power. If these financial experts had taken a few more economics courses, they’d have learned that cartels, are notoriously fragile. And one of the primary reasons for fragility is the admittance of new members into the cartel.In 1880s America, the railroad companies kept trying to form cartels but they’d fall apart whenever new railroads would request membership. Why? Because there was only so much demand to go around, and so any time a new company would join, older members were ordered to give up a portion of their market share, just as OPEC countries would have to do if Brazil joined.The railroad companies didn’t appreciate that idea and it usually led to temporary price wars that sent prices not just falling but plummeting.The viewpoint that OPEC will avoid this same fate demonstrates these “experts” to be ignorant of both economics and history – and not just early American history but recent history as well.OPEC attained its position on the world stage as the oil bogeyman back in the 1970s, and noone would dispute that the US suffered through some bleak times during that era. But by the 1980s, US consumers were doing fine, and the nation did even better in the 1990s.”Analysts” may believe that there is an evil oil cartel out there with powers to usurp logic, rewrite history, overcome the laws of economics, common sense and physics by their own decree. But OPEC is not omnipotent, and is much less of a threat to the US than those analysts want us believe. Remember, these are the same masters of fear mongering that convenced some of us that 19 Arabs with box cutters overpowered NORAD and the world’s greatest military and made three buildings in lower Manhattan crumble in free fall speed by flying planes into two of the three buidings.Anyway, regardless of what these crazy people do it doesn’t necessarily follow that you and I need to be the effect of it and take it laying down. There are solutions. Here is one…WATER4GAS is providing information at a low price which car owners can use in their garage or wherever to put together a small gizmo which instills hydrogen into the gas/air mixture that their automobile runs on.The process makes smaller particles out of the ones that the engine burns as fuel. So the system gets to use considerably more of the gas.With WATER4GAS you can minimumly expect to improve your fuel mileage by thirty to fifty percent or even more. Those goblets must have been pretty “blankin’” huge in some engines before. But with WATER4GAS they are made usable so you can improve your fuel mileage.It also helps make emissions substantially cleaner.This information has been purchased by over NINE THOUSAND individuals already and happy members number about 99%! So how about you?