While The World's Economies Are Reeling, OPEC Wants Us To Pay More For Oil
In November of 1999, in a speech to the Houston Oil Forum, Saudi Oil Minister Ali al-Naimi bragged that the "all inclusive" cost to the Saudis to produce a barrel of oil was less than $1.50 a barrel. Costing $1.50 then you can make your own extrapolation as to what it may cost today. My estimation is it is less than three dollars today, and probably a lot less. My reason for putting forward this tidbit of information is to give one a comparative benchmark of production costs of other OPEC member states be they Libya, Kuwait, Iran, Algeria, etc. All would be comparable to Saudi production costs. As to the argument that today's oil price reflects a rapidly declining resource, I have long argued that OPEC's and especially Saudi Arabia's reserves have been purposely understated and are vastly greater than we have been led to believe (among other posts please see "Peak Oil" RIP: Official Obit Front-paged In the New York Times," 3.8.07)
With the current rout of speculators pulling in their horns from the commodity markets and the economy's impact on oil and oil product consumption, and finally the growing and widespread realization of the environmental and national security dangers inherent in fossil fuel consumption, the price of oil is collapsing. Or is it?
With the price of oil retreating from its high of $147/bbl we heard from the oracle of oil patch baloney, Chakib Khelil, OPEC's President and chief cheer leader. Khelil, who had called for an emergency OPEC meeting for November 18th, a month ahead of schedule, was quoted by Bloomberg on October 9th that prices have fallen "dramatically" and "The decision will very likely be to cut production."
Now consider this. Even with oil prices' recent tumble to $80 a barrel, using Al-Naimi's 1999 Houston Oil Forum's formulation (all-inclusive production costs of less than $1.50 then, extrapolated to $3.00/bbl now), we are still dealing with a breathtakingly obscene markup of 2500% -- this while the world's economies are on the brink of depression. But having tasted the nectar of a 5000% markup when prices were at $147/bbl while holding the industrial world and the world's economies to ransom, the OPEC cartel has lost all bounds of reason and simple commercial common sense, which dictates a shared responsibility and communal well-being between industrial consumer and materials supplier. In their actions, and OPEC's volition to keep prices at artificial and egregiously high levels at a time of potential economic disaster for their customer base, they have forever lost all semblance as suppliers who can be relied upon in good times and bad. No matter how inexpensive and accessible their wares become and how tempting for us to become hooked all over again it is long past due to get the oil monkey off our back once and for all.
Greed may well be a universal human failing. Its contribution to the dimensions of the present world financial crisis does not diminish the outrage we feel in its numbing excess. It is an outrage that now needs be extended to the OPEC cabal and their oil patch allies as well.
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For all his bawling on TV about how much he loves his country, you'd think a guy like Glenn Beck would be eager to do whatever is necessary to combat terrorism. Same for Michelle Malkin.
Raymond J. Learsy: Why are We Paying $50 a Barrel for $20 Barrel Oil??
To continue transferring our wealth and well-being in these times of crisis to the oil industry and to the petro despots is madness.
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I have, since I ever remember thinking about the issue (back during the late 1970s while in Junior High), never understood WHY we should expect OPEC, or other energy producing countries upon which we have become even more dependent should be viewed as anything except sources of potential conflict.
WE are their dependent consumers - They know this.
THEY are sitting on a a limited supply (whatever that supply may be) of oil/natural gas - They know this.
Basic ecnonmics, coupled with an understanding of their own self-interest vs our self-interest, dictates that they will seek to maximize their profits for as long as they can continue to do so.
OPEC and associates have a vested interest in keeping us using as much of their product, at a price they get to mostly dictate, for as long as possible.
Of course OPEC is going to run up the prices for as long as they can. To NOT do so (from their standpoint) would make no sense.
It is heart warming to hear cries of desperation from several oil producing nations as they scream they cannot meet their bills as oil drops below 100 dollars a barrel. So tin-pot oil rich dictators around the globe are in serious trouble tonight as the value of their oil exports fall and they are unable to fund their insanity. Why good old Iran may even have to cut back on it's funding of global terror, what a shame.
Maybe this time, as oil falls it will be different and we really will turn to nuclear power and other power sources but don't bet on it. We could soon forget how bad things can be and stop supporting the vast alternative energy sources as we once again guzzle down cheap oil energy. Liberals will go back to keeping us from the nuclear power we need and the economics will keep us from bringing on alternative sources and we will get nowhere again. I hope I'm wrong and it's different this time....but we have been down this road before.
don't listen to the Bush Admin who makes Iran a terrorist country. Iran supported the US after
9/11 - don't forget this. Bush Admin is lying about the insurgents in Iraq, the ones getting caught
are mostly Saudis and remember we just sold the Saudis like 20 billion arms deal, and
Ahmedinejad constantly gets misquoted to suit their purpose.
Does anyone even know that the US is exporting 1.5 million barrels of oil per day? If we want
to become energy independent, then let us not export our oil!
Let me know when you have a car that drives on nuclear power. Then I will make sure to vote for the next reactor to be built in your neighborhood.
WE COULD HAVE ELECTRIC POWER STRIPS ON ROADWAYS LIKE TYCO RACE CARS
Many cities have those. It's called a trolley bus.
:-)
PEOPLE WAKE UP !!!!!!!!!!!!
U.S. DEPARTMENT OF ENGERY ADMITTED IN 1989 THAT IF THE USA COULD HARNESS THE WIND ENGRY FROM JUST 3 STATES WE HAVE THE TECHNOLOGY TO PRODUCE 2 MEGA JEWELS OF ELECTIRC POWER PER YEAR.
THE USA ONLY USES 0.5 MEGA JEWELS PER YEAR NOW !!!!!!!!!
BUILD WIND MILLS AND BUILT A NEW POWER GRID. ELECTRIC POWER AT 1 /3 THE PRICE.
NO MORE BURNING COAL TO CREATE ELECTRIC POWER.
NO NUCLEAR EITHER !!!!!!!!
We need to burn much more coal. The US is the Saudi Arabia of coal and we need to use it. One pocket of strength in our economy is the coal industry because they export so much and at very high prices. Coal miners also make good money (although it's a terrible job) and there is a currently a shortage of miners, so if people want jobs head to coal country.
TRICKS using "Illegal Leveraging" lead to $147 crude,
Oil prices dropped starting in July at the "HIGH of the DRIVING SEASON." WHY?
It Coincides with two simultaneous investigations in late June:
1. Congress investigation of "Crooks" doing "ILLEGAL LEVERAGING of OIL" -pennies on a Dollar!
2. Finally under pressure from Congress SEC began investigating "ILLEGAL NAKED SHORTING" of Financials and other stocks!
As soon as these two investigations began the OIL MARKET BEGAN TO TANK 23% and FINANCIALS went up 22.5% in about one MONTH.
This shows the level of corruption in these markets and lead to LOSS of CONFIDENCE!
We could see prices below $50 for crude!
Pump and dump! Pump and dump!
Here in California, we could do quite a bit in the way of public transportation. Specifically, a high-speed rail service connecting the LA and Bay Areas to the Central Valley, as well as other feeder lines of such a system, could do wonders in the way of getting people off the roads as well as bringing down housing prices to a more reasonable level....or at least bringing some kind of equalization.
Of course, it makes me absolutely angry thinking about how much money we waste on the military and this stupid war on terrorism. The kind of infrastructure investment we would need to get off our oil addiction to oil.
And yes, after years and years of cramming structural adjustment down the throats of developing nations around the world, I'm afraid that OPEC should be able to charge whatever the hell they want for oil. We deserve it.
OPEC's days are numbered. Iraq will soon be pumping 6 million barrels per day the same time America cuts imports.
The Saudis will have to cut back on their imported concubines and there will be hell to pay.
Rule 1. The lower the supply the higher the price.
Rule 2. The lower the supply the higher the price.
The Iraq War shut down Iraqi oil production and a huge trandsfer of wealth happened to allow the Sadui's to collect enough money to build themselves a Military and get businesses setup in thier country. The time of living of interest and oil has passed.
Have you seen the news from Mosul lately? I wouldn't bank on the stability of Iraq.
I am surprised that you are still at it blaming OPEC for all the woes in the world. Your credibility is about zero. Why don't you just give it up and try to do something else for fun. You would be doing everyone a favor here or do you just like making a nuisance of yourself.
Amen!
Alternative energy is not a catch phrase. It is what it says, an alternative to the pusher, OPEC. These people have been waging thier dollar making war on this country (and others) since I was born. I believe it was our own money that paid for the terrible events on that day in September. The faster we get wind, wave, geothermal, ethanol and natural gas for vehicles, you name it producing , the faster we decrease the demand for oil. That also means we can tell those Saudis to go to hell. There I said it. How have they ever acted as friends to the average American? If we and other nations don't need it, they can't ram it down our throats anymore. In the meantime, try to find gas stations that buy American oil. Yes there is still American crude, do your homework.
Maybe the U.S. should stop whining and start coming up with its own energy sources. The only reason the economy is being held "ransom" is because we're not investing enough in developing clean, affordable energy sources.
Complaining about expensive oil reminds me of a heroin addict whose habit has hit $100 a day blaming his dealer for the price of his junk.
Better to kick the habit! Life will be okay on the other side, better in fact. There's plenty of sunlight readily available. It isn't OPEC's problem that we're not using it.
So why can't OPEC charge whatever it wants for oil? I don't understand what you're complaining about.
If they charge too much and "force" into alternatives are you going to complain that we should give them charity?
It's their natural resource and they can charge whatever the heck they want for it if we're stupid enough to pay.
Right on bro!
I hope your gas station, upon seeing your smiling face, charges you quintuple the price...
And, no, OPEC isn't the whole problem.
It's unfortunate, but they are just not being gentlemen about this!
After Bush orchestrates the greatest transfer of wealth in history--your words and mine--to the oil producing companies and countries, in addition to the continued job meltdown of the late nineties--we were told we were to become a "service" economy, but then they started to move service jobs (along with the usual industrial) overseas too--what's left? Market meltdown.
Oh those bad boys at OPEC, why can't they be nice!
What "job meltdown" was there in the late 90s? The late 90s was one of the biggest periods of job growth in our nations history. Second, the move to a "service" economy began many decades ago and is not some kind of new development.
Rule 1. The lower the supply the higher the price.
Rule 2. The lower the supply the higher the price !
Whow after this US greed instigated financial crises someone starts talking about the greed of someone else.
By the way:
-The US with 5% of world population uses 25% percent of supply, so maybe someone else has a right to complain about US energy use?
-What makes you think you are entitled to that oil? Are you Dick Cheney?
Yeah Learsy thinks OPEC should just give their wealth away cause he says so. Of course you would not hear him say that about any of our natural resources. He just does not get it or whoever is paying him to blog here thinks we are all stupid.
Well, large oil companies had no qualms buying it then selling it to everyone else, with how many politicians encouraging studies into other forms of energy since the early-70s? Only two, it seems, and both of them presided in the 1970s...
I thought being "green" was the be-all and end-all. The more expensive oil is the more green we'll be. Rejoice in high gas prices. We should be begging OPEC to raise prices.
"We should be begging OPEC to raise prices."
No. We should have raised them ourselves while there was time. It's called a gas tax and works really well to curb consumption.
An increase in the gas tax would not go over well in the "battleground states" or in the early primary states. We the people are a bunch of spoiled whiners.
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