THE OPEC Thread (merged) pt 1

tkn317071 · Heavy Crude Joined: May 29, 2004 Posts: 106

If I remember correctly, part of the reason for the current spike in gasoline prices was that OPEC decided to cut production (back in Feb-March) because some of the producers were cheating and producing too much. Now, only three months later, they're talking about increasing production as if the previous meeting and decision never even happened. Could it be that the rumors of Saudi manipulation of the oil market to affect the US election are true? Or did they decide to cut back originally because they knew they were running out and now a decision to increase production will simply accelerate depletion?
OPEC seems to have no long term plan and/or foresight.

Pops · Posted: Thu Jun 03, 2004 2:23 pm Post subject:

One of the things we’re not talking about here is the world tanker fleet is pretty well maxed out (sorry no link right now – its on his site). Pump away and send it where?
People are bashing tree huggers for blocking new refineries but I haven’t seen any protests about new tankers.
Same holds true in my opinion, producers must have known that the glut of the ‘90s would be followed by the peak in the ‘00s, otherwise they would have added capacity to meet the obviously growing demand.
Same pretty well goes for LNG. Lots around (outside N. America) but no way to get it here. They might have been surprised in the big upswing in Nat gas power plants, or maybe not.
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Lugal · Coal Joined: Mar 08, 2004 Posts: 17

Similar thing here on Swedish news the other day: On the subject of current high crude prices they mentioned briefly that "some now question if Saudi Arabia really has as big reserves as they claim", and showed a snippet with some sort of expert saying something to the same effect. No further comment on what kind of consequences this may suggest.

smiley · Fission Joined: Apr 16, 2004 Posts: 2130 Location: Europe

good point Pops.
Firstly I believe they didn't actually raise production today, they just legitimized existing leakage, which to me seems a confirmation that they are currently maxed out.
But even if they where able to pump 2 mbd extra that would last us about nine months with current demand growth. The past months we have seen G7, G11, EU, US, China, Jpn on their knees begging at OPEC's doorstep for a bit of oil. This shows how desperate the situation is.
Assuming that we have secured the necessary production to accommodate demand growth for this year, my question is: "what about next year. What do we do then? Where do we get our oil?"
Yet the media seem to think: "Problem solved, the oil price will drop to $20, if only the terrorist stop bugging us . Rest assured buy a new Hummer and party on"
They remind me of a junkie who just had his shot. He doesn't bother about how or when he's going to get his next one.

JLK · Posted: Thu Jun 03, 2004 3:16 pm Post subject:

We've been discussing this topic for a while if anyone cares to join in: PetroEuros? What Are The Implications?
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Carrie · Posted: Thu Jun 03, 2004 4:04 pm Post subject:

A caller on a radio talk show (KGO in SF, CA) just mentioned that starting next January, the EU will begin purchasing it's oil for the entire Union. This is in contrast to before, when each country ordered its own oil.
The caller claimed that this would mean that they would be making one single large order, which would be much larger than the individual countries combined orders.
Does anyone know if there's any truth to this? This could have a major impact on worldwide suppy & demand if it's true.

slick50 · Tar Sands Joined: May 05, 2004 Posts: 85

Yesterday on cnbc around noon, they ran a short story on Peak Oil, they had a short interview with Kenneth Deffeyes. This is the first time I have seen peak oil mentioned this way in the mainstream press. It lasted about 5 minutes but the case for peak oil was conveyed accurately.
There is still incredibly amount of denial out there, for instance among the Saudi's. If Matthew Simmons is correct about the condition of Ghawar, we will see Saudi Arabian oil go into decline in a few years, if it hasn't already occurred.

MattSavinar · Elite Joined: May 09, 2004 Posts: 1999

I'm amazed they had one of the official Peak Oil "doomsayers" interviewed. I thought the best we'd get is Roberts - whose book is extremely thorough, but I've been somewhat disappointed by his unrealistically rosy outlook. Leaves the viewer with the impression that, "Oh - seems some smart folks are working on it - no need to act."

adam · Coal Joined: May 28, 2004 Posts: 15

I saw the interview with Paul Roberts on the PBS newsour here:
PBS
Paul Roberts was a damn site better than Daniel Yergin - a total cornucopian who thinks natural gas has all the answers - and yet the debate was framed and contained in such a way that I felt like the peak oil argument was being sanitised and co-opted by Paul Roberts. At the very least he's not very good at expressing how profound the implications of peak oil might be. I'm glad CNBC went with Deffeyes.

Mark_i

Pops · Posted: Fri Jun 04, 2004 7:46 am Post subject:

We better hope they keep loaning us money, after all we deserve all the crap... I mean material possesions, we can stuff into our garages.
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Chichis · Last edited by Chichis on Fri Jun 04, 2004 8:10 pm; edited 2 times in total

I am largely unknowledgable about this, so pardon me if I am wrong on the facts:
The purpose of OPEC is for the countries to limit production to fix the prices as they see fit. They talk about upping production, or lowering production, etc etc, and it is always big news whenever they agree to do this or that.
My question is: what is the point of all this now? Isn't every country in the world except Saudi Arabia running at maximum oil production capacity? What is the point of an "agreement" in OPEC to raise production when the only member capable of doing his is Saudi Arabia? Is it, at this point, all a facade and a farce?

Andy · Intermediate Crude Joined: May 16, 2004 Posts: 519

Dvanharn

This thread lead me to do some Googling on the subject, and I found an article attributed to Dr. Bulent Gokay, Senior Lecturer in International Relations and Director of European Studies Programme at Keele University in the U.K. Middle East Information Center. I found it at several forums, but could not locate the "source," so I don't know where it was originally published by Dr. Gokay.
I was aware that the struggle of the euro vs the dollar for Iraqi oil was one of the factors involved in the U.S. decision to invade Iraq, and this article puts it all into perspective. I've copied a few important paragraphs below, but I highly recommend that everyone read the entire article.
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Below excerpt from: [url=http://middleeastinfo.org/article4398.html ]Book[/url]
Iraq was the first OPEC country, in November 2000, to convert its reserves from dollars to euros. This was the first time an OPEC country dared violate the dollar price rule. Iraq also converted $10 billion of its currency reserves to euros. Since then the value of the Euro has increased, and the dollar has begun to decline. Libya has been urging for some time that oil be priced in euros rather than dollars. Iran, Venezuela and other countries have indicated that they would denominate their petroleum trade in euros. During 2002 the majority of reserve funds in Iran's central bank have been shifted to euros. Some in Saudi Arabia have called for switching to the euro as “a more effective punishment [than an oil embargo] for the United States, Israel’s principal source of financial and political support”. In October 2003, Russian President Vladimir Putin announced that Russia might price its oil in euros as well. Since the oil trade is a central factor underpinning the dollar's hegemony, all these are potentially very significant threats to the strength of US economy in particular, and the US global hegemony in general.

With a significant part of the petroleum trade uses euro, instead of dollars, many countries would have to keep a part of their reserves in euros. The dollar would then have to compete with the Euro for global capital. Not only would Europe not need dollars anymore, but Japan which imports more than 80 % of its oil from the Middle East have to convert most of its dollar assets to euro. The US, too, being the world’s largest oil importer would have to get hold of euro reserves. This would be disastrous for the American attempts at monetary management. Not only they would lose a large part of their annual subsidy of effectively free goods and services, but that switch to euro reserves from dollar reserves would bring down the value of the US currency. Even a modest shift out of dollars, or a change in the flow, would create significant changes. If the euro becomes a bigger reserve currency [i.e. if the US were to share its reserve currency status with the euro] it is also likely to mean either the US buys more euro or the Europeans reduce their dollar holdings and buy euros.

That is why there is a clear and definite oil (and Petrodollar) connection in the recent military conflict in Iraq. This financial dimension is a power game of the highest geopolitical significance. The future of the dollar/ euro competition to be the global reserve currency is far from a minor issue of interest only to banks or currency traders. A hidden war between the dollar and the new Euro currency for global hegemony correspond to two different perceptions of the global order: Pax Americana, or the American Century model of global dominance on one hand; and to balance the overwhelming dominance of the U.S. in world affairs on the other. In this connection, the war in Iraq is a war whose purpose is bigger than Halliburton or Exxon: it's a war being fought to maintain America's position in the world.

smiley · Fission Joined: Apr 16, 2004 Posts: 2130 Location: Europe

Hey.... found some interesting legislation from the European parliament so I revived the discussion
it's a tough read but well worth the effort.
European Parliament resolution on the Communication from the Commission on the European Union's oil supply (COM(2000) 631 - C5-0739/2000 - 2000/2335(COS)) Link
Although peakoil is not mentioned in the document it leaves no doubt that future oil production won't be able to meet demand.
The document contains a number of proposals which should lower our total oil dependence as well as a number of proposals to ensure our oil supply.

But the most striking point I found this.
4. Calls on the EU, in dialog with the OPEC and non-OPEC countries, to prepare the way for payment for oil in euros;
Here you have it black on white.