Production and Prices
Prices started the week around $45 a barrel; dropped to $40 on grim economic news and a 4 percent drop in the Dow to a 12-year low; and then rebounded to close to $45 on the premature hope that China would announce a major new stimulus package. Mixed signals continue to emerge from the run-up to next week’s OPEC meeting. With outside observers reporting that OPEC appears on track to reduce its
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Venezuela
In the wake of the February 15th referendum that will allow him to remain in office indefinitely, President Chavez has begun a series of confrontations and nationalizations to cope with falling food supplies and oil production. The underlying cause is the drop in oil prices that the country relies on for 90 percent of its hard currency earnings. With heavy Venezuelan oil selling in the mid-$30s,
China in recession
With circa $2 trillion in foreign reserves to spend, developments in China command instant world attention these days. Last week there was a flurry of activity in the world’s stock markets when it was incorrectly reported that Beijing was about to announce a major new stimulus package. Premier Wen Jiabao announced last week that China is still on track to grow its economy by 8 percent this year
Briefs week of March 9, 2009
Gas produced for sale in the US surged 7.2 percent in 2008 from the previous year, contributing to the current glut. That compares with a 3.1 percent rise in 2007. (3/7, #2) The number of oil and natural gas rigs operating around the world fell 7.4 percent in February to the lowest level since April 2006, according to Baker Hughes Inc. (3/7, #1) About 35 oil drilling projects in OPEC states have
Quote of the week
“The IEA’s comments are confusing and misleading. Whilst asking for prices to remain at $40 (a barrel), it also wants investments to be made that are not economically viable at these prices.” – OPEC Secretary-General Abdalla el-Badri
The Role of Speculation in the 2007-2008 Spike in Oil Prices.
Over the last 8 years many explanations have been offered on why oil prices gradually increased before spiking upward. In the United States, Bush administration officials and industry lobbyists consistently blamed conservation groups and the laws that protect our environment for causing high energy prices. The accusations reached a crescendo in the summer of 2008 as oil prices peaked and chants
