Record Oil Raises New Fears

Wednesday, October 17, 2007 - www.FreeMarketNews.com

The price of oil jumped to yet another record yesterday, sparking predictions that motorists would see sharply higher gasoline prices by Thanksgiving — and fears that $100-a-barrel oil is no longer such a distant prospect. Crude oil for November delivery settled at a new nominal high of $87.61 a barrel, up $1.48. Futures touched $88.20 a barrel during the day yesterday, after jumping nearly 3 percent on Monday. -TheNewYorkTimes

Comment

10/18/2007 - 7:23:1AM

BY: Rod Campbell-Ross

OPEC doesn't believe "the fundamentals justify current high prices"? The OPEC people must think we are stupid. Lots of the reporting is inane - as if Turkey attacking Iraq justifies on its own an oil price near $90.

The reason prices are high is because that is the price dictated by supply and demand. Every month that goes by it becomes clearer that the world has passed Peak Oil and production is now over 1m barrels per day lower than it was im July 2006. That is bad enough, but an analysis of oil exports is truly alarming.

Exports from the top 16 oil exporting nations was 40.445m barrels per day in September 2005. This August just passed exports were 37.907m barrels per day, some 2½m barrels per day lower than Peak Oil Exports. The trend is set to accelerate and is determined by two factors: 1) Flat or declining production in the oil exporting countries; and 2) Exponential growth in consumption in oil exporting countries where prices are invariably heavily subsidized. In fact, if these trends are maintained there won't be any oil for export in 6 years. Of course the trends will not be maintained. Much higher prices will change the dynamics in several ways.

Food prices have only just started to go up. Air travel will become the preserve of the rich again and they will be happy to sit in economy class seats. Americans are going to have to get used to European style gas prices.

Sure, the rest of the US will get drilled, including ANWR and the coasts, but it won't make much difference. 10bn barrels sound like a lot of oil. Maybe there is even 20bn barrels out there - that is not the issue. It is the flow that counts, and that will not amount to eneough to make much of a difference. Anyway the faster you pump it the faster its gone. Say goodbye to your SUV's everybody. Time to go to check out that Toyota Yaris!

Oil strikes new record $89

By Richard Valdmanis

NEW YORK (Reuters) - Oil prices touched a new peak of $89 a barrel on Wednesday as investors fretted over possible military action by Turkey in northern Iraq and a potential supply crunch this winter.

The rally renewed worries that soaring energy costs could damage world economic growth and prompted producer group OPEC to consider calling a formal meeting November 17 on output policy during a heads of state conference in Saudi Arabia, earlier than expected.

"There will be a meeting of ministers, initially informally, but there may be a formal meeting. We are still a month away and it depends what transpires before then," Nigerian Minister of State for Petroleum Odein Ajumogobia told Reuters.

U.S. crude entered a seventh day of gains, soaring $1.39 to trade at $89 before pulling back to $88.24 by 1:30 p.m. EDT (1730 GMT) -- a 63 cent rise. London Brent crude rose 25 cents to $83.80.

Turkey's parliament Wednesday granted its troops permission to launch an attack against Kurdish rebels inside Iraqi territory, despite international pressure to hold off on a strike.

The tensions are seen as dimming hopes for a recovery in Iraqi oil exports via Turkey, which have been sporadic since 2003. But traders say the greater fear is the risk of further unsettling the Middle East region, which pumps a third of the world's oil.

Surging oil prices, also driven by an inflow of investor money, have approached their $90.46 inflation-adjusted peak of 1980. Experts fear damage to the U.S. economy already coping with fallout from the subprime loan crisis

"Given the long-term risks of security-related disruptions to the global oil market, it would be very wrong to write off oil-induced recessions as a thing of the past," said Gilles Moec, an economist at Bank of America.

U.S. petroleum consumption already has showed signs of slowing, with demand growth running just 0.2 percent over last year, according to the latest government data. Experts said the slowdown is being offset by continued strong growth in demand from China and other developing economies.

The impact of the geopolitical risk was magnified by concerns that OPEC's 500,000 barrels per day (bpd) output rise may be too little too late to maintain healthy supplies through the winter, with refiners revving up to meet peak demand.

Saudi Arabia, OPEC's top producer, is set to boost output close to 9 million bpd in November under the group's agreement.

The White House said on Tuesday that oil prices were too high and the U.S. Energy Information Administration (EIA) said the market needed additional OPEC oil.

Tempering oil's rally Wednesday, U.S. crude stocks and refined fuel stockpiles rose more than expected last week, according to a government report.

(Additional reporting by Janet McBride in London)

© Reuters 2007. All Rights Reserved.

When Peak Oil Meets Global Warming

www.TheDailyGreen.com

With Oil Near $88, Solar Power Exec Claims Peak Oil is Here — Or Soon Will Be

Crude oil prices rose to nearly $88 a barrel after Turkey approved a military incursion into Kurdish Iraq yesterday, which is just one reason why Jeremy Leggett’s ideas about peak oil and global warming are getting attention.

Leggett is a one-time oil industry consultant and Greenpeace activist turned head of a U.K. solar electric company, who will take his talk “Half Gone: Peak Oil Meets Climate Change” to Dublin soon, according to the Irish Times.

His argument: The depletion of oil reserves will trigger massive price spikes and a worldwide recession, setting the stage for the rise of new alternative energies as global warming’s effects become unmistakable in the weather.

Peak Oil is a theory, and analysts describe Peak Oil as the point when the world has effectively pumped half of what is available, when the rest comes at greater expense, and a yawning gap emerges between supply and demand.

Legget thinks we’ll be there in three years, and that it will set off an economic catalclysm every bit as severe as the Great Depression. And, of course, global warming will not help the world economic cause, as it demands disaster relief, sea wall construction, disease treatment and other economic inputs.

Which is why he advocates for huge government investments in renewable energy source (like solar, hint hint) that can offset the decline in oil without contributing greenhouse gases that fuel global warming. And we know that such an investment would help the job outlook, and not just for a certain solar power executive.

Record oil rally stalls as OPEC mulls

By Richard Valdmanis

NEW YORK (Reuters) - Oil's record rally stalled on Wednesday after an OPEC minister said the group could not rule out another output hike and may call an early formal meeting next month in Saudi Arabia.

U.S. crude settled down 21 cents at $87.40 a barrel -- its first loss in seven sessions -- after touching a fresh record $89 earlier in the day. London Brent crude fell 42 cents to $83.13 a barrel.

Oil prices have climbed more than 10 percent since last week on fears of a winter supply crunch, a weakening dollar, and rising tensions between Turkey and Kurdish rebels in Iraq.

Nigeria's oil minister told Reuters Wednesday that the Organization of Petroleum Exporting Countries could call a formal meeting November 17 when ministers meet in Saudi Arabia for a heads of state conference, nearly three weeks earlier than planned. He added he could not rule out a production hike.

"There will be a meeting of ministers, initially informally, but there may be a formal meeting," Minister Odein Ajumogobia said. "We are still a month away and it depends what transpires before then."

OPEC's next scheduled formal meeting is scheduled for December 5 in the United Arab Emirates. The group already has agreed to boost output by 500,000 barrels per day starting November 1