posted on April 28, 2004 10:41:24 AM new
It's starting to look more and more like the Carter years from the 1970s.
Fed warns of dramatic rise in oil futures
By Andrew Balls in Washington and Kevin Morrison in London
Published: April 27 2004 19:42 | Last Updated: April 27 2004 21:13
Alan Greenspan, chairman of the US Federal Reserve, warned on Tuesday that the "dramatic" rise of oil and gas futures was "an economic event that can significantly affect the long-term path of the US economy".
In the latest of a series of cautions from economic policymakers, Mr Greenspan said the rise in six-year oil and gas futures was "almost surely going to affect the growth of oil and gas consumption in the US and the nature of the capital stock investments currently under contemplation".
The benchmark Brent crude futures on Tuesday hit their highest level since the Iraq war when it reached $34.33 a barrel. US gasoline futures hit a lifetime record of $1.2040 a gallon.
Addressing an energy conference by the Center for Strategic and International Studies in Washington, the Fed chairman said the strength of crude oil prices reflected "fears of long-term supply disruptions in the Middle East that have resulted in an increase in risk premiums".
The US, he added, needed to increase its capacity to import liquefied natural gas (LNG), to reduce gas price volatility. Imports of LNG accounted for only 2 per cent of US gas supply in 2003.
"If North American natural gas markets are to function with the flexibility exhibited by oil, more extensive access to the vast world reserves of gas is required."
Mr Greenspan's comments came as the Organisation of Petroleum Exporting Countries said it was considering raising its preferred price band of $22-$28. Purnomo Yusgiantoro, Opec president and the oil minister of Indonesia, said: "The $22-$28 range was decided in 2000. It's 2004. Some Opec members have proposed a change, therefore we are now analysing whether to change the range."
Opec's future actions were put in doubt, however, by Ali Naimi, Saudi oil minister, who said the kingdom remained committed to the cartel's current preferred range. At this month's Opec meeting in Vienna, Saudi Arabia supported a reduction in the cartel's output because of fears of a sharp seasonal fall in demand.
That Vienna decision was criticised on Tuesday by Kyle McSlarrow, the deputy US Energy secretary, who met Mr al-Naimi in Washington.
"People need to understand that the inventory levels are tight enough that if a pipeline goes down, if there's a refinery fire, or something like that, you could see significant price effects," Mr McSlarrow said.
"The people who are refining gasoline today do not have an incentive to build a cushion because they're buying more expensive crude."
Indonesia - along with Venezuela - has been a vocal supporter of a higher Opec price band, as both countries have struggled to meet their quotas. Indonesia faces a long-term production decline and Venezuela has struggled to recover from the oil workers strike in late 2002.
Claude Mandil, chief executive of the International Energy Agency, the energy watchdog of OECD countries, plans to discuss the price band issue with Opec ministers in Paris this week.
"If this is confirmed, it will be very detrimental to the global economy," Mr Mandil told the Financial Times. "It will also ultimately be very detrimental to Opec producers because they are looking for short-term revenue increases, but it will come at a cost with the loss of market share and as a consequence revenue," he said.
posted on April 28, 2004 11:22:55 AM new
Considering that these rises seem to be based on the possibility and fear of refinery problems maybe our oil companies should consider the wisdom behind their decision to not build a new one in the past 15 years. Is it just me, or is that just blatantly stupid?
Maybe someone should also consider taking he Saudis up on their offer to finance and build two new refineries here in the US since our own oil companies don't seem to be interested in making this kind of common sense move.
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If it's really "common" sense, why do so few people actually have it?
[ edited by fenix03 on Apr 28, 2004 11:23 AM ]
posted on April 28, 2004 02:30:17 PM new
I know oil for heating and fuel aren't our only oil needs....but do any of you really think American's are as concerned about this issue vs. just what the price of a gallon of gas is?
Whatever happened to the idea of conservation of both heating and gasoline?
Also, on building new plants....imo...a big part of why we haven't seen that happen is because of the strict environmental regulations. Not enough profit to encourage building after meeting all the new regulations. Between the old refineries operating under a 'grandfathered' deal and the 'lessening' of EPA standards have allowed some of what's being producted now. Otherwise...we'd be getting even less fuel.
posted on April 28, 2004 04:18:29 PM new
well,there is always nuclear energy.
I agree,no one talks about conserving energy-driving less,go to bed early ,wear thermal underwear,use ceiling fan.
-sig file -------we eat to live,not live to eat.
Benjamin Franklin
posted on April 28, 2004 04:55:36 PM new
Well Linda, when you consider that US population and consumption rates are consistantly risng if that is really the reason it's about the worst I have heard. We have not built anythin in 15 years because it's expensive.... well so is upkeep on 20 year old technology. Just think how much more ffiecient an upto date refiner would be. Oil companies have any amazong effect of the US economy it's about time that someone comes into the picture that recognizes that and acts in the best interest of the country as well as their bottom line. At a time when we cannot keep up with demand, one of the California refineries is being shut down.
I can't figure out if these people are criminally stupid or just criminally greedy.
~~~ • ~~~ • ~~~ • ~~~ • ~~~
If it's really "common" sense, why do so few people actually have it?
posted on April 28, 2004 05:36:28 PM new
fenix - At a time when we cannot keep up with demand, one of the California refineries is being shut down
What were the reasons given for it being shut down?
The point I was making about it appearing to me most American's aren't concerned is because we continue to buy bigger and bigger homes when we are having less children. We continue to buy bigger gas guzzling cars...without concern for conservation.
Another question. Would you like to see the government own and run all our energy facilities....rather than just regulate them?
posted on April 28, 2004 06:49:37 PM new
::What were the reasons given for it being shut down? ::
I honestly have no idea but apparently neiter do many others because there is an investigation behind it since it smacks of the manufactured energy shortage here a couple years ago when plants where taken offline for no justifiable reason.
::Another question. Would you like to see the government own and run all our energy facilities....rather than just regulate them?:::
Good god no! If our government has established one thing it is that it is completely and utterly devoid of business sense. We would be paying $5 a gallon within a year.
We should let the Saudi's build the two refineries that they want to put in here (or get Gates, Theresa Hines or billionare of choice) to build a couple refineries and then lease it's services to whomever would like to utilize it.
The only way I would endorse greater government involvement is if they built and leased out the refineries with lease contracts awarded on lowest contracted consumer retail price per gallon of finished product and accept bids from international entities wanting to expand into the US. I would endorse this because it would force a price war which is not going happen unless new players are brought to the party. ( yeah yeah yeah - I know it will never happen but ... ) BTW - I would want this overseen by an individual with a proven business record and no ties to oil companies with a reasonable salary base and bonus based on profitability of facility limited to 100% of base salary).
~~~ • ~~~ • ~~~ • ~~~ • ~~~
If it's really "common" sense, why do so few people actually have it?
[ edited by fenix03 on Apr 28, 2004 06:54 PM ]
