The Breaking Point

[katty]

continue at:
http://www.energybulletin.net/8112.html

Published on 21 Aug 2005 by New York Times. Archived on 21 Aug 2005.

The Breaking Point
by Peter Maass

Petrodollar Warfare: Dollars, Euros and the Upcoming Iranian Oil Bourse...

OPEC says it's lost control of oil prices...

The largest oil terminal in the world, Ras Tanura, is located on the eastern coast of Saudi Arabia, along the Persian Gulf. From Ras Tanura's control tower, you can see the classic totems of oil's dominion -- supertankers coming and going, row upon row of storage tanks and miles and miles of pipes. Ras Tanura, which I visited in June, is the funnel through which nearly 10 percent of the world's daily supply of petroleum flows. Standing in the control tower, you are surrounded by more than 50 million barrels of oil, yet not a drop can be seen.

The oil is there, of course. In a technological sleight of hand, oil can be extracted from the deserts of Arabia, processed to get rid of water and gas, sent through pipelines to a terminal on the gulf, loaded onto a supertanker and shipped to a port thousands of miles away, then run through a refinery and poured into a tanker truck that delivers it to a suburban gas station, where it is pumped into an S.U.V. -- all without anyone's actually glimpsing the stuff. So long as there is enough oil to fuel the global economy, it is not only out of sight but also out of mind, at least for consumers.

I visited Ras Tanura because oil is no longer out of mind, thanks to record prices caused by refinery shortages and surging demand -- most notably in the United States and China -- which has strained the capacity of oil producers and especially Saudi Arabia, the largest exporter of all. Unlike the 1973 crisis, when the embargo by the Arab members of the Organization of Petroleum Exporting Countries created an artificial shortfall, today's shortage, or near-shortage, is real. If demand surges even more, or if a producer goes offline because of unrest or terrorism, there may suddenly not be enough oil to go around.

[mcscajun]

1. It's a long but worthwhile read...

...I've been working on it on and off this morning/afternoon, in between other things.

[wli]

2. some disinfo in there

e.g. the refinery and terrorism causes cited for elevated oil prices now are bunk. What's going on with oil right now is Enron-style chicanery. Things will fall apart later (in fact, soon).

[HKTech]

3. Nobody wants oil prices to get too high...

The Oil Prices in the late 70's were responsible for the recession of the early 80's. Those high oil prices also led to more fuel efficient cars becoming the norm in the USA and more fuel efficient technologies being implemented and the price of oil to crater. OPEC and everybody else does not want that to happen again.

The major cause for the rise in prices is demand. Asian countries are growing and they need oil to fuel that growth. Prices would be high if we didn't invade Iraq.

[wli]

4. but current oil prices aren't justified by it

I don't have a source, but people are saying it all over.

It's Enronization of the market, not a real shortage.

[HKTech]

5. If it was just American Companies...

I'd agree with you, but there are too many things going on to blame "Enronization."
http://www.washingtonmonthly.com/archives/individual/2005_06/006532.php
http://www.washingtonmonthly.com/archives/individual/2005_07/006660.php
http://www.washingtonmonthly.com/archives/individual/2005_07/006665.php

And if you don't have a source, then it doesn't exist. :)