Oil's top brass talk prices at summit

[Eugene]

Oil's top brass talk prices at summit
Sat Apr 22, 2006 10:05 AM BST

By Barbara Lewis and Deepa Babington

DOHA (Reuters) - Chief executives of the world's top energy companies met ministers from
the biggest producers on Saturday with record oil prices of above $75 a barrel speeding
the race for supply investment.

A four-year rally, fuelled by supply constraints from the oilfield to the refinery gate,
has left both sides with bumper profits. This year, worries over Iran's exports and crises
in Iraq's and Nigeria's industry have pushed oil to levels that threaten economic growth.

Consumer governments are urging the likes of Exxon Mobil, BP and Royal Dutch Shell to spend
money building refineries. The companies want major producers like Saudi Arabia, Kuwait and
UAE to drill for more oil.

<snip>

All are in rare agreement that prices have reached the danger zone as they near their
inflation-adjusted peak of more than $80 hit in 1980, the year after the Iranian revolution.

<snip>

...but prices will remain high for the next few years.

Full article: http://today.reuters.co.uk/news/newsArticle.aspx?type=businessNews&storyID=2006-04-22T090520Z_01_L22697254_RTRUKOC_0_UK-ENERGY-TALKS.xml

[phantom power]

1. Grasping for new supplies is a losing game. Smell the desperation.

[Massacure]

2. Even if china only goes through a 5% yearly increase

That is still 1.4 million more barrels we will need by 2010. Good luck finding that.

China is growing at the rate of 8-10% though. 5% is conservative even with their shift in focus toward environmental stability.

[Strelnikov_]

3. " . . Prices Will Remain High For The Next Few Years . . "

Yea, right.



2002 (+) 1.8 M bbl/dy Price $20/bbl-> $31/bbl
2003 (+) 3.4 M bbl/dy Price $31/bbl-> $31/bbl
2004 (+) 2.4 M bbl/dy Price $31/bbl-> $42/bbl
2005 (+) 0.3 M bbl/dy Price $42/bbl-> $62/bbl
2006 ~ 0 (a)M bbl/dy Price $62/bbl-> $71/bbl

(a) all indications are that supply in 06 has fallen.

So, in the face of increasing price, we have a steady increase in production, just as one would expect (even in 2002/03 with the overlay of the Iraq buildup/invasion).

Then, suddenly, in 2005, production flatlines.

Price drop? No.

Recession reducing demand? No.

OPEC, a cartel that could not even keep it's act together during the relatively low prices of the 90's oil glut, finally are working in unison, and contrary to past (seemingly annual now) statements that the current price of oil is too high? I wasn't born yesterday.

Oh, but no. The high prices can't be that of which we shall not speak.

It just has to be Big Oil collusion Bushco sabre rattling lack of investment OPEC collusion Chindia demand . . . and on and on and on. . .

Yet, nearly every article mentions 'supply problems', in passing, always secondary to the talking point of the day.

There is a lot of money to be made in the initial stages of that of which we shall not speak, some of which will not be made if the 'consumers' catch wind of the unmentionable, and begin to make other economic and political arrangements.

[Jesus W Vader]

4. Any Stats available?

Any Stats available for the last few months or Q1-06 oil production. I am aware of the creepy graph from IEA showing a plateau forming late '04 through all of '05, and non-opec has been flat for longer, which cannot plausibly be blamed on politics. Still, seems for everyone who insists PO is here, there is someone who insists we have 5, 10, 15, 20, 30 yrs. My attitude is "wait and see" I guess. It's tempting to think "they're gouging us" even though oil is a finite and vulnerable resource. Most of the gouging that goes on in this country is WRT health care and education, IMO.

[Strelnikov_]

5. I Was Wrong About Q1-06, Supply Increased 0.2 M bbl/dy

Nigeria and Iraq unrest drops, get all the GOM platforms back online, we could wring another 2.5 M bbl/dy out of the system . .

That is, if one of the other myriad other threats to supply or depletion of some super-giants does not materialize first.

http://omrpublic.iea.org/world/wb_wosup.pdf