Speculators, not OPEC, 'causing oil price spike'
Posted Tue Jun 10, 2008 11:23am AEST
Updated Tue Jun 10, 2008 11:28am AEST
Oil drums from British Petrolelum
Speculation-fuelled: Rising oil prices have the world economy in turmoil (AFP: Paul J Richards)
A former Iraqi oil minister says record high oil prices are more to do with speculators, including central banks, than supply and demand.
Prime Minister Kevin Rudd is pressuring G8 leaders to push for OPEC to increase oil supply.
Isam Chalabi was Iraq's oil minister before the first Gulf War and has more than 40 years experience in the industry.
He says Mr Rudd's strategy will not work.
"The question of prices today is not related to supply and demand fundamentals - everybody knows that," he told AM.
"Everybody has said so and hence it is not a matter of increasing supplies because whoever is in need of oil has been able to get it, so there is no need of problem of getting the oil."
Brian Wilson, former British energy minister under Tony Blair, agrees.
"What takes it from $US100 to $US130 is that there is a huge speculative element and the actual connection between the paper trading price of oil and anything that is happening in the physical world is now extremely remote," he told the BBC.
Mr Chalabi says only regulation of oil trading will stop the price spike.
"The world consumes 85 million barrels a day, you have trading going on over a billion - some people estimate up to two billion - barrels a day, so if something really happens to put a hold on that, I believe that the price spike will not continue and maybe it will start to decrease," he said.
Wednesday, June 11, 2008
Oil Crisis - American Point of View
Asia is in political crisis.
Airlines globally are concerned about high costs.
Mass strikes by truckers in Spain and Portugal.
Protests in India amid rising unrest about high fuel costs.
Here is what's happening according to a Seattle publication:
-----------------------------------------------------------------
It will take governmental guts to cure America's gas pains
MARTIN SCHRAM
When Washington is in crisis mode, its officials move into high-speed action mode. Which is to say, they start talking faster.
And America's gas pains -- economic and political -- are a major crisis that is hurting worst those who can afford it least. So Washington officials are a blur of action, racing in front of the cameras to promote their pet solutions.
Here's where we are today: Gasoline prices are shooting up faster than the gas station guys can scurry up the ladders to change the big numbers on the big signs. Indeed, the only thing shooting up as fast are the profits of Exxon and the other big oil companies -- huge profits, record profits. Exxon's profits for the first quarter of 2008 were a whopping 17 percent higher than its huge profits from the previous quarter.
Big Oil's profits far exceed those of the other industries that you used to think needed to be reined in -- Big Pharm, Big Farm, the old Ma Bell. Big Oil's response is short and crude: The world price of crude oil is at record highs. That's why you must pay record prices at the pumps.
The notion that the burden should be shared by all -- with you paying less at the pump and oil companies taking lesser profits that, even so, are still higher than those in other industries -- is something big oil considers to be insultingly crude (only this time they pronounce it without the "e"). Here is what Official Washington is saying today:
Democrats say we must fix what is wrong by clamping a new tax on the windfall profits of the big oil companies. That will cause the big oil companies to act more responsibly.
Republicans are saying windfall, shmindfall. Big profits are the mother lode of capitalism. The Grand Old Party's top answer for your gas pains today has been an idea that may well make it less likely that you will remain doubled over with gas pains a decade from now: Start drilling for oil beneath good old American land -- in the Arctic National Wildlife Refuge.
To which environmentalists say, drilling there could endanger Arctic wildlife. To which economic survivalists could say the Arctic wildlife is already endangered by the pigs of the lower 48 and the rest of the world -- because their energy emissions are already endangering life in the Arctic.
Here is what Washington's left and right are also saying: We must promote alternative fuels -- solar, wind, ethanol, natural gas, diesel (the new engines are far cleaner than they used to be), shale, hydrogen fuel cell cars of the future, and the hybrid cars of today. To which many will stop you at the mention of "ethanol" to utter the in-crowd's new reflexive response: A gallon of ethanol costs more to produce than a gallon of gas -- and corn for ethanol is driving up prices of all things that use corn. To which one can respond: But at least we won't be picking that corn in the sands of Saudi Arabia.
Also, Washington needs to fix its hybrid tax-credit bungle. Buyers of "full hybrid" cars which achieve maximum mileage and produce near zero emissions -- Toyota's Prius and Honda's Civic (with miles per gallon in the upper 40s) and Toyota's mid-size Camry (35 MPG) -- deserve federal tax credits that must be made permanent. Buyers of silly "mild hybrid" cars such as the Chevrolet Malibu which scores just 2 MPG better than non-hybrid models should get no federal tax credits.
Here is what nobody seems to have the political fortitude (see also: governmental guts) to say: Washington's left, right and squishy-soft center need to end their battles of the buzz words, deep-six their pet political agendas and recognize that America's energy crisis requires an urgent, all-out approach.
Today it is an economic security crisis. Those suffering most are those who can least afford to pay $4 -- going on $5 -- a gallon. Those soaring gas prices are being matched by soaring prices for all goods and services that at some point involve the use of petroleum, which is to say: Everything).
Tomorrow it is a national security crisis: America still imports 60 percent of its oil, much of it from the volatile Middle East. We can no longer wait for politically perfect solutions. Drill in ANWAR and safeguard the wildlife in every way possible. Today we face a rare test of political will. To which the correct answer must be: All of the above.
Martin Schram writes political analysis for Scripps Howard News Service; martin.schram@gmail.com
Airlines globally are concerned about high costs.
Mass strikes by truckers in Spain and Portugal.
Protests in India amid rising unrest about high fuel costs.
Here is what's happening according to a Seattle publication:
-----------------------------------------------------------------
It will take governmental guts to cure America's gas pains
MARTIN SCHRAM
When Washington is in crisis mode, its officials move into high-speed action mode. Which is to say, they start talking faster.
And America's gas pains -- economic and political -- are a major crisis that is hurting worst those who can afford it least. So Washington officials are a blur of action, racing in front of the cameras to promote their pet solutions.
Here's where we are today: Gasoline prices are shooting up faster than the gas station guys can scurry up the ladders to change the big numbers on the big signs. Indeed, the only thing shooting up as fast are the profits of Exxon and the other big oil companies -- huge profits, record profits. Exxon's profits for the first quarter of 2008 were a whopping 17 percent higher than its huge profits from the previous quarter.
Big Oil's profits far exceed those of the other industries that you used to think needed to be reined in -- Big Pharm, Big Farm, the old Ma Bell. Big Oil's response is short and crude: The world price of crude oil is at record highs. That's why you must pay record prices at the pumps.
The notion that the burden should be shared by all -- with you paying less at the pump and oil companies taking lesser profits that, even so, are still higher than those in other industries -- is something big oil considers to be insultingly crude (only this time they pronounce it without the "e"). Here is what Official Washington is saying today:
Democrats say we must fix what is wrong by clamping a new tax on the windfall profits of the big oil companies. That will cause the big oil companies to act more responsibly.
Republicans are saying windfall, shmindfall. Big profits are the mother lode of capitalism. The Grand Old Party's top answer for your gas pains today has been an idea that may well make it less likely that you will remain doubled over with gas pains a decade from now: Start drilling for oil beneath good old American land -- in the Arctic National Wildlife Refuge.
To which environmentalists say, drilling there could endanger Arctic wildlife. To which economic survivalists could say the Arctic wildlife is already endangered by the pigs of the lower 48 and the rest of the world -- because their energy emissions are already endangering life in the Arctic.
Here is what Washington's left and right are also saying: We must promote alternative fuels -- solar, wind, ethanol, natural gas, diesel (the new engines are far cleaner than they used to be), shale, hydrogen fuel cell cars of the future, and the hybrid cars of today. To which many will stop you at the mention of "ethanol" to utter the in-crowd's new reflexive response: A gallon of ethanol costs more to produce than a gallon of gas -- and corn for ethanol is driving up prices of all things that use corn. To which one can respond: But at least we won't be picking that corn in the sands of Saudi Arabia.
Also, Washington needs to fix its hybrid tax-credit bungle. Buyers of "full hybrid" cars which achieve maximum mileage and produce near zero emissions -- Toyota's Prius and Honda's Civic (with miles per gallon in the upper 40s) and Toyota's mid-size Camry (35 MPG) -- deserve federal tax credits that must be made permanent. Buyers of silly "mild hybrid" cars such as the Chevrolet Malibu which scores just 2 MPG better than non-hybrid models should get no federal tax credits.
Here is what nobody seems to have the political fortitude (see also: governmental guts) to say: Washington's left, right and squishy-soft center need to end their battles of the buzz words, deep-six their pet political agendas and recognize that America's energy crisis requires an urgent, all-out approach.
Today it is an economic security crisis. Those suffering most are those who can least afford to pay $4 -- going on $5 -- a gallon. Those soaring gas prices are being matched by soaring prices for all goods and services that at some point involve the use of petroleum, which is to say: Everything).
Tomorrow it is a national security crisis: America still imports 60 percent of its oil, much of it from the volatile Middle East. We can no longer wait for politically perfect solutions. Drill in ANWAR and safeguard the wildlife in every way possible. Today we face a rare test of political will. To which the correct answer must be: All of the above.
Martin Schram writes political analysis for Scripps Howard News Service; martin.schram@gmail.com
Tuesday, June 10, 2008
A Policy that Evades Common Sense
I don't understand where this is going.
Take away the subsidies meant for the rakyat, then compensate by ploughing the money back to the rakyat through several poorly conceived programmes...
Why not retain but fix the subsidy at current levels, then work out something that really works?
As as for Govt savings, that's a 2-edged sword. Unnecessary spending should be curbed - afterall, why does a minister even have to have 1% of his/her entertainment budget when directly or othrwise, each has enough access to wealth? And how about relooking the contracts of the IPPs and other petrol users who make up the non-vehicle component of the subsidy?
This said, government spending will spur economic growth and should be done carefully, and properly. Public transport for one. Education another. A better healthcare system. Need I say more?
What we do NOT need: government bailouts of useless projects, overseas training centres, useless loopsided tourism campaigns, lawatan sambil belajar...
Lastly, BP has said that there is 42 years more of fuel, what does Petronas say? In fact, shouldn't it be time for Petronas to come under the purview of the government and not one man?
I continue to be confuse. Why form another committee when the basic startegy is flawed? We do not need a committee on inflation, we need a leadership that understands the components that make up an economy and to focus on the multipliers that matter...
Take away the subsidies meant for the rakyat, then compensate by ploughing the money back to the rakyat through several poorly conceived programmes...
Why not retain but fix the subsidy at current levels, then work out something that really works?
As as for Govt savings, that's a 2-edged sword. Unnecessary spending should be curbed - afterall, why does a minister even have to have 1% of his/her entertainment budget when directly or othrwise, each has enough access to wealth? And how about relooking the contracts of the IPPs and other petrol users who make up the non-vehicle component of the subsidy?
This said, government spending will spur economic growth and should be done carefully, and properly. Public transport for one. Education another. A better healthcare system. Need I say more?
What we do NOT need: government bailouts of useless projects, overseas training centres, useless loopsided tourism campaigns, lawatan sambil belajar...
Lastly, BP has said that there is 42 years more of fuel, what does Petronas say? In fact, shouldn't it be time for Petronas to come under the purview of the government and not one man?
I continue to be confuse. Why form another committee when the basic startegy is flawed? We do not need a committee on inflation, we need a leadership that understands the components that make up an economy and to focus on the multipliers that matter...
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