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Cheney says high oil price reflects market reality
Tabassum Zakaria, Reuters.
Crude oil prices in excess of $100 a barrel reflect the reality in the market place, U.S. Vice President Dick Cheney said on Monday.
Cheney, on a trip to the Middle East that started in Iraq, said he did not see a lot of excess production capacity worldwide.
… Asked about the prospects for increased oil production in the region, Cheney told reporters in Baghdad traveling with him: “One of the problems we’ve got now obviously is that there is not a lot of excess capacity worldwide.”
(17 March 2008)
Contributor Douglas Houck writes:
Doesn’t appear Cheney is in the Cornucopian camp.
They see bubbles everywhere now
Jerome a Paris, European Tribune
I must admit that I’m continually amazed these days about how easily the oil price increases and the development of renewable energy are labelled as “bubbles.” After years during which the blatant real estate bubble was ignored by all “serious” commentators (and after an earlier decade when the reality of the dotcom bubble was similarly denied until the crash had happened), they now find it extraordinarily to use that label freely for any inconvenient price evolution.
But, of course, it is easy to understand. It is so much more comfortable to paint the ever-higher oil prices, and the development of still thoroughly hippie-tainted wind power as temporary aberrations or meaningless bursts of irrational exuberance rather than as persistent realities, because that would mean that the comfortable assumptions that underpin today’s economic model have to be questioned. Perpetual growth, the deification of the quick buck based on blissful ignorance of externalities, and individual freedom have to give way to long term planning, intrusive regulation of pollution and emissions, policies to reduce demand and care for the commons.
And that cannot be promoted, can it? Thus, it’s a bubble.
A few examples…
(12 March 2008)
Also at Daily Kos. Ronald Bailey at Reason also sees a bubble.
Isn’t it possible – indeed probable – that both are true? That there is both a long-term rise in the price of oil, as well as bubble-like behavior? -BA
Shell CEO says no problem with oil supplies
Reuters
Royal Dutch Shell Plc’s Chief Executive said on Monday that there is no major problem with world oil supply, making it difficult to explain why prices have hit an all-time peak.
… “From the physical point of view there is no high alarm,” Shell’s Jeroen van der Veer said at a news conference. “It’s difficult to understand why the oil price is where it is.”
“No tankers are waiting in the Middle East, there are no queues for the retail stations here.”
(17 March 2008)
Weak dollar fuels energy price rise
Sam Fletcher, Oil & Gas Journal
… Adam Sieminski, chief energy economist for Deutsche Bank in New York, and Michael Lewis, the bank’s head of global commodities research in London, issued a report outlining several measures to assess at what point oil prices can be considered extreme.
Among those measures:
— Crude prices are already at record highs in real terms deflated by US producer prices. However, oil prices would have to rise to $118/bbl to exceed their all-time highs in real terms deflated by US consumer prices.
— Relative to per capita income, crude prices would have to reach $134/bbl to bring the purchasing power of an average G7 (group of seven industrialized nations: Canada, France, Germany, Italy, Japan, UK, and US) consumer to the levels that prevailed in 1981.
— West Texas Intermediate prices would have to rise to $150/bbl for oil as a percent of global gross domestic product to hit the all-time high that prevailed in 1980.
— Crude prices would have to hit $145/bbl to raise energy expenditures as a percent of US disposable income to early 1980s levels.
(14 March 2008)
Contributor driller writes:
The study says that 1980’s real “real” terms crude price is $150.
Record oil divorced from fundamentals-OPEC delegate
Simon Webb, Reuters
The weak dollar and the flow of investment money into commodities have pushed oil prices to a fresh record so more pumping from OPEC would have done little to stop the surge, a senior OPEC delegate said on Sunday.
… “What can you do?” the delegate told Reuters. “Prices are completely ignoring the fundamentals of supply and demand. Even if we had increased (at the meeting), I don’t think it would have changed anything. It is financial speculators, the weak dollar and funds driving the price.”
(16 March 2008)
