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Oil industry costs continue steep rise: CERA
Michael Erman, Reuters
Costs to tap into new oil and gas projects escalated about 6 percent globally over the past 6 months and the climb can be expected to steepen on soaring prices for steel and other raw materials, according to a study released on Wednesday.
Cambridge Energy Research Associates (CERA), a unit of information and consultancy IHS Inc said that costs to build new refineries and petrochemical plants also rose 6 percent.
(14 May 2008)
High oil prices not “a friend,” ConocoPhillips chief says
John Porretto, Associated Press via Forbes
Despite contributing to massive, multibillion profits in recent quarters, record crude prices are not helping the world’s big oil companies on many fronts, including some efforts to find more fossil fuel, the chief of ConocoPhillips said Wednesday.
Jim Mulva, speaking at the company’s annual shareholder meeting, said the spike in crude prices to historic highs has raised the tab to do business in the oil field dramatically, both for equipment and personnel.
For example, Mulva said, a barrel of oil that might have cost $20 or $30 a barrel to find, produce and transport in the past may now cost the company $70 or $80 barrel.
… Mulva said the biggest factor in gasoline prices was the skyrocketing cost of crude. Speaking to reporters after the meeting, Mulva said his prediction late last year for the price of crude in 2008 was somewhere between $85 and $95 a barrel.
He figured the slowing economy would take a toll on demand but acknowledged – like others – that market speculation, geopolitical turmoil and other factors have pushed prices higher.
(14 May 2008)
Contributor Scott Chisholm Lamont writes:
I wonder if the “other factors” mentioned would include supply/demand mis-match?
Emerging markets ‘to keep oil prices high’
Danny Fortson, Independent
The price of oil is unlikely to fall significantly from near-record highs and could rise further still as demand from Asia and the Middle East outstrips falling demand from the faltering US and European economies, the International Energy Agency said.
The Paris watchdog’s findings, published yesterday in its monthly oil market report, underline the shifting balance of power between the emerging economies in the East and the traditional powers in North America and Europe.
Year on year the United States, the world’s biggest oil consumer, is using 400,000 barrels less per day, equivalent to 2 per cent of its average daily consumption of 20m barrels. A slowdown of that magnitude would in the past have led to a sharp drop in the oil price. This is clearly no longer the case – oil hit a fresh high of more than $126 on Monday.
Eduardo Lopez, an IEA analyst, said the role of America as oil price arbiter – it consumes one in every four barrels of the world’s oil – has been greatly diminished.
(14 May 2008)
Oil could reach $200 before demand gets hit
Santosh Menon, Reuters
The price of oil could rise to $200 a barrel in the next two years before it starts to seriously hit demand, fund manager Tim Guinness said on Tuesday.
“I am increasingly comfortable with the analysis which says the oil price is going to have to go to $200 before demand is dampened enough,” Guinness, who is the chief investment officer of Guinness Atkinson Funds, told Reuters in an interview.
(14 May 2008)
The new realities of record oil
Shawn McCarthy, Globe and Mail
Emerging economies are fighting soaring prices with subsidies and price controls. But are their methods part of the problem?
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Emerging economies are contributing to record oil prices by subsidizing demand in their home markets as they seek to shelter their populations from the impact of crippling fuel costs, the International Energy Agency says in a new report.
As crude prices breached another record yesterday, the Paris-based IEA downgraded its forecast of world petroleum consumption for 2008, saying that high prices and economic weakness in the industrialized world are eating into oil demand.
But the developing world is bucking that trend, notably China and the Middle East, as booming economies and subsidized fuel have kept oil demand climbing sharply.
(14 May 2008)
