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Oil crisis – maybe we just need more strict speculator controls
Kelvin King, AirCargo Air-Pacific
THE AIR cargo industry knows all about emergencies. They can happen on a small scale, such as a consignment jaunting off temporarily (well, one hopes so!) on its own itinerary, or on a larger and more tragic basis, such as a freighter crash, writes Kelvin King.
At the moment, however, we’re facing an emergency which might have disastrous consequences for the forwarding, logistics and transport industries, consequences that will be reflected in increased prices to end users, cobwebby distribution patterns and the demise of shippers who can’t hack it in the face of rapidly-rising prices.
The soaring price of oil isn’t because we’re almost out of the stuff, although the peak oil purists do have a point if only they would dilute their ideological hyperbole.
… It’s a given that a key contributor is the devil-may-care attitude so much of the world – our industry included – has had in using non-renewable fuel sources. We’ve talked about optimum efficiency and even made some useful moves towards achieving such nirvana, but for the most part it has been little more than worthy reports and earnest, not always entirely relevant, research projects.
In the shadows, however, lurks a very different contributor to the pricing problem: The fuel speculators, playing silly buggers with oil futures in expectation of massive profits. Some people have called them evil, suggesting that what they are up to is illegal.
(22 June 2008)
Oil Summit to Take on Speculators
Bernd Radowitz and Reem Shamseddine, Wall Street Journal
A joint working paper ahead of an oil summit here Sunday between energy producers and consumers is set to raise the heat on oil market investors by calling for tighter regulation and more data on the role of index funds, though the tone may rankle major free-market consumers such as the U.S. and U.K.
The document, seen by French news agency AFP and which could, if agreed, form the basis of the summit’s final communiqué, is to be presented to energy ministers, chief executives from the oil majors and leaders Sunday. It calls for action to “improve the transparency and regulation of financial markets through measures to capture more data on index fund activity and to examine cross exchange inter-actions in the crude market.”
The document says that index funds and other investors have “unrealistic assessments” of the future value of oil.
(21 June 2008)
Former Saudi oil minister says world reaching third oil crisis
Eric Watkins, Oil & Gas Journal
Speculation is contributing to higher world oil prices, not imbalances between supply and demand, according to Saudi Arabia’s former minister of oil, Sheik Ahmed Zaki Yamani, in a published interview.
Asked if current conditions are approaching a third oil crisis, Yamani said, “Yes, I think so. This is a new oil crisis. Oil prices are very high.” He said that the two earlier oil crises of the 1970s were caused by “a lack of supply, but now it is because of problems with the price-setting system” in the futures market.
… At the same time, Yamani suggested that under extreme conditions the price could range even higher. “If the US or Israeli forces attack Iran. If and only if they attacked, the oil price would go up to $200 immediately. The Strait of Hormuz [would] be shut down by Iran. I do not see the US attacking Iran, based on logical thinking. But you never know.”
(20 June 2008)
