Saudi oil summit likely to produce more meetings, not more oil
The private jet and limo brigade are gathered in Saudi Arabia today as representatives of oil producing and consuming countries meet to discuss the skyrocketing price of the the black stuff.
With oil almost twice as expensive as it was a year ago, countries around the world are starting to feel the strain of rising prices not just on fuel but on everything that uses oil in its production or transportation, which is to say everything. Energy ministers and delegates from more than 30 nations, as well as representatives of major oil companies, are looking to get to the bottom of why prices have jumped so far, so fast, and to determine what can be done about it.
The US says that the the problem is Economics 101 - insufficient supply to meet burgeoning demand - and wants production increases. OPEC nations disagree, blaming the run-up in price on speculation, although they've suggested that production could be boosted if necessary.
In fact it's unclear whether OPEC even has the ability to pump up the volume in any meaningful way. Right now they're strongly incented to do so, as a production increase would ease international shortage fears and reduce the economic attractiveness of alternatives like biofuels. However, thus far the Saudis have only bumped their output by 300,000 barrels day, a drop in the bucket considering that daily global production is over 80 million barrels. Say, did I hear someone say "peak oil"?
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Reader Comments (Page 1 of 1)
6-25-2008 @ 10:02AM
D.Dutta-Roy said...
I've been writing about the same phenomenon myself.....Attacks on oil pipelines has become a
global phenomenon.
My prediction vis a vis crude oil price has come true.....I predicted that at end-2008 it
might touch $200 / barrel. Seems like it's going that way.
Meanwhile, India is reeling under severe inflation due to oil prices > political instability > stocks falling .
IT'S A CHAIN REACTION.......
Solutions to such problems have to be out-of-the-box.
Reply
6-25-2008 @ 12:35PM
D.Dutta-Roy said...
Excellent blog......
$200/barrel by end-Decemeber .....what's u'r prediction?
Reply
6-26-2008 @ 4:05PM
Patrick Metzger said...
I think we might see a drop in the next few months as demand levels off due to high prices and speculators take a breather - maybe down as low as $100.
However, the mid-long term trend seems up to me - I could see $200 by end of year, especially if there are any disruptive political/natural events that affect production, refining or distribution.