Oil and Gas Press

What is causing the high prices?

Violence in Nigeria (Niger Delta)
Iraq War
Venezuela Crisis with Oil conglomorates and the US
OPEC’s inability to do anything.

- Some feel the assassination of the former Pakistani Prime Minister Benazir Bhutto increased oil prices because stability in Pakistan is important to US policy in the Middle East.
- Threats to oil workers and facilities in Nigeria have cast a long-term shadow over oil supplies from the world’s eighth largest oil exporter.
- Sustained militant attacks in Port Harcourt raises concern for further disruptions in shipments.
- The weak dollar?
- China’s ever increasing demand.

Is demand for oil continuing to soar?

Some say  Yes.  Demand is at an all-time high, fuelled by the continued breakneck economic expansion of the Indian and Chinese economies. With more than a billion people in each country, and both economies growing fast, manufacturers and consumers are sucking in energy at an ever-increasing rate. China’s booming economy is sucking in a huge amount of oil. China overtook Japan as the world’s second-largest consumer of oil in 2003 and is closing in on the US, with demand for oil growing at about 15% a year. Analysts worry global demand for oil is so intense that supplies may not keep pace. Demand will rise by an average of 2.2 million barrels a day next year, the International Energy Agency says, compared with the 1.5 million-barrel rise seen in 2007. It says annual demand will rise 2% up to 2012, while other projections suggest demand could soar from about 90 million barrels a day to as much as 140 million over 25 years.

What is Opec doing about the situation?

As the leading oil supplier in the world, producers’ cartel Opec is under constant pressure to do something about the price bubble. It recently bowed to pressure to pump more oil, agreeing to raise its production quotas by 500,000 barrels a day from 1 November. Reports suggest the move was forced through by Saudi Arabia and that few other Opec members either have much stomach for increasing output or much capacity to spare.  Opec has said the market is “very well supplied” with crude and will continue to be so in the immediate future. It has blamed speculation by market traders - who can make money by betting on the future direction of prices - for the continuing price rises. Critics of Opec say it must act more aggressively to bring prices down.
 

Who are the winners and losers from costly oil?

 Losers:

US

Consumers and businesses

Winners:

ExxonMobil and BP are having a wonderful time,

Oil rich countries if they are not at war.  such as:  Venezuela, allowing Chavez to pay for extensive social programmes.

Russia’s oil and gas bonanza has underwritten efforts by President Vladimir Putin to exert state control over the country’s energy sector.

Libya, now becoming a major force in Africa.

Ghana, Just starting out.
 

Where will prices head next?

Many people scoffed when analysts from investment bank Goldman Sachs said in 2005 that prices could eventually top $100 a barrel. “All of the factors that pushed us above $80 are now moving us higher,” said Peter Beutel at Cameron Hanover in Connecticut. “Until we get more supply or demand starts to take a hit, there is no reason we can’t see any number.”

What do you think? send us an email info@oilandgaspress.com 

Tags: High, NIGERIA, Oil prices