OPEC Weighs Need Versus Greed

Cartel Expected To Maintain Current Output Despite Oil Costs Rising Above $100 A Barrel

(AP)  As oil prices shoot into uncharted territory, OPEC is wrestling with two powerful forces: need vs. greed.

Analysts expect the Organization of Petroleum Exporting Countries to take the easy way out and do nothing at all - at least for the time being - when the 13-nation cartel meets in Vienna on Wednesday.

Crude prices surged past $103.76 Monday on the New York Mercantile Exchange, setting an all-time high Monday when adjusted for inflation from the $38 a barrel that oil hit in 1980.

Pressure has been mounting on OPEC to increase output and help ease the threat of record prices nudging the U.S. into recession and inflicting wider damage. Reflecting the worries of major industrial nations, Japan last week urged the group to open its taps, saying the soaring prices "are gradually damaging the global economy."

But OPEC members are reaping unprecedented profits, and analysts say it's unlikely that they will vote this week to raise production.

"I think that politically, OPEC should increase output. But I think what they will actually do is nothing," said John Hall, of John Hall Associates in London.

"They're controlling the market very carefully right now," he said. "They're getting greedy, and politically, it's a very bad move."

Oil shot up a dramatic 19 percent in February. Among the factors behind that: tensions in the Middle East, Turkey's incursion into northern Iraq and the slumping dollar, which has prompted speculators and other investors to shift cash to crude and other commodities.

Supply and demand, as always, are the wild cards.

Most industry experts say crude inventories are building, and key OPEC members contend the market is well-supplied.

What's less certain is demand. It typically slackens in the second quarter - and if the U.S. economy stumbles into recession, demand is likely to fall further as industrial production slows and factories adjust to weaker orders for consumer goods.

Surging oil prices are boosting gasoline prices at the pump, which is starting to dampen demand. The average price for a gallon of gas stood at $3.165 on Monday, according to AAA and the Oil Price Information Service, up nearly 70 cents from a year ago. Americans are responding by driving less - demand for gasoline has fallen for 5 straight weeks when compared to the same week a year ago, according to Energy Department figures.

"OPEC now finds itself in a difficult spot," said Stephen Schork, editor of The Schork Report, which keeps tabs on global energy markets and trends.

"The dollar is weak and getting weaker by the day, crude supplies continue to build, and the demand outlook is hardly sunny," Schork said. He thinks OPEC will be tempted to float a cut in output, "but in this price environment, that is a difficult sell."

Venezuela, one of OPEC's strongest price hawks, said it will lobby to keep current production levels unchanged. And Libya said OPEC probably "won't do anything" if oil holds around $100 a barrel.

"There are geopolitical factors that are pressuring prices," including the U.S.-led war in Iraq and the threat of new violence in Nigeria, said Venezuelan Oil Minister Rafael Ramirez. "It's not a supply problem."

Johannes Benigni, managing director of JBC Energy in Vienna, believes there is justification for a cut in output - but he doesn't think the cartel will intervene just yet.

A cut would push prices even higher, generating a storm of negative publicity for OPEC. And reducing output now would, as Benigni put it, "remove a bullet from their arsenal which could be used more effectively at a latter stage if prices begin to fall."

Benigni and others say the more likely trigger for OPEC action would be a drop in oil prices to $80 or $85 a barrel, which they think the cartel would be bound to defend.

"If oil retreats to these prices, then the group is likely to cut output," he said.

Including Iraq, which does not adhere to OPEC's production quotas, the cartel's total output is estimated at about 31.5 million barrels a day - roughly 40 percent of daily world demand, which is believed to be around 85.5 million barrels. Excluding Iraq, the formal OPEC output ceiling is around 30 million barrels a day.

Hall predicts that OPEC will maintain its current output, but to reassure jittery oil markets, will formally authorize the group's President Chakib Khelil to increase or decrease production in the coming weeks.

The cartel, he warned, may be trying to have it both ways.

"High oil prices do lead to recession," Hall said. "It takes time, but it gets there. And the problem is that it's self-perpetuating."

The 13 OPEC members are Algeria, Angola, Ecuador, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela.

[sjc_1]

Demand may go down in the U.S. with a slowing economy, but demand in Asia is rising. Since oil is priced in dollars and the value of the dollar is falling, expect oil prices to rise.

[wardoglrs]

These two links Should be shared to also. Very disturbing

http://www.apfn.net/Doc-100_bankruptcy.htm


http://www.ideachannel.tv/

[runningralph]

Can anyone state a plausible reason why oil producers should increase supply or lower prices? Especially in light of the fact that Al Gore''s crowd says we''re burning too much fuel. The planet is warming up. We need to reduce fuel consumption. The average American uses 9 times as much fuel as the average non-American. This is inexcusable.

[wardoglrs]

Gold and silver were such a powerful money during the founding of the
united states of America, that the founding fathers declared that only gold
or silver coins can be "money" in America.


http://www.apfn.net/Doc-100_bankruptcy.htm

[prairiefox1]

WE NEED TO SELECT ONE OIL FIELD AND BOMB IT OUT OF EXIXTANCE WITH A GUARANTEE TO DESTROY ANY ATTEMPTS TO REESTABLISH THE PRODUCTION! WE DO NOT HAVE TO INVADE TO DO THIS!
AND IF THEY CONTINUE WITH THEIR GREED THEN DO ANOTHER ONE!

[ov442]

"The dollar is weak and getting weaker by the day, crude supplies continue to build, and the demand outlook is hardly sunny,"
So that QUOTE would indicate there is plenty of oil available....
"A cut would push prices even higher, generating a storm of negative publicity for OPEC."
Opec would normally cut production during a buildup..

"Oil shot up a dramatic 19 percent in February. Among the factors behind that: tensions in the Middle East, Turkey''s incursion into northern Iraq and the slumping dollar, which has prompted speculators and other investors to shift cash to crude and other commodities."
See, everytime something occurs, the speculators buy petro-commodities and there is no shortage of oil and gas for demand in the USE of it. However, if they create a shortage in supply of available commodities, then the price on the market goes up for purchase. Yet the user at the pump or industrial processor, or manufacturer doesnt see a supply problem, but they see their prices go up.

Solution? if we just killed off all the oil speculators in one good bloody monday, the market would stabilize and prices would drop back to reasonable values.

[ov442]

the falst spector of a shortage is promoted by the oil companies, and if need be, they would gladly hold back resources on purpose to perpetuate that impression. World oil production on the market has been all throughout this 7 yr span of high gas and oil prices been adequate and they have increased output numerous times. we never had a shortage of gasoline in this country even when repeated studies show that americans have only cut back on driving to a far smaller extent than the percent increase of gas prices over this span of time. The reason? heck, we need to get to work and the store.
Americans have actually overall decreased gas usage per capita, but not by much. Some people have by a lot, some by none or increased, but most people can only cut out a few trips to places a month.
And yet no shortages even with hurricanes, even with wars or terror attacks in unstable oil countries, even with tankers spilling oil or alaskan pipeline shut down for maintenance or spilling oil.
Proof is in the pudding.
No shortage, fraudulent speculative forces hiking the prices for profit (manipulation) and oil companies keeping gas production low to keep gas prices high.

[north1949]

ov442, you have hit the nail on the head. Refining
capacity, speculation, and, as I stated, the decline in the value of the US $$.

[killtheliars]

North1949,

i realize that but they do owe us and we have them by the balls. That is how you do business with disrespectful underlings!

[ov442]

Why should they? A) its not their fault for high prices, they dont set them. and B) they raised production a couple years ago in response to the same thing happening and it had zero effect on the market.
In Reality, they are being generous. If they increased production, it would just give them more profit and thats all, it wouldnt lower the price on the market much and then it would just go back up shortly. The blame for high prices lies in two places. #1 is the Oil companies that control the refineries. They''ve controlled output of a Necessary commodity -Gas- to be at or near 92-95% efficiency of production to maximize profits and minimize costs for 30 yrs.
The Result is that anytime theres a disruption- or FEAR of a disruption, the spector of a minor shortage occurs raising prices -leading to #2- The speculators have driven the price up on the Stock exchange from unreasonable fears, potential for turmoil and knowledge of the system fueling their greed. if you are a trader and you can guarentee a pattern of increasing prices, wouldnt you be doing everything you can do to keep that ball rolling while you make your little empire? of course you would.

[north1949]

Killtheliars, Mexico isn''t even a member of OPEC,
and has nothing to do with setting the supplies from
that consortium.

[killtheliars]

North1949,

I am as you call it picking on Mexico because they owe the U.S. big time. We have forgiven thier debt, we deliever thier babies and we treat thier sick who are here illegally. In addition we give them financial and medical aid in millions every year, then they turn and say they are cutting production to keep the price of oil high.
Also you mention supply and demand but oil anylists have come out in the last month and said that the oil market is not working according to supply and demand, otherwise prices would be down not up.

[north1949]

Why pick on the Saudis or the Mexicans or the Nigerians? The US imports more crude from Canada
each day than it does from Saudi Arabia. As well
the increase in oil price is due as much to the decrease in the value of the dollar and speculation
on the market as it is to OPEC supply policies. As your country enters into a recession, it will use less oil and the price will drop in accordance to supply, demand.

[lochlan-2009]

"Crude prices surged past $103.76 Monday on the New York Mercantile Exchange, setting an all-time high Monday"

Why don''t we have Bernanke do another interest rate cut, devalue our dollar, and increase the price of oil/barrel. All in the name of saving our banks who have done exactly opposite and increased their rates to their customers for increased profit. Americans are getting such a f8ck job right now from their corporate government, luckily most of them are to dumb to know even a little of what is going on and how it is and will effect them.

[killtheliars]

if Mexico has so much oil why doesn''t the U.S. stop all financial, medical, disaster relief aid, stop forgiving their debt ect.... and really seal the borders so the Mexican government has to deal with the financial consequenses of thier sick and poor without our help. Once the Mexican government starts to crumble under this financial burden, we the U.S. can offer to come to the rescue, in return we want all of the oil that is pumped in Mexico at a reasonable price.
Once it works with them we can do the same thing to other developing countries. If they want to play hardball with oil we should play hardball back.

[juwboy]

Why haven''t any oil-importing nations attempted to break the OPEC cartel?

Why haven''t they gone after a country with a weak economy like Nigeria?

As stated in the report, OPEC nations are not producing at full capacity.

So, if importing countries offered to buy twice as much oil from Nigeria''s currently dormant wells at, say $80 per barrel, Nigeria would be better off and so would we.

Once one of the dominoes falls, other OPEC countries would have to follow suit.

I still don''t understand why this approach hasn''t been taken.

[brianbwb-2009]

Greed will always win out over need, this is why Bush wants to get his hands on a pipeline in the Middle East, no matter what and how many lies he must tell, or how many people will die because of them.

Now US backed Columbia, home of the coke cartels, is inciting hostilities in South America, so when Ecuador and Venezuela respond in a defensive manner, he will claim another false "casus belli", for military hostilities in that region, the real goal of which is to steal Venezuelan oil.

[kennergirl]

Greed

It has to be the worst of all the seven deadly sins, because a greedy person would do anything to get what he wants.

and G W rides his horse into the sunset.

[random_radar]

WarDogLRS,

Before the age of internet blogging, I used to think that the Government was evil but the People were good. But having read and listened to a wide cross section of rank and file Americans, I have decided the evil Government is a reflection of what is in the hearts of the People. Now that the People have a voice on the internet, I have learned to my sorrow that we really do have a Government of the People and it is evil.

[wardoglrs]

random_radar It was''nt the American people who do these things its Neo Cons in the White House. So if your so tough then go over there and do something about it. I can issure you that the American people are fooled by this.GWB is in the mosy powerful position. What the hell can we do except warn people
an we are trying to wake up those who are asleep. Soon the American people will be under a Marshel law
There will be another event like no other. I fear that this will be the end of the USA. Here is a link that should be passed around.
http://www.ideachannel.tv/