VIENNA, Austria, March 5, 2008
OPEC Faults U.S. As Oil Hits New High
Cartel Blames U.S. Economic "Mismanagement," Not Lack Of Supply, For Pushing Crude Past $104 A Barrel
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(AP/CBS)
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- OPEC Weighs Need Versus Greed
OPEC said it "highlighted the economic slowdown in the U.S., which, together with the deepening credit crisis in financial markets, is increasing the downside risks for world economic growth and consequently demand for crude oil."
"Crude oil prices are being strongly influenced by the weakness in the U.S. dollar, rising inflation and significant flow of funds into the commodities market," it said.
"We've seen people using oil more as a strategic commodity or an economic commodity where they buy it as a hedge against inflation," said Peter Beutel, president of Cameron Hanover, an energy-tracking firm.
"As long as the Fed is desperate to prevent there being a recession it looks like traders are going to continue buying oil and a number of other commodities, everything from wheat to cocoa to sugar to cotton to gold," Beutel told CBS News Radio.
Oil trader Ray Carbone concurred, telling CBS News correspondent Anthony Mason, "I think if the dollar keeps falling, I think oil becomes much more attractive to certain types of investors. And I think it will keep upward pressure on oil."
Beutel suggested that eventually, this same investment behavior could be effective in reversing the price trend for crude.
"People will probably come in and try to sell at the same time and that ultimately will give the consumer an advantage whenever this market does in fact turn around."
Analysts said they didn't expect any significant action Wednesday.
"In truth, OPEC's decision not to pump more oil is a reflection that supply is relatively good," said Anthony Sabino, a professor of business at St. John's University in New York.
"What is driving oil prices up to the stratospheric level of over $100 per barrel is the U.S. economy, now undeniably in recession," he said. "It's not so much the price of oil is going up - it's that the value of the U.S. dollar, sad to say, is slumping."
Oil shot up a dramatic 19 percent last month as the falling dollar prompted speculators and other investors to shift cash to crude and other commodities as a hedge. Among other reasons for the spike: tensions in the oil-rich Middle East and Turkey's incursion into northern Iraq.
Key cartel members said this week that prices in the $85 to $90 per barrel range would be optimal.
But oil's only direction Wednesday was up.
Light, sweet crude for April delivery rose US$2.02 to US$101.54 a barrel in electronic trading on the New York Mercantile Exchange by the afternoon in Europe - amid growing expectations that it stood to climb even higher.
"There's an ongoing stampede to be a part of the crude oil rally," said Tim Evans, an analyst at Citigroup Inc., in New York.
Hall said OPEC was partly to blame for economic woes in the U.S. and elsewhere. "By helping the price to rise, they have fueled inflation and they're fueling recession," he said.
But Stephen Schork, editor of The Schork Report, which keeps tabs on global energy markets and trends, said the cartel may not have had much choice.
"If you're OPEC, you see ample supplies and questionable demand," he said.
Schork gave OPEC credit for not pushing through a cut in output, which "would legitimize the bullish speculation we've seen since February" and risk sending oil to $120 a barrel or higher.
Crude inventories are growing, including "a massive increase" in U.S. stocks, Schork said.
"It's certainly a comfortable supply situation," he said.
The 13 OPEC members are Algeria, Angola, Ecuador, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela. Iraq is the only member not subject to the cartel's output quotas.
© MMVIII, CBS Interactive Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.
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Best-selling author Mitch Albom on his first nonfiction work since "Tuesdays with Morrie."
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See all 281 CommentsWhat is the BIGGEST cause of CRIME and POVERTY?GREED AND %u201CDEMOCRACY%u201D up to the point that companies have only one concern %u201CPROFIT MARGINS%u201D and how they can make more moneywith little or no concern about who is affected.
GLOBAL GREED has raped people of their dignity and pride.
Wouldn%u2019t it be better if companies reduced their profit margins and streamlined the overpaid senior management and invested more in the driving engine of the company?
Governments should be looking at giving tax benefits to companies that are %u201CHONESTLY%u201D towing the line with being able to prove that they are.our children are our future.
GREED is probably the worst disease in the world proably causes more deaths than any medical condition on Earth so the thing is if you can find a cure for GLOBAL GREED then you have taken the first step in reducing crime and poverty. People don%u2019t want to steal but what other choice do they have. Remember people with nothing have nothing to lose.
www.stopglobalgreed.co.za
CURB our continued economic plunge by removing the speculators from the equation! In our current crisis of inflation combined with recession, energy commodity traders are traitors! Don''t let them sell out the US anymore!
If an energy commodity trader (individual or investment firm) can not prove that they are in the business of taking possession and converting/processing the energy commodity into wholesale products then they should be restricted from speculating. Call it what it is: gambling at the expense of the security of our nation.
Wouldn''t $75 a barrel of oil today bring about a turn around in our economy faster than Bush''s economic stiumulus checks? You bet!
A stable oil market is possible by removing the minute-by-minute volatility that the speculators are causing.
Posted by j-whitman
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Get help j. The voices in your head are not me. I''''ve never been a pro-lifer, never been a born again, never was for the war in Iraq.
I voted for Kerry and am a Democrat.
Get help j. It breaks my heart to see someone with your brains and potential doing what you do.
Posted by ilikecats1 at 11:04 PM : Mar 05, 2008
Hello ilikecats--I''m heeeeeere. Time to post all of those horrible, mean porno laced comments I made to you....LMAO FREAKNIK.
Dont forget that Oil is traded in Dollars only and no other currency. Just in case you knew and didnt want to mention it........
Posted by hillaryin08 at 08:34 AM : Mar 06, 2008
You''re right. Should have mentioned that, as well as these 2 pieces of salient info:
1. Though dollars are used to pay for oil, those who get them often must pay THEIR bills and for imports to their country in Euros or other currency--this is why it is important that the dollars paid reflect the real bills and inflation induced higher prices of now.
2. Precisely Saddam''s threat to marry the price of his oil to Euros is one of the main reasons behind the 1st Iraqi invasion and many believe it may have been the reason behind the 2nd invasion and present war---on top of that, Iran''s continual attempts to also tie the price of oil to the Euro instead of the dollar may be why that country is also in Bush''s gunsights also (on top of their meddling in a war we started due to our own meddling) there. that should cover it.
Posted by hillaryin08
Not even close, daily oil consumption as of 2007
#1 United States: 20,730,000 bbl/day
#2 China: 6,534,000 bbl/day
You are 100% correct. This is because Nixon got Opec to use US dollars as the currency of payment, so when he sold the US treasury''s gold on the open market, starting on 08/19/72, the dollar wouldn''t collapse, oil has been the only reason the dollar has any value at all.
But think for a moment, the dollar has been falling, it is only a third of what it was worth in 72, and the rate of drop is now the fastest it has ever been.
If it continues, the Chinese will dump their 1.5 trillion on the market to cut their losses, pushing it even further down.
If you were OPEC, wouldn''t that press you to either raise the price, or switch to a more stable currency, like the Euro?
Once that happens, especially with idiots like McCain threatening OPEC member Iran, the dollar is instantly worthless paper.
So when you supported Bush''s fake war, which was the main reason he issued the debt now held by China, you supported the last of the nails in the US''s economic coffin.
I mean after all didn''t the Patron Saint of the Republican Party Ronald Reagan not embrace the Patron Saint of American Economics Milton Freidman: His political philosophy, which Friedman himself considered classically liberal and consequentialist libertarian, stressed the advantages of the marketplace and the disadvantages of government intervention, strongly influencing the outlook of American conservatives and libertarians. OPEC on Wednesday accused the U.S. of economic "mismanagement" it said is pushing oil prices to new record highs, rebuffing calls to boost output and laying the blame at the feet of the Bush administration. But that''s OK, once President-elect McCain becomes President McCain, oil will be at $200 a barrel, which should cause a booming business for the bicycle industry in China, as well as its rickshaw factories, which then will provide badly needed employment for laid off Americans as rickshaw drivers, Ah yes, the Republican vision of America, back to the stone age.
This is what people do not understand about the value of currency that is only backed by promises instead of a real asset like gold or platinum---the more you print, the less ALL of it is worth. It only has value due to the "promise" attached implicitly to each bill, the more bills there are, the more that promise is diluted. Ergo--continual borrowing and lower interest rates = a weaker dollar and a weaker dollar= high inflation and high inflation= goods from overseas (including oil) going through the roof to get the same value that they had 7 years earlier. This is basic econ.
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Posted by b-easy63 at 08:28 AM : Mar 06, 2008
Dont forget that Oil is traded in Dollars only and no other currency. Just in case you knew and didnt want to mention it........
Now OPEC is blaming bush and feeding the Liberal Insergency in America. I guess they conviently left out their number one customer now is China.
The other peice of information conviently left out is the Demand will outstrip the Supply and peak in 2020. The real war for Oil is about to begin...........
Posted by aheadace at 08:07 AM : Mar 06, 2008
They''s rather not--due to Bush''s policies, they are having more fun ramming your azz pell mell--why kiss what they can simply fvck?
This is what people do not understand about the value of currency that is only backed by promises instead of a real asset like gold or platinum---the more you print, the less ALL of it is worth. It only has value due to the "promise" attached implicitly to each bill, the more bills there are, the more that promise is diluted. Ergo--continual borrowing and lower interest rates = a weaker dollar and a weaker dollar= high inflation and high inflation= goods from overseas (including oil) going through the roof to get the same value that they had 7 years earlier. This is basic econ.
When we de-regulated, we just shot ourselves in the butt on the side where our wallet is held.
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Posted by poopusbuttus at 02:39 AM : Mar 06, 2008
Poopusbutthead that supposedly works in the Pentagon, has evidently not witnessed our allies standing down, one after the other, nor seen the missions of Princess Incompetence begging them for help with no results.
otherwise vote for a democrat,
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