From Free Internet PressÂ
June 20, 2008
Crude oil prices rose sharply on the world’s commodity markets Friday night after the head of OPEC (the Organization of Petroleum Exporting Countries) dismissed as “irrational and illogical” a call by Britain’s Prime Minister Gordon Brown for the cartel to pump more oil.
Chakib Khelil said the near doubling of oil prices over the past year was due to geopolitical tension, speculation and a shortage of refining capacity rather than a failure by producers to supply enough crude.
His comments came as the prime minister flew to Saudi Arabia for a summit meeting on Sunday of oil producers and consumers in Jeddah at which he will press for OPEC to help contain rising inflation in the West by pumping more oil. Rising petrol and domestic energy costs are blamed by the government for pushing the cost of living in Britain to a 16-year-high of 3.3%.
Khelil told the Algerian official news agency APS: “Asking OPEC member countries to increase their offer is illogical and irrational.” Khelil, Algeria’s energy and mining minister, ruled out a quota increase by OPEC and said Saudi Arabia’s uniltateral decision to raise production would have no impact on world crude prices. He suggested there would be no decision by OPEC as a cartel at the meeting in Saudi Arabia.
“I’m invited as Algeria’s energy and mining minister. So, I have no OPEC mandate for a position by this organization,” he said. Commenting on reports that the Saudis were willing to increase production to its highest level since 1981, Khelil said it would have no effect on the global price of crude. “The barrel is always at $136. I do not believe that is the problem.”
Oil rose by more than $4 a barrel today as dealers reassessed their view about a fuel price increase in China announced by Beijing earlier this week. After a $5 fall Thursday, speculation that Chinese demand might rise pushed the price of both U.S. and Brent crude above $136 a barrel, within sight of the record of just under $140 a barrel briefly reached earlier in the week.
SocGen analyst Mike Wittner added: “We think, if anything, the Chinese price increase would tend to increase consumption and not decrease it.”
Analysts, who expressed skepticism about the likely outcome of Saturday’s summit, said crude prices also rose as a result of attacks on oil installations by militants in Nigeria and amid fear of a military conflict between Israel and Iran. “Traders don’t want to be short going into the weekend. There are just too many hotspots around the world now… There is more potential for bullish news than bearish news,” said Gerard Rigby of Fuel First Consulting in Sydney.
As Chinese motorists queued and complained at the pumps, economists warned that last night’s 18% increase would heighten the risk of inflation, already near a 12-year high.
But environmentalists expressed hope the rising cost of fuel may force the world’s second-biggest oil consumer to improve energy efficiency and encourage new car buyers to consider greener models. China, once famed for its bicycles, is now one of the world’s fastest-growing car markets.
Despite the oil price surging to almost $140 a barrel this month, the government has long capped domestic fuel costs to ensure social stability. Inflation has risen in the past year, particularly in the food sector.
Yet, after holding firm for eight months, the government was forced to lift prices under pressure from state-owned oil companies, which have lost a fortune by selling petrol at a loss, and from foreign governments which argue subsidized Chinese fuel is keeping global prices high.
Many drivers were furious. In the hours before the price rise, police were sent to several petrol stations to maintain order.
There were no reports of violence but many petrol buyers expressed disappointment. Li Lianyou,a taxi driver queuing for petrol in west Beijing, said the price rise would hurt unless compensation is ramped up.
“I lose about 500 yuan (£37 or $74) every month. It is as though where I once could afford to eat meat three times a day, now it is only once a month,” he said.
He expects the price of fuel and other goods to continue rising. “I don’t save, any more. In the current economic situation, the best thing to do is spend money.
The Hunger Site
June 21, 2008 at 5:17 am
Yeah, yeah, yeah. Blame the Chinese, Indians, and Arabs for the price of gas. That’s the oldest trick in the book and it gives the oil companies and speculators cover to keep prices high. And keep in mind that Americans are the biggest consumers of oil in the world and that the dollar is worthless (thus, making the price of gas more unbearable) because of unsustainable U.S. policies.
If you really want to lower the price of gas, get back at the oil companies, and break the speculators, end the war in Iraq and charge a high speculation tax. And buy smaller, Japanese cars while you are at it.
June 20, 2008 at 3:39 pm
Check out http://carfreetalk.blogspot.com/