G8 nations ask for more oil, pledge to use less
It's a complex issue, this business of oil. With stock markets and unemployment numbers taking their lumps, civilian unrest at oil and food prices, and politicians weighing in with all manner of cures and pronouncements, the Group of Eight nations got together to try and figure something out. The result: they want oil producing companies to produce more oil while they work on creating oil-independent fuel sources.It's the equivalent of Wimpy saying to Popeye, "For a hamburger today I will gladly pay you on Tuesday." The G8 nations, including the U.S., want more of the black stuff to see them through this rough spot. In the mean time, all countries but Germany pledged to begin exploring nuclear power and building reactors, and examining technology like carbon capture and storage. Think of carbon storage as a sealed, underground landfill for coal plant emissions. If they can get it to work -- and find the space -- they can use more coal without creating more emissions.
An OPEC representative said there would be no decision on any production change until it convenes its next meeting in Vienna on September 9. In the mean time, the retail price of oil has passed $4 nationwide in the U.S. for the first time ever, and you can probably expect to pay more for gas as each week of summer passes.
[Source: Detroit Free Press]
Reader Comments (Page 1 of 4)
Snutz 6:35PM (6/09/2008)
Surely you mean the retail price of gas, cause the last time I checked oil was on it's way to $150;
Reply
Xcountryflyer 9:11PM (6/09/2008)
I am not sure why that guy is holding is head--we went past those prices months awhile ago.
TriShield 6:40PM (6/09/2008)
Supply isn't the issue, it's the fall of the US dollar and rush to invest in commoditties that's driving the price of oil sky high. Until that is addressed oil will not stop ascending.
Reply
Aprime 6:52PM (6/09/2008)
+1
Seriously, does the 1 year % hike make any sense to any of you? Sure, supply's diminishing year after year, but not enough to cause such a ridiculous spike.
Chris 7:03PM (6/09/2008)
This isn't about the fall of the dollar, if it were then the EU would be sitting pretty as would Japan. This is a speculator market gone wild.
montoym 7:37PM (6/09/2008)
@ Chris:
It is exactly about the fall of the dollar. Which is why other nations haven't been hit as hard as we have. Yes, we(countries) are all seeing higher prices(except for gov't subsidized countries), but the US seems to be taking the brunt of it and for good reason. Oil is traded in US dollars(at least currently until they decide to switch to Euros), so when our dollar sinks, the price goes up giving us a double whammy of price increases. A higher price and a weaker dollar with which to buy it.
Now, this can be seen with the EU's recent decision to increase rates. That single decision caused both the fall of the Dollar vs. the Euro as well as an increase in the price of oil(an increase of $11 to $138). As the dollar has decreased in value, oil has risen along with those decreases, virtually lock-step together.
I will agree with you that speculators have a lot to do with it as well. That's also seen by today's market move where oil decreased in price. There was certainly some profit-taking going on there. Though the dollar did gain a bit of ground as well.
LMBVette 10:29AM (6/10/2008)
+1 on Trishield.
There is plenty of supply right now. There is no shortage what-so-ever. This is basically an investment bubble.
The Real Estate market has been decimated the past two years. All the companies associated with the RE industry (building materials, banks, mortgages companies, home improvement stores) are in disarray. Their stock values have plummeted. Billions upon billions have been lost.
Investors need someplace to stash their money. Oil is it. Now, I hope that gas prices stay high to force our country to actually do something to get us off of foreign oil, however, the bubble will burst at some point. People will find another market to invest in as soon as they think oil has peaked. You will continue to see articles saying that oil prices could hit $200 or $250. Prices will inevitably hit those marks because investors will jump on board. What will happen is prices will rise so high at the pump that people will literally stop driving. Supplies will rise to historic levels, sales will drop to historic lows......and somebody will be caught holding the perverbial hot potato as the oil prices come crashing down to $60 per barrel.
History repeats itself.....
Disgruntled Goat 6:54PM (6/09/2008)
So let oil rise if that's the only way we can ween ourselves off of it (relatively speaking of course). Government seems either unwilling or unable to enact any kind of sane long term policy with regards to energy so maybe we'll just have to do it the hard way.
Reply
Chad 6:58PM (6/09/2008)
This could really bite the oil companies in the a$$ by forcing use to find alternatives.
Toy Yoda 7:07PM (6/09/2008)
Chad, I don't know about that. I read somewhere that oil companies are the biggest researchers in alternative fuel sources in terms of dollar amount spent.
Aprime 8:13PM (6/09/2008)
What, were you expected the profit-racking oil consortiums and corporations to wait for the resource to be completely exploited for them to move onto something else? It really isn't a winning strategy.
Frank 10:18PM (6/09/2008)
Chad,
BP is one of the largest solar players out there, as wafer prices decrease and higher efficiencies become a reality the solar market becomes more lucrative, it's also an intelligent hedge. Did you know BP is one of the worlds largest commercial solar users?
GeoTracker 6:56PM (6/09/2008)
Supply will help relieve it temporarily and in this market that might mean a week. Realistically we should just turn on the taps in Iraq and invade Iran, Nigeria, and Venezuela. Just kidding.
We really need to fix our thirst, the faster the better. Coal is still cheap, steam powered cars anyone?
Reply
rouse42 7:06PM (6/09/2008)
CPHHC
Coal Powered Hybrid Hover Cars.
paul34 10:13PM (6/09/2008)
The price of coal has skyrocketed. Just ask any power utility. Florida utilities have applied for mid-year rate increases for the fuel surcharge, a pretty desperate move (usually adjustments are only applied for at the end of each year, unless there is a rather dire situation).
Nuclear looks like a better and better option everyday. Probably why they are planning to build over 30 new plants across the nation in the coming decade (if all those utilities can get government approval).
vwboyaf1 6:59PM (6/09/2008)
If we can decrease demand about 6-7% from the levels they are at now, the bottom will fall out of the oil market, causing prices to fall.
Its the same as the housing market. Investors are buying oil because it is the hot thing right now, as soon as they realize that they have hit the peak they will sell it all off.
Reply
NT 7:03PM (6/09/2008)
That, and those same real estate investors pulled all their cash out of it, and in turn are investing in oil. So the same people who caused the Real Estate crash, and forcing the price of oil up...Gotta love it.
Chad 7:02PM (6/09/2008)
I thought this was interesting....
http://www.motorcities.com/contents/08/2009-Ronn-Scorpion-450hp-and-40mpg-Thanks-to-Hydrogen-in-the-Gas_08F5C110030354.html
Reply
Holden Miecranc 7:03PM (6/09/2008)
Or maybe if we just accessed the 800 million - 2 trillion barrels of oil the Dept of Interior says lie beneath US soil, we wouldn't be dependent on anyone while develop cleaner, renewable sources...
Reply
Chris 7:07PM (6/09/2008)
Or maybe ask the Democratic controlled Congress why they are not acting on their campaign promises to curtail the rise in fuel prices? They have skyrocketed while these dolts (republicans too) sat on their asses and held mock trials of people who don't control the prices paid for oil.
Sheesh, they would rather Americans pay money to petty dictators, some of which even take time out to threaten us or begrudge our reputation, instead of exploiting our own resources and throw off the yoke. No, they would rather FUND the very people they claim are killing servicemen in Iraq.
F T