Kuwaiti Oil Minister reportedly says OPEC won't increase production until prices hit $100/barrel
America might get most of its oil from Canada, but the moves that OPEC makes still reverberate here. Thus, a statement by the Kuwaiti Oil Minister Sheikh Ahmed al-Abdullah al-Sabah to reporters yesterday probably won't help decrease domestic gasoline prices any time soon. OPEC's al-Sabah said that the organization will not consider increasing production until the price of a barrel of oil reaches $100.
Currently, the price is around $70 a barrel – up almost 60% this year – but way, way down compared to the highs of 2008. Oh, and when the $100 price per barrel threshold is reached, only then will OPEC "maybe" consider putting more supply into the market. The organization sees the recent rise in prices as the result of investors looking for good places to put their money, not because demand for the product is rising. Over the middle-to-long term, many expect forecasters expect prices to easily surpass $100 a barrel once again.
[Source: Bloomberg | Image: David McNew/Getty]
Reader Comments (Page 1 of 3)
TigerMil 5:02PM (6/11/2009)
Eff em. Go nuclear power/electric and we'd have all the oil we'd need in North America. Let them go back to living in tents in the desert.
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Sea Urchin 5:07PM (6/11/2009)
Tiger, interesting suggestion.
Did you know that as we speak there NOT A SINGLE NUCLEAR plant is USA that is profitable without heavy governmental subsidies.
It is bizarre that many conservatives say nuclear, nuclear, but never bringup the fact that aside from France nuclear energy is a not for profit entity. Companies do make money, but they require heavy subsidies.
I will not even bring up the waste issue and who will clean it up……..taxpayer.
TigerMil 5:13PM (6/11/2009)
Urchin...you're right if you consider the unsolved waste problem, which also includes France..the government by definition is heavily subsidizing nuclear power by accepting used fuel and reprocessing it as well as accepting the risks (no insurance company will cover it) associated therewith.
Arguably, all power generation is heavily subsidized...we accept the increased CO2 generation, toxic gases (and medical cost associated), and the owners/operators walk away with "profits" that do not reflect the true cost of their activity.
parden moi...we are leaning heavily towards socialism here, but change is in the air! We voted for it and we shall have it.
Noidor 5:34PM (6/11/2009)
Right idea, but wrong time. It doesn't matter what we come up with, but alternative energy is a very very short-term solution. Not because that there is something inherently wrong with alternative energy, but because we don't have a sound currency. All you have to do is look what markets worldwide have been doing for past several weeks.
1) China yet again expressed its discomfort in buying US debt because they know that the only way they will get paid back is through a devalued dollar. And that's precisely what US is attempting to do. Just read Warren Buffet's 1997 Squanderville article and you'll see what I'm talking about.
2) Russia has said that it will release some of its US Treasury bond holdings. Again as above, why do you think the rates have went up again? Investors are not willing to loan us more money, hence higher rates, hence weaker dollar.
3) Investors are no longer comfortable sitting on cash because of coming inflation, they want to put their money into real things. I think they realize that investing money into equities (exception of Chinese) is not smart right now, so they're putting money into commodities. So voila, here's why oil is up over $70.
No one right now has any confidence in US dollar, US economy or the US government, and of course the Fed.
So blaming the Kuwaiti for this step is like blaming the thermometer for your high fever.
tankd0g 5:48PM (6/11/2009)
Nuclear power doesn't make tires, plastics, fertilizer, diesel fuel.... you get the picture.
Saxxon 9:29PM (6/11/2009)
Here is an idea. How about lifting the government regulations against drilling for oil in our OWN COUNTRY!?!? This will create less dependence on foreign oil, and drop the price down. Supply and Demand, learned it in Economics class. Also, it will cost less money, and be available sooner. But no, the Eco-mentalists and liberal bureaucrats in Washington say "no, lets spend more money, time, and effort to create a infrastructure that wont be ready until twice as long from now."
Until then, better get used to our Dear Leader Maobama bowing to King Abdullah for the time being.
paulmer 9:47PM (6/11/2009)
Living in tents? How come I am the only one who is offended by this racist pricks comment?
Jake B 12:35AM (6/12/2009)
How do you fix California's budget?
PUMP OIL!!!
Most of Alaska's State revenue comes from taxing the oil coming out of the ground.
California could stand to make a pretty penny off of some offshore drilling.
JZeke 5:02PM (6/11/2009)
I wouldn't be surprised to see gas breach $4.00 a gallon (nationwide average) by Christmas.
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TigerMil 5:04PM (6/11/2009)
I don't think it will happen.
I would be surprised to see the DJIA hit 14K by Xmas...which is about what it would take to get 4.00/gal regular.
Their just isn't that much demand and we're still losing, what, 500K jobs per month.
Beastage 5:45PM (6/11/2009)
There is a certain critical point in which oil cannot increase price without demand crashing to bottom.
d4rez 6:41PM (6/11/2009)
That's still cheap, here in the U.K. were paying the equivalent of seven or eight dollars for a gallon of unleaded. Even factoring our larger gallon and exchange rate fluctuations, you are very lucky.
Chris 9:43PM (6/11/2009)
I agree with d4rez, here in my part of Canada gas just went over $1 per liter, I don't see why Americans complain about $3 or $3.50 a gallon, it's still cheaper then a lot of places.
Sea Urchin 5:04PM (6/11/2009)
Look when oil hits 100 or $150 and you are still somehow unprepared, if you still do not have a car that gets mileage that is respectable and affordable, that simply means you are a moron.
If you haven’t learned anything from last 3-4 years, you will never learn anything.
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mapoftazifosho 5:07PM (6/11/2009)
Pretty much spot on. I still cannot believe that I not only convinced my mom to sell her suburban for something MUCH more fuel efficient, but that I sold it within 3 hours on craigslist for asking price. It was clean, but still...shocked by how quickly we forget...
TigerMil 5:07PM (6/11/2009)
Respectable is in the wallet of the beholder...as is affordable.
The real issue has always been availability...gas was eminently affordable in 1973 during the first oil shock...it wasn't available, and THAT was what caused riots.
And yes...the whole nation is composed of morons and smug Cassandras...the morons don't believe it will happen again and the Cassandras are just as foolish predicting it will soon.
Iridium 5:47PM (6/11/2009)
That is about the most ignorant comment coming from the most ignorant poster on this site.
What is acceptable? 30mpg, 60, 120. Are you just supposed to accept that oil is $70 a barrel heading back to $120 and deal with it. The past 4 years in regard to history have as much bearing on a true situation as the Loch Ness monster swimming to New York Harbor. As is the past four years has been a complete fraud perpetrated on the worlds population for personal gain.
Maybe we should just forget that the historical average for oil over the past 150 years in 2008 dollars is $25 a barrel. That even with increased demand from China and India we are not even close to having demand outstrip supply.
The supply and demand price of oil including all world output and consumption should be $20 a barrel. Anything higher is market manipulation by hedge traders who should be considered domestic terrorists.
There is no reason why we should be paying more for gas. The cost to take it out of the ground didn't increase, demand actually decreased, refining costs haven't gone up by any percentage that would double the price, and they are finding large untapped reserves every year. Every fact about the market says that oil is overvalued by at least $40 a barrel.
Every oil company said that it would be profitable to drill anywhere on Earth with oil at $40 before the speculative binge. Now they say they need $60 oil to make it work. OPEC would have killed for $30 oil in 2000. Now they aren't happy with anything under $100.
The pure fact is that if the rules weren't changed regulating hedge funds and institutional traders the price of a barrel of oil would be $15 right now. Before the rule change oil was around $20 and you would bet with a worldwide recession this particular commodity would be trading lower.
tankd0g 5:50PM (6/11/2009)
I learned that bubbles are created by speculators and if you hold on for 6 months they burst in a spectacular fashion. I didn't get sucked into buying a new car over it.
Redeemed 6:13PM (6/11/2009)
Who's the bigger "moron"?
The guy who drives a SUV that's paid off or the guy who buys a new car, gets a $300/month payment, to save $100/month in gas?
Please think a little more before hitting the "add comment" button.
Nightcrawler 6:13PM (6/11/2009)
"The cost to take it out of the ground didn't increase"
Baloney it didn't. The easy, cheap to get out of the ground stuff was used up first. Much of it is gone now, so we have to go get the tougher, more expensive stuff. You don't think drilling 15.000 foot wells into rock 10,000 below the surface of the ocean, or cooking oil out of Canadian oil sands costs more than the comparatively easy to get oil we were using 50 years ago? You're kidding yourself.