01-Jul-2008, 12:05 PM
Join Date: Nov 2005
Oil price increase? Let's point fingers at one another
Like the famous saying goes, if you can't convince, confuse them?
And then start pointing fingers at one another
July 1, 2008
Oil chiefs divided on cause of hikes
Producers blame speculators while Western leaders cite lack of supply
MADRID - LEADING figures in the oil world gathered in Madrid yesterday for one of the industry's biggest events, the World Petroleum Congress, with the search for a remedy to record crude prices again stymied by division about the causes.
The gathering yesterday pitted consumer nations, which are calling for an increase in production, against producers.
One of the main points of contention was the role of speculators, who are blamed consistently by producer countries for the doubling of crude prices over the last 12 months.
Western oil chiefs, backing the view of governments in consumer countries, insisted that speculators were the wrong target and that the failure of supply to match rising demand was the real cause.
These chiefs blame the lack of supply on them being kept out of many countries by governments keen to see their national oil companies retain a monopoly on oil and gas production.
'Supply is not responding adequately to rising demand,' BP chief executive Tony Hayward said.
He added that politics rather than geology was the reason.
'The problems are above ground, not below it. This is not a speculative bubble,' he said, adding that it was a myth that speculators were to blame.
Mr Jeroen van der Veer, the head of British-Dutch oil group Shell, agreed: ' 'Investors' is a better word than 'speculators'. They are investing in the oil market because they believe prices will go up.'
He added that the role of the market was 'the translation of things that might happen in the future into the price'.
Saudi Arabia had held a hastily arranged meeting of consumers and producers in Jeddah, 10 days ago, to tackle the problem of rising oil prices. The Organisation of Petroleum Exporting Countries' president last week forecast that prices will touch US$150 to US$170 per barrel in the coming months.
Most experts had agreed afterwards that the only concrete result from the Jeddah meet was Saudi Arabia's announcement that it would increase daily production by more than 200,000 barrels to 9.7 million.
Oil rose more than US$3 a barrel yesterday to a new record above US$143, propelled by heightened market fears of conflict between Israel and Iran over Tehran's nuclear programme.
A fall in the US dollar to three-week lows versus the euro helped push the prices up.
Oil had broken through the US$140-per-barrel level for the first time last week.
AGENCE FRANCE-PRESSE, REUTERS
what comes around goes around comes around goes around comes...