OPEC executive downplays 'superspike' report (you ain't seen nothing)

Excellent interview on Australian ABC this morning. Friggin scary at what you guys are going to pay for petrol...uh sorry gas.


http://www.abc.net.au/insidebusiness/content/2005/s1342010.htm

-SNIP-
ALAN KOHLER: On the 1st of April Goldman Sachs issued a report which has had a lot of attention saying that there'd be a new superspike in the price of oil and predicting a price up to $105 a barrel. What do think of that?

DR SHIHAB-ELDIN: Well, that was a scenario, we do not believe that's necessarily the scenario they were talking about that supply would continue to be tight and demand continue to be strong and therefore the only way to stop or arrest this price escalation is to, quote them, 'destroy the demand' and then they expected that the $100 level would be the level to destroy demand. We do not subscribe to that level. We do not think prices have to go that high. We think that they are already high enough and maybe too high and we need to bring them down to a moderate level.

ALAN KOHLER: In fact, they said that $4 per gallon of gasoline in America was needed to stop Americans buying SUVs - gas guzzlers.

DR SHIHAB-ELDIN: Yes, that is how they arrived at their number. It's just one way of doing it and, as I said, we don't necessarily subscribe to that. We believe that oil should be made available at more reasonable levels, not only to the United States but for developing countries.

...inelastic, that is won't change regardless of the price.

So these guys can charge anything they like. Oil is not $105 per barrel at the moment because that would cause negative repercussions by oil consuming nations that OPEC does not want to have to deal with, namely invading armies taking over the oil production in these supplier nations. So, we see the prices increase on an incremental basis rather then the super-spike that was characteristic of the oil embargo periods of the early and mid 1970's. Compared to last year at this time, the price of oil is at least a third higher and hovering now at the $60 per barrel mark.

So who is to say that it won't hit $100 to $110 per barrel by late this summer. I think it will and I think that we consumers will have to pay the price and start taking our bicycles or walking to work.

Get everyone to buy those big cars then sock it to 'em. Brilliant.

the Chinese demand question. First he claims that OPEC currently has 2 - 3 million barrels per day spare capacity, and then claims that OPEC will be able to meet Chinese demand even it it grows @ 10% year. Even if you assume the lower figure he implies for current Chinese demand, 6 million barrels per day, that means that China alone will wipe out OPEC's current spare capacity within five years.

http://www.energybulletin.net/5173.html

The more you read the more you know this world is for a big ass shock!!