| |
| |
|
Politics Information |
|
|
|
OPECs Swan Song?
Indonesia's Energy Minister, Purnomo Yusgiantoro, is unhappy with the modest production cut, from June 1, of 2 million barrels per day, adopted by the Organization of Petroleum Exporting Countries last week. He intends to demand further reductions at the June 11 get-together in Qatar. The deal struck is so convoluted and loopholed that actual output declines may amount to no more than 600,000 bpd, assuming, miraculously, full compliance. Quotas were first raised before the war to 27.4 million bpd - a theoretical level, not met by actual supply. Crude prices, entering a period of seasonal weakening, dropped further on the news. With Nigerian and Venezuelan crude recovering from months of strife, this downtrend may be temporary. Global excess capacity is a mere 1 million bpd - one fifth its prewar level. As North American and North Sea production declines, the importance of Gulf producers soars. OPEC's eleven countries - Algeria, Indonesia, Iran, Iraq (suspended in 1990, following its invasion of Kuwait), Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela - control one third to two fifths of global oil output and three quarters of the far more important residual demand - traded between net consumers and net exporters. Residual demand is set to double by 2010. Still, OPEC - led by Saudi Arabia, now off the US buddy list - faces fundamental problems that no tweaking can resolve. Iraq, in the throes of reconstruction and under America's thumb, may opt to exit the club it has founded in 1960 and, thus unfettered, flood the market with its 2.3 to 2.8 million bpd of oil. Iraqi production can reach 7-8 million bpd in six years, completely upsetting the carefully balanced market sharing agreements among OPEC members. This nightmare may be years away, what with Iraq's dilapidated and much-looted infrastructure and vehement international wrangling over past and future contracts. All the same, it looms menacing over the organization's future. Far more ominous perils lurk in Russia, the second largest oil producer and growing. Though the cheapest and most abundant reserves are still to be found in the Persian Gulf, Central Asia and Russia are catching up fast. Ali al-Naimi, the Saudi oil minister may be forced out of office by this apparent crumbling of the organization's stature. This would be unwise. Naimi is widely credited with engineering the tripling of oil prices to more than $30 a barrel between 1998 and 1999. As the informal boss of the state-owned Saudi oil behemoth, Aramco, he has already introduced postwar output cuts. The oil market is so volatile that even marginal production shifts affect prices disproportionately. Naimi is a master of such manipulation. Saudi Arabia regards itself as the market regulator. It keeps expensive, fully-developed, wells idle as a 1.9 million bpd buffer against supply disruptions. It is this "self-sacrificial" policy that endows it with tremendous clout in the energy markets. Only the United States can afford to emulate it - and even then, the Saudi Kingdom still possesses the largest known reserves and sports the lowest extraction costs worldwide. OPEC is, therefore, not without muscle. Saudi Arabia had punished uppity producers, such as Nigeria, by flooding the markets and pulverizing prices. Yet, the organization is riven by internecine squabbles about market shares and production ceilings. Giants and dwarves cohabit uneasily and collude to choreograph prices in what has long been a buyers' market. These inherent contradictions are detrimental. If OPEC fails to recruit another massive producer (namely: Russia) soon - it is doomed. Paradoxically, the Iraq war is exactly what the doctor ordered. OPEC's only long-term hope lies in a geopolitical shift, the harbingers of which are already visible. Russia may join the cartel, disenchanted by an imperious and haughty USA - or the Europeans may "adopt" OPEC as a counterweight to the sole "hyperpower" newfound energy preeminence. America announced its intention to pull out its troops stationed in Saudi Arabia. As this major producer is thrust into the role of the "bad guy" - it acquires incentives to team up with other "pariahs" such as France and, potentially, Russia. Controlling the oil taps is a sure way to render the USA less unilateral and more accommodating. US interest are diametrically opposed to those of oil producers, whether in OPEC's ranks or without. The United States seeks to secure an uninterrupted supply of cheap oil. Yet, a consistently low price level would go a long way towards reducing Russia back to erstwhile penury. It would also destabilize authoritarian and venal regimes throughout the Middle East. This unsettling realization is dawning now on minds from Paris to Riyadh and from St. Petersburg to Tehran. As the United States looms large over both producers and consumers, the ironic outcome of the Iraqi war may well be an oil crunch rather than an oil glut. About The Author Sam Vaknin is the author of Malignant Self Love - Narcissism Revisited and After the Rain - How the West Lost the East. He is a columnist for Central Europe Review, PopMatters, and eBookWeb , a United Press International (UPI) Senior Business Correspondent, and the editor of mental health and Central East Europe categories in The Open Directory Bellaonline, and Suite101 . Until recently, he served as the Economic Advisor to the Government of Macedonia. Visit Sam's Web site at http://samvak.tripod.com; palma@unet.com.mk
MORE RESOURCES:
Google News |
|
|
|
RELATED ARTICLES
Open Source and Post-Capitalistic Society Capitalism as the social structure was founded in order to support further evolution and development of human race, to support the innovation which was oppressed by the former system. It was brought up by the two industrial revolutions. The Contemporary Global Marketplace - IT, Software, and Services "Had there not been outsourcing and utilization of cheaper resources offshore, average computer users would not have been able to afford the hardware and software that are available to them today." In this manner, author Robin Sood brushes aside superficial criticism of outsourcing and brings home to the reader of IT, Software and Services: Outsourcing and Offshoring two key points: outsourcing is already widely used and its positive effects go well beyond increased company profits. Let us Disband The FTC's Franchising Division Previously Senator Dick Armey and his staff in 2000 to review seriously the important decision to scrutinize the FTC's franchising division. Mr. Water Conservation, Retention and Better Policies As the populations expand in Colorado outside of Denver, Las Vegas, North County San Diego, Atlanta, Phoenix, Tucson, San Bernardino, Riverside, Albuquerque, etc; The West will need to look to transferring the load of cities like Los Angeles, Phoenix, San Diego, and San Bernardino to getting water from the ocean through Desalination Plants. At one point during the last drought states had to make a choice between fighting fires or saving the water for drinking. Lost and Found in Gaza The evacuation of Gaza is now completed, and the world has been watching closely. As a proud member of the Jewish People, I have nothing but admiration for the soldiers of the Israel Defense Forces, for the humane way they carried out this most difficult military assignment. Minor Disruptions Cause Chaos in Transportation Recently the Los Angeles Transit workers are on Strike and the RTD is not operating, this happens every few years. This disrupts the flow of people on their way to get food, go to work, attend college or visit friends. Seattle Lawyer and Financial Freedom We are destroying our freedoms and slowing innovation, due to our belief that we can regulate morality by laws, that we can protect the most ignorant or mentally challenged individual in society by making a law; hardly possible. We have systematically allowed over burdensome laws to be made which support no freeman in this period only give work to 'wordsmithers' who claim to be helping us as they help themselves to our hard earned money. Connecticut Does Not Need Further Income Tax Hikes! Industrial Recruiting. The absence of a state income tax in Tennessee was cited by Nissan Corporation as one of the quality of life factors it considered for its workers when it decided to build a large plant in Smyrna, Tennessee, to produce the Nissan Altima and other vehicles. The European Bank for the Retardation of Development In typical bureaucratese, the pensive EBRD analyst ventures with the appearance of compunction: "A number of projects have fallen short of acceptable standards (notice the passive, exculpating voice - SV) and have put the reputation of the bank at risk". If so, very little was risked. Should Farmers Plant GM Terminator Seeds? If a farmer plants the same crop three seasons in a row he might like to have the non-terminating, but if he plants winter wheat and regular wheat he gets paid by the purity as part of his yield and therefore, would prefer the terminating, having no left over seeds growing within his ranks. Also he can plant GM one year when needed for Ethanol and then another type later for another purpose. Bureaucracy Suffocating the Flow of Transportation We are slowing the transportation flows of our civilization by over burdening our transit systems, transportation companies, airlines, railroads and shipping companies with linear thought out rules and regulations. We are over regulating, over taxing and attacking the free market sector companies and this is cost America jobs, governments in tax base and hardship for travelers, vendors and industry, which rely on this transportation. Why Dont We Listen To Entrepreneurs? I just got done reading a series of articles dating from December 2000 to September 2001 (pre-9-11) regarding Larry Ellison's bush to get the government to link all it's databases. Now everyone agrees, but now we are post 9-11. Rule of Thumb For Exporting Technology Rule of Thumb for exporting technology. The American People need piece of mind to get this economy moving. A Journey Through History History repeats itself, goes the cliche. It does so, perhaps, for the human beings to have more than one chance of learning a lesson if they have missed out on the first opportunity. NASA Budget Space Shuttle Thoughts Regarding the issues with the Space Shuttle and the in flight explosion of the Columbia. I believe that of course that hindsight is always easy to use to place blame, however we must continue the program and the Space Shuttle as it sits may not be the best technology as newer technology is now available for re-useable craft such as;http://www. Screening Trucks and Containers Coming Into Our Country We presently have adequate sniffer devices in this country to help us screen the trucks and containers coming into this country at our checkpoints and ports. Now we should be conducting massive recording of odors of trucking shipments and containers for database evaluations to insure that we do not unnecessarily impede the flow of trade or delay parts needed to run our economic powerhouse. Kudos For Monsanto Company I applaud Monsanto for their R and D. I would like to meet the head R and D man there and shake his hand for his drive and stick-to-it-ness to find solutions to feed the world. Gone With the Wind Almost Did Not Make It Corporate America has been shaken recently by lawsuits and criminal charges of fraud by Enron, Martha Stewart and Tyco. Huge companies who lied to stockholders, the SEC and the government. The Economic Giant-- A Closer Look at China IT'S NO LONGER NEWS THAT CHINA IS BECOMING A MAJOR player on the world economic scene. Yet, as we've noted in past editions, investing in China is fraught with uncertainty, due to a still un-free political situation, and insecure property rights. The Power of Media: Russian Perspective Journalism, as it is often said, is the 'fourth branch of power', along with legislative, executive and judiciary, not any less mighty than those three, even if not legally endorsed in the Russian constitution. It is the power of symbolism, and it cannot be escaped, but can only "used" to bring truth, or "abused" to bring propaganda.
|
| home | site map |
| © 2006 |
