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December 26th, 2010

OPEC wants $100 per barrel

Members of OPEC are trying to force the market to a target price of $100 per barrel, according to the latest media reports. With the current price of oil at $94.74, thanks primarily to a weak US dollar under President Barak Obama, they are already most of the way to their goal.

Only Saudi Arabia – the largest exporter of oil – is breaking from the pack. They would prefer to see prices retreat to $75 a barrel, a drop that would restore the price at the pump to around $2.50 per gallon, give or take a little. A rise to $100 per barrel would push US gas prices close to $3.25 per gallon for regular unleaded.

Tis the season to be greedy, if you’re OPEC, it seems. Maybe OPEC execs need to spend more time enjoying a massage therapy program online, rather than thinking up ways to artificially prop up prices and ruin the world economy. Again.

By Craig Hansen • Posted in oil prices • No Comment
December 1st, 2008

Oil prices at $55 per barrel, OPEC wishes for $80

At close of market on Friday, oil closed at $54.43 per barrel, well below the high of $147 per barrel price suffered through this past summer. As consumers enjoy gas below $2.00 per gallon for the first time in years, the drop in price is nevertheless a fluctuation in demand. US demand for oil dropped 12.8 percent from a year ago, and even demand in China is down.

This roof cleaning action by the market after a price-roof-breaking summer is a welcome relief to most consumers. However, OPEC has been making noises about wishing prices would rise back to a so-called “fair price” of $80 per gallon, although the Saudis say $75 would be more appropriate.

Still, these are the same folks who, when oil was going for $147 per barrel, were claiming $60 per barrel would be a fair market price. Now that we’re back in that vicinity, they want to drive it up again?

Never trust an oil baron.

By Craig Hansen • Posted in oil prices • No Comment
June 23rd, 2008

Drill here, drill now, pay less

California auto insurance may soon be cheaper than a gallon of gas in California if prices keep rising out of control. OPEC, perhaps a bit worried by John McCain’s commitment to increased drilling in the US under the “Drill Here, Drill Now, Pay Less” campaign, has become divided as Saudi Arabia has pledged to increase production by an additional 200,000 barrels a day by July, and up by nearly 3 million barrels per day by the end of 2009.

In spite of these aggressive new commitments, demand continues to outpace supply and refinery capacity, rising at a pace this year of about 1 percent, with production rising by only one-fifth of that pace. Clearly, depending on OPEC is not a winning strategy to guarantee future oil supplies and low prices going forward. Drill here, drill now, pay less.

By Craig Hansen • Posted in Election 2008, oil prices, Republicans • No Comment
May 22nd, 2008

Prediction: Oil $500 per barrel, gas $22.50 per gallon

Since editorialists everywhere are competing with each other to make the most outrageous price predictions on the cost of oil and the cost of gas at the pump, I figured I may as well join in the fun. So, WonderfulPessimist.com hereby predicts that oil will rise to $500 per barrel, with an at-the-pump price of $22.50 per gallon for regular unleaded.

Maybe. Someday. Certainly not anytime soon, though.

But still, if newspapers and TV stations across the country can get attention by treating the price of gas story like it’s an auction to be won by the highest bidder, I figure why not get really outrageous and really go for broke?

The current mess is cyclical and rather disturbing. OPEC are a bunch of greedy jerks, liberal media elites this we’re still not paying enough for gas for pure political reasons because a gallon of Starbucks coffee is still higher, and Democrats are looking for any excuse to make the mess worse by increasing the gas tax.

(It’s been a continual cry of liberal Dems ever since Paul “Tax On Gas” Tsongas ran for the White House. And Minnesota Dems demagogued the 35W bridge collapse enough to actually push a gas-tax increase through even in the midst of the worst pump-price spike in years. This in spite of the fact that a gas tax is one of the most regressive forms of taxation in our economy; guess the Dems don’t fight THAT hard for the poor, eh? So don’t tell me I’m making this up out of whole cloth.)

Also, let me be the first to predict this: prices will eventually ease again. Maybe not in 2008 yet, but certainly by next year. Too much of the current spike is not about supply and demand, but on baseless price speculation in the futures market. And like the irrational Internet economy of 2000, a bust will eventually take the air out of this oil boom.

Till then? I’m closing my wood shutters and not vacationing ANYWHERE this year.

By Craig Hansen • Posted in Opinion • No Comment
April 29th, 2008

OPEC blaming the victims

Chakib Khelil, Algeria’s energy minister and president of OPEC, in the wake of oil hitting a record $125 per barrel this week, has predicted that oil could rise as high as $200 per barrel before the market peaks out. Rather than blame consistent production cuts designed to spur the price inflation, however, Khelil decided to blame the victims.

Khelil said the blame for record oil prices and inflation at the pump lay at the feet of the weak U.S. dollar and “global insecurity.” That’s funny. And here I thought the weak US dollar had a lot to do with these out-of-control oil prices. Silly me.

As for the “global security” problem, things have never been better, when you think about it. Iraq is closer to being a stable democracy than it has ever been, the troop surge put a huge dent in the terrorist cell resistence, and about the only real risk out there now is the rabid president of Iran, Mahmoud Ahmadinejad, who really might want to invest in some medical ID tags for his citizens and himself if he doesn’t cool his jets and start acting like a diplomat instead of a terrorist.

So much for our “allies” in the Middle East; those who aren’t trying to blow up America are taking notes from Japan and waging an all-out economic war on the West.

By Craig Hansen • Posted in Opinion • No Comment
March 28th, 2007

Is Iran crisis all about OPEC?

The British hostages. The tension between the US and Iran. Rumors of missle exchanges. The constant threats to wipe Israel off the map, and the US with her.

We’ve heard it almost endlessly, but no one’s been looking at a startling possibility: Could all of Ahmadinejad’s saber-rattling toward the West be more about OPEC than about Iran’s national sovereignty?

Follow the money. After enjoying hefty price-per-barrel profits last summer, the OPEC nations have been taking a bit of a bath once prices began to fall last fall. In the last month, though, prices have shot back up in the wake of tensions in the Middle East, most of them caused by Iran’s Ahmadinejad.

Money is about power, and it seems to Wonderful Pessimist that the latest saber-rattling is less about real tensions and more about power supply repair; in other words, Iran wants its power back, and rising gas prices accomplish that, so if you can create some tensions about Middle East peace and cause those prices to go back up, you get your power back.

It makes more sense than one might think, once you take a moment to ponder it.

By Craig Hansen • Posted in Uncategorized • No Comment