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Gas prices: Down 15 cents in 8 days
Gasoline prices continue trending lower but remain 31% above year ago levels
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Speculators' role in crude-oil prices under examination
Federal regulators have uncovered evidence that oil speculators operating in unregulated "dark markets" may have helped drive the price of crude oil to record highs this year, McClatchy Newspapers has learned. Federal regulators have uncovered evidence that oil speculators operating in unregulated "dark markets" may have helped driv... more
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Will air fares fall as oil drops?
Don't count on it. It's not clear the price relief will last, and airlines are using fuel surcharges to repair their damaged balance sheets.
As crude oil prices jumped over the past two years, airlines and other fuel-dependent companies turned to surcharges as a way to cushion their balance sheets from higher costs. Now, however, crude oil is in the midst of a retreat, dropping briefly below $100 per barrel on Sept. 12. In the past two months, crude has declined by nearly one-third since topping $147 per barrel. In a Sept. 12 client note, Credit Suisse analyst Daniel McKenzie cited crude's "collapse" as one reason he's bullish on the airline industry's deeply discounted stocks.
Lower crude oil prices mean airlines will also drop fuel surcharges, right? Not quite. Jet fuel is still running 40 percent to 50 percent higher than a year ago -- and it's not clear if the price relief will last. "At the moment, airlines are in balance-sheet repair mode, and it is not likely we will see any fuel or base-airfare rollbacks until they recoup some of the major losses of the past year," air fare watcher Rick Seaney of travel site Farecompare.com said in an e-mail. He predicts crude would need to drop by another $20 a barrel or so before airlines begin rolling back fuel fees.
(continued at link) Don't count on it. It's not clear the price relief will last, and airlines are using fuel surcharges to repair their damaged... more -
OPEC to cut oil production, tackling falling oil prices
OPEC ministers headed for Vienna on Monday to wrestle with the issue of falling oil prices, with analysts expecting them to agree to trim output to help keep crude above $100 a barrel.
The question facing OPEC, which is to hold a meeting Tuesday, is when, not if, to cut its oil production target as crude prices slide in the face of weakening global economic growth, analysts say.
Most observers expect the 13 nation cartel to agree to reduce its output informally before waiting until later, possibly at a scheduled gathering in Dec, to alter its official output target.
The informal cut will be achieved by members, mainly Saudi Arabia, agreeing to cut their excess production above their OPEC quota, which would remove oil from the market but not amount to a formal change in policy.
"Anyone that is overdoing their quota should respect it," Libya's OPEC representative, National Oil Corporation (NOC) chairman Shukri Ghanem, told AFP by telephone on Sunday. "The market is more than oversupplied it seems."
Under fierce pressure from the U.S, Saudi Arabia agreed in May and June to increase production to help calm the runaway crude market which reached a pinnacle on July 11, when crude struck $147 a barrel in New York.
Saudi Arabia, the world's biggest crude producer, is estimated to be producing about 700,000 barrels per day (bpd) above its quota.
The stakes are entirely different to the last time OPEC members met in March, when crude prices had broken through $100 a barrel and were on a steep upwards trajectory.
This time, oil prices are on the way down and approaching $100 a barrel - a level many members, above all the traditional price hawks of Iran and Venezuela, are keen to protect.
Economic conditions, which determine oil demand, have worsened considerably, with many European economies facing recession, the US struggling & fears growing about the emerging economies of Asia.
OPEC producers have to balance their desire for revenues from high oil prices against the danger that high prices could choke off feeble economic growth.
Analyst John Hall, who runs his own oil consultancy expects a cut in production via a crackdown on overproduction by Saudi Arabia.
"I think they'll hold up at where it is & reinforce targets. That'll bring the output number down," he told AFP.
He estimated that OPEC was pumping about a million bpd more than its output target of 29.67 million bpd, which includes new members Angola & Ecuador but excludes Iraq.
Ecuador's oil minister, whose nation is the smallest OPEC producer, said on Sunday an oil price of $110-120 per barrel was "reasonable" but he suggested OPEC should keep its output steady.
"I don't think there is a possibility of a cut to OPEC production levels in our opinion," he said as he arrived in Vienna. "The production levels are adequate."
On Monday, ministers from Algeria, Iran, Kuwait, Qatar and Venezuela are set to arrive and begin informal talks ahead of the policy meeting late on Tuesday.
The arrival time of Saudi Arabian Oil Minister Ali al-Nuaimi, the de facto leader of the group who is yet to comment on the meeting, is unknown.
The Washington-based energy consultancy PFC Energy believes support is growing for an outright cut to OPECs target despite the unpopularity of such a move in consumer countries where transport and heating costs are rising.
"The focus of debate among OPEC ministers gathering ... in Vienna will not be whether there is a need to cut crude oil production, but rather when," it said in a report.
If not on Tuesday, then a cut would be announced in December at the next OPEC meeting.
"Though Riyadh will not be bullied into agreeing to a production cut, the near consensus within the group that some reduction in volumes is needed ... raises the distinct possibility that the final communique in Vienna will announce an output reduction," PFC continued.
OPEC meets regularly to set its production policy, with each member assigned a quota or production target. OPEC ministers headed for Vienna on Monday to wrestle with the issue of falling oil prices, with analysts expecting them to agree to t... more -
Oil prices trading higher as Gustav spins toward Gulf of Mexico, threatens oil pla...
NEW YORK (AP) -- Oil prices rose for a third day Wednesday as Tropical Storm Gustav spun toward the Gulf of Mexico on a possible collision course with offshore oil and gas installations.
Also Wednesday, the Energy Department reported a surprise drop in U.S. crude supplies. However, the report did not seem to be affecting trading as oil investors focused their attention on Gustav.
Royal Dutch Shell PLC and BP PLC said they have begun evacuating some workers from offshore rigs scattered throughout the Gulf, home to about a quarter of U.S. crude production and much of its natural gas.
Though it was too soon to know where the storm would hit, some models showed Gustav taking a path toward Louisiana and other Gulf states devastated by Hurricanes Katrina and Rita three years ago in a double blow that sent energy prices soaring.
"A bad storm churning in the Gulf could be a nightmare scenario. We might see oil prices spike $5 to $8 if it really rips into platforms," said Phil Flynn, analyst at Alaron Trading Corp. in Chicago.
Light, sweet crude for October delivery rose as high as $119.63 on the New York Mercantile Exchange before easing back in early afternoon trading to $117.03, still up 76 cents. The contract added $1.16 on Tuesday to settle at $116.27 a barrel.
The storm also boosted natural gas prices, which gained 18.9 cents, or 2.28 percent, to $8.467 per 1,000 cubic feet.
Gustav struck Haiti on Tuesday as a hurricane, pummeling the impoverished country with 90 mph winds and heavy rain before moving toward Cuba. At least 11 people were killed in Haiti and the Dominican Republic. Gustav was later downgraded to a tropical storm but was expected to regain strength, possibly becoming a dangerous Category 3 storm by next week, forecasters said.
Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Ill, said a big threat was to oil refineries dotting the Gulf Coast from Texas to Louisiana. A shutdown in refining there would likely lead to a sudden jump in retail gas prices around Labor Day weekend, a time when many Americans take to the road for end-of-summer vacations.
"There's a strong chance that by Friday we could see some fairly significant pump price increases," Ritterbusch said. "Crude can be replaced and brought in via tanker, but bringing a damaged refinery back up again can take a long time, as we saw with Katrina and Rita."
Prices were also supported by a weaker dollar, which boosted the demand for oil among investors who buy commodities as a hedge against inflation.
The euro recovered ground against the dollar Wednesday after hitting a six-month low the previous day. It bought $1.4714 in New York trading, up from $1.4650 Tuesday.
Crude prices have gone up for three straight days, halting a steep, monthlong slide as oil traders at least temporarily shift back toward a focus on short-term market events like Gustav.
But evidence of falling U.S. oil demand is keeping a lid on oil prices. The U.S. Energy Department's Energy Information Administration said Tuesday that year-over-year oil demand was down 5.6 percent in June.
"We're getting some pretty powerful data that suggests slower growth and higher gasoline prices have really crimped oil demand in the U.S," said David Moore, commodity strategist at Commonwealth Bank of Australia in Sydney.
The Energy Department's Energy Information Administration said in its weekly inventory report that crude stockpiles fell slightly by 100,000 barrels to 305.8 million barrels for the week ending Aug. 22.
That compared to the 1.5 million barrel increase analysts surveyed by energy research firm Platts had expected.
"I think Gustav is overshadowing the EIA report. It doesn't appear to having an impact," Flynn said. NEW YORK (AP) -- Oil prices rose for a third day Wednesday as Tropical Storm Gustav spun toward the Gulf of Mexico on a possible colli... more -
Hurricane Gustav hits Haiti, oil prices rise
Tropical Storm Gustav reached hurricane strength as it swirled through the central Caribbean and bore down on Haiti on Tuesday, the U.S. National Hurricane Center said.
A hurricane hunter aircraft reported the storm's top sustained winds were near 80 mph (130 kph) -- above hurricane strength of 74 mph (120 kph) -- as it approached southwest Haiti.
Gustav threatened the impoverished Caribbean nation of 9 million with up to 25 inches of rain in some areas, which could trigger deadly floods and mudslides.
Oil prices rose as Gustav stirred concerns about disruptions to U.S. oil and gas output in the Gulf of Mexico and served as another reminder that this storm season is shaping up to be busier than usual.
^^^^^^^^^^^^^^^
Amazing, just in time for Labor Day weekend. If I didn't know any better I could believe these storms are being steered to exactly where oil companies make the most profit. Just by the National Weather Service stating it "could" veer that way, prices go up. And nevermind the devastation it left behind in Haiti... Gotta protect those oil rigs! Tropical Storm Gustav reached hurricane strength as it swirled through the central Caribbean and bore down on Haiti on Tuesday, the U.... more -
Crude rises on Georgia fighting
Crude oil prices have forged higher on fears that military conflict between Russia and Georgia could disrupt supplies in the region.
US light, sweet crude was up 71 cents at $115.91 a barrel, while London's Brent crude gained 70 cents to $114.03 after prices had fallen on Friday.
Georgia is not an oil producer but the country is a key transit point for crude and gas exports.
Oil prices have fallen in recent weeks after hitting a record $147.27 in July.
(continued at link) Crude oil prices have forged higher on fears that military conflict between Russia and Georgia could disrupt supplies in the region. ... more -
Iraqi Government Says Their $80 Billion Surplus is "Not Real Money"
BAGHDAD, Iraq (CNN) -- Iraq's government is pulling its weight to reconstruct its war-torn country, Shiite lawmaker Haidre al-Abadi said Wednesday, a day after U.S. auditors announced that Iraq has amassed projected surpluses of up to $80 billion from rising oil prices while Washington pays for reconstruction projects.
"This is projected and not real money," al-Abadi said. "We have many reconstruction projects and as you know, most of the infrastructure of the country had collapsed after the war and that needs a lot of money to rebuild the country."
He acknowledged that the United States has spent "a lot of money," but stressed that Iraq must build up its central bank reserves considering the flexibility of the cost of oil.
Iraq depends on "one single income, which is oil," al-Abadi said.
Rising oil prices left Baghdad with a $29 billion surplus between 2005 to 2007. With the price of crude roughly doubling in the past year, the projected surplus for 2008 is expected to be between $38 billion and $50 billion, according to a new report from the Government Accountability Office, the investigative arm of Congress.
The assessment drew outrage from leading members of Congress, including Sen. Carl Levin, the chairman of the Senate Armed Services Committee, who called the findings "inexcusable."
Al-Abadi said the U.S. spending in Iraq is focused more on the military initiatives. "If you look carefully, I do not think that the U.S. budget is spending on the Iraqi economy," al-Abadi said. "U.S. money is not being spent at the moment on reconstructing Iraq, but it's spent on services for the U.S. military. It's a mutual interest for both countries."
However, the GAO auditors concluded that the United States has put about $48 billion toward reconstruction since the 2003 invasion of Iraq. About $42 billion of that has been committed to various projects, including about $23 billion spent on the oil and electricity industry, water systems and security.
Iraq, meanwhile, spent $3.9 billion on those sectors from 2005 through April 2008, according to the GAO. The ongoing fighting there, a shortage of trained staff and weak controls have made it difficult for the Iraqi government to spend that windfall on needed projects, the agency's latest report concluded.
Levin, D-Michigan, has been an outspoken critic of the slow progress of reconstruction and an advocate of a U.S. withdrawal from Iraq, which U.S.-led forces invaded in 2003. But his criticism was echoed by Virginia Republican Sen. John Warner, the former chairman and a leading member of Levin's committee.
"Despite Iraq earning billions of dollars in oil revenue in the past five years, U.S. taxpayer money has been the overwhelming source of Iraq reconstruction funds," Warner said in a joint statement with Levin. "It is time for the sovereign government of Iraq, using its revenues, expenditures and surpluses, to fully assume the responsibility to provide essential services and improve the quality of life for the Iraqi people."
In its response to the audit report, the Treasury Department said U.S. officials are working with Iraqis to address the issue, "and we believe progress is being made."
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Obviously, the American people and government are outraged by this "projection". Share your thoughts about this article. BAGHDAD, Iraq (CNN) -- Iraq's government is pulling its weight to reconstruct its war-torn country, Shiite lawmaker Haidre al-Aba... more -
Off Shore Drilling: House Dems turn out the lights but GOP keeps talking
Paging Mr. Smith....
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"I'm not going anywhere."
He's NOT? Oh no! Gordon Brown has vowed to do "whatever is necessary" to help people struggling with rising food and fuel prices in the wake of Labour's catastrophic defeat in the Glasgow East by-election.
The Prime Minister, who earlier brushed off a call by Tory leader David Cameron for a General Election, insisted that he understood popular concerns at a time of global economic problems.
Addressing Labour's National Policy Forum at the Warwick University campus in Coventry, he promised new measures in the coming weeks to help people cope with the pressures of energy costs.
"We understand and we hear people's concerns," he said.
"We will do whatever is necessary over the next few months to help hard-working families through these difficult times."
Mr Brown praised Margaret Curran, the defeated Labour candidate in Glasgow East, saying that she had fought an "excellent" campaign.
He stressed that with oil prices having trebled over the last two years and food shortages pushing up prices, he said that every country in the world was affected by the current economic difficulties.
"Coming from ordinary families as we do and have done, we know what it is like when people go to the supermarket and find that the price of milk, and the price of bread, and the price of eggs have gone up dramatically in recent months," he said.
"We know that our role when facing global economic challenges is to be on the side of hard-working families, on the side of the people of Britain." He's NOT? Oh no! Gordon Brown has vowed to do "whatever is necessary" to help people struggling with rising food and fu... more -
Cheaper Gas Websites
The cost of gas is out of control with no relief in sight. What is a consumer to do? Here are some cheap gas websites that are supposed to take some of the pain out of the pump. The cost of gas is out of control with no relief in sight. What is a consumer to do? Here are some cheap gas websites that are suppose... more
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Ivory Coast halves government pay to cut fuel prices
The Ivory Coast government is halving the salaries of its ministers to pay for a reduction in the price of fuel. Prime Minister Guillaume Soro said the managers of state-owned companies would also have their pay cut in half, to pay for a 10% cut in fuel prices. "Having heard the people's cry from the heart, the government has decided to cut the price of fuel," Mr Soro said.
The announcement comes after a strike by public transport works in the main city Abidjan last week. On 7 July, Ivory Coast increased diesel prices by 44% and petrol prices by 29%. The government attributed the increase to rising global oil prices. Mr Soro said running costs and investments in government departments would also be cut to help cope with the extra expenditure.
Overseas trips by government members would also be reduced to a "bare minimum", he said. Escalating food prices sparked violent protests in Abidjan in March and April, when housewives took to the streets banging pots and pans, youths built burning barricades and at least one man was killed. The Ivory Coast government is halving the salaries of its ministers to pay for a reduction in the price of fuel. Prime Minister Guill... more -
UK economy heads for ‘horror movie’
BRITAIN is facing an “economic horror movie” because of a “toxic mixture” of a moribund credit market and volatile oil prices, according to a leading forecasting group.
The Ernst & Young Item club, which uses the Treasury’s economic model, will argue in a report tomorrow that the economy will struggle to avoid recession. This comes as a survey by the Institute of Directors shows that business confidence has slumped to the lowest level ever recorded, with company chiefs increasingly gloomy about the investment climate.
These reports follow an interview with Alistair Darling in which the chancellor admitted the downturn would be more “profound” and last longer than he had expected.
Also, Sir Win Bischoff, chairman of Citigroup, the American financial giant, believes that house prices in Britain and America will keep falling for another two years.
The Ernst & Young Item club predicts growth of only 1.5% this year, slowing to 1% in 2009. It says consumer spending will slow to a standstill, rising by only 0.2%, and forecasts a two-year drop in investment.
It also warns that the chancellor’s budget strategy has been thrown into “turmoil” by the downturn and an unplanned £2.7 billion tax giveaway. It predicts the budget deficit will top £50 billion and the “current” budget deficit, used to determine the golden rule, will remain in the red for at least the next three years.
Peter Spencer, chief economist at the Item club, said: “Both on the high street and in the housing market it is going to get a great deal worse before it gets better. We have already seen a housing crisis that has morphed from a credit crunch to a general collapse in confidence as prices have tumbled.
“Our worry is that without the usual medication from the Bank of England - which would have nasty inflationary side-effects in this environment - consumers will follow suit, moving from their current state of denial into a state of despair.”
Meanwhile, the Institute of Directors’ quarterly business opinion survey shows business optimism at its lowest level since the survey began in 1996. The proportion of company directors “more versus less” optimistic about their company’s prospects fell to -25%, compared with -17% three months ago. BRITAIN is facing an “economic horror movie” because of a “toxic mixture” of a moribund credit market and volatile oil prices, accordi... more -
Volkswagen to open US plant
Twenty years after the closure of its last American plant, Volkswagen is returning to the United States. With its planned factory in Chattanooga, the company is hoping to regain US market share and also buffer itself from euro-dollar currency fluctuations.
German carmaker Volkswagen announced on Tuesday it would invest close to €1 billion ($1.59 billion) to build its first factory in the United States after the closure of its last plant 20 years ago. The company said it expects to open a new plant in Chattanooga, Tennessee by 2011. VW plans to produce 150,000 automobiles annually at the site as part of its effort to increase market share in America, which has eroded in recent years.
Read more... Twenty years after the closure of its last American plant, Volkswagen is returning to the United States. With its planned factory in C... more -
Cheap Airlines Are Losing Altitude
Expensive oil could end up spelling the end for once-celebrated budget airlines. Increasingly, Air Berlin, easyJet and co. are running into major difficulties. And getting rid of excess ashtrays won't be enough to save them.
Last fall and winter was not a happy time for Lufthansa CEO Wolfgang Mayrhuber. But it wasn't just the uncooperative weather and series of strikes that were making his life so miserable. Mayrhuber, a 61-year-old originally from Austria, faced heavy criticism for being too hesitant and overly risk-averse, all because he passed up opportunities to acquire charter airline Condor and Italian competitor Alitalia.
Read more... Expensive oil could end up spelling the end for once-celebrated budget airlines. Increasingly, Air Berlin, easyJet and co. are running... more -
Oil prices continue to fall
Oil prices extended their decline Wednesday after diving more than $6 a barrel in the previous session on concerns that U.S. economic problems may reduce demand for crude.
By midday in Europe, light, sweet crude for August delivery was down $1.84 at $136.90 a barrel in electronic trading on the New York Mercantile Exchange.
That came a day after crude plunged $6.44, or 4.4 percent, to settle at $138.74 a barrel in an extremely volatile session. Over the course of Tuesday's session, the contract rose as high as $146.73 and fell as low as $135.92.
Prices hit a trading record of $147.27 on Friday.
Concern that quickening inflation and slowing economic growth will cut consumer demand in the U.S. for gasoline and other oil products may slow a bullish trend that's seen crude prices roughly double in the past year, said Tetsu Emori, a commodity markets fund manager at ASTMAX Futures Co. in Tokyo.
"The market is eyeing the weaker economy and the weaker demand out of the U.S.," Emori said. "The price uptrend is still ongoing, but without a news catalyst, there isn't as much confidence that we'll break US$150 in the short-term."
Federal Reserve Chairman Ben Bernanke told Congress on Tuesday that "numerous difficulties" are racking the U.S. economy, and warned that rising prices for energy and food are elevating the risks of inflation.
At the same time, the Labor Department reported that wholesale inflation jumped by 1.8 percent last month, a larger-than-expected gain. Over the past year, wholesale prices have risen 9.2 percent, the most since 1981.
The latest monthly market report from the Organization of Petroleum Exporting Countries gave traders further reason to unload oil this week.
The cartel predicted world oil demand will rise by 900,000 barrels a day in 2009, or 100,000 barrels per day less than this year. OPEC blamed the slowdown in growth on slumping economies and high pump prices in rich, industrialized countries.
Vienna's JBC Energy cited MasterCard Advisors as noting that the four-week average of U.S. gasoline demand was down 3.5 percent from the same period a year earlier.
"Following the fourth of July holidays gasoline demand normally goes up but last week demand was down by 5 percent compared to a year earlier," JBC wrote.
Amid the signs of demand destruction, though, potential supply threats and a weak U.S. dollar continue to put a floor to prices. Oil prices extended their decline Wednesday after diving more than $6 a barrel in the previous session on concerns that U.S. economic ... more -
Japan fishermen strike over fuel
Fishermen across Japan are mounting a one-day strike in protest at rising fuel costs. About 200,000 boats - almost the entire industry - sat idle in ports, and thousands of fishermen demonstrated in a park in central Tokyo.
In the Japanese capital, several thousand fishermen joined a march to highlight their concerns. Fuel costs for fishermen in Japan have tripled in three years. Fishermen across Japan are mounting a one-day strike in protest at rising fuel costs. About 200,000 boats - almost the entire industry... more -
Inexorable Comeback of Nuclear Energy
Oil prices are sky high. Greenhouse gases are driving up temperatures around the world. And many are now looking to nuclear power as the possible solution. Dozens of new reactors are under construction, but in Germany the subject remains taboo -- for now.
Read more... Oil prices are sky high. Greenhouse gases are driving up temperatures around the world. And many are now looking to nuclear power as t... more -
Airlines Call on Congress to End Oil Speculation
The airline industry, which will lose at least 30,000 jobs to high oil prices by the end of the year, is urging Congress to act quickly to curb oil price speculation. "Oil has become the new gold," said Jim May, CEO of the Air Transport Association, at a Washington news conference Friday. He said airlines face a crisis that results largely from the role of speculators in the oil market, with investor trades accounting for 20 times the number of physical trades by producers and users. That pushes prices up far above the actual cost of production, which is $65 to $75 a barrel... (click on link for rest of story)
Also, you may want to check out this website: http://www.stopoilspeculationnow.com/ for the website that the airlines has set up, as part of its speculation initiative, which has resulted in 1 million email messages being sent to Congress, just in the first three days. The airline industry, which will lose at least 30,000 jobs to high oil prices by the end of the year, is urging Congress to act quickl... more -
Dingell introduces bill on oil speculation, energy market manipulation
“For too long, energy markets have operated behind a veil of secrecy,” Dingell said. “I have dark suspicions about the effects that unchecked speculation and possible market manipulation are having on the price of crude oil and petroleum products. Given the record energy prices that are harming businesses, farmers, consumers, and our economy as a whole, Congress should act to determine the precise effects that manipulation and speculation are having on energy prices, and work to identify where there are gaps in regulation that allow this rampant speculation.” Rep. Dingell, Energy Committee Chairman introduces HR 6238 to provide for the establishment of an interagency working group to provide for better regulation over oil markets today, July 11, 2008. (click on link for full story...) “For too long, energy markets have operated behind a veil of secrecy,” Dingell said. “I have dark suspicions about the effects that un... more
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Oil Prices
