From Knight Ridder Newspaper, Washington bureau correspondent Kevin G. Hall wrote the following.
Just a bit of the report from today is below.
Anyone get the sense that things are speeding up?
Headline of nightly news lead is the supply of oil.
Get ready folks.... Here it comes....
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Unforeseen events playing havoc with oil prices
By Kevin G. Hall
Knight Ridder Newspapers
WASHINGTON - When a tropical depression in the Caribbean was upgraded to Tropical Storm Dennis this week, crude oil prices immediately began climbing on the New York Mercantile Exchange.
Traders feared that at least one of the four tropical depressions off the U.S. Atlantic and Gulf coasts could become a hurricane that would delay oil deliveries, damage offshore oil rigs and threaten onshore refineries. That means temporary oil shortages are possible, a fear that drives up fuel prices.
Volatile oil prices look as if they're here to stay, experts agree, at least for a year or two. Why? Partly because world oil demand is growing faster than oil production. Partly because financial speculators are gaming the markets. And partly because nobody knows just how much oil is available, not least because it's unclear just how much oil Saudi Arabia has.
It is clear that the growing appetite for oil in China, India and other emerging economies has reduced the world's margin of extra oil-production capacity. The world now consumes about 84 million barrels of oil per day. If every well in the world is producing flat out, analysts said, total production could equal no more than 86 million barrels a day.
That small margin of extra capacity isn't much of a cushion against unforeseen events such as a terrorist attack, refinery fire, pipeline rupture or a natural disaster such as last September's Hurricane Ivan, which damaged oil rigs and platforms and removed about half a million barrels a day from the U.S. market for months.
That's why markets are nervous and fuel prices are high. Right now, U.S. oil inventories are near all-time highs, so there's no supply shortage here. But if anything cuts oil production anywhere in the world, there could be a shortage, very soon.
"Clearly, we are in a situation where the likelihood of us entering a supply-tightness scenario has increased, and that's what this market is playing off - that fear of what could happen," said Kyle Cooper, an oil analyst with Citigroup Inc. in Houston. "Fear and psychology are major market factors." |
