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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club -- Ignore unavailable to you. Want to Upgrade?

To: Justa Werkenstiff who wrote (14645)	6/22/2000 6:05:00 AM
From: Justa Werkenstiff	Read Replies (1) \| Respond to of 15132

Asia faces high energy costs for 2 to 3 yrs -analysts By Raj Rajendran SINGAPORE, June 22 (Reuters) - An era of high energy costs looms for Asia over the next two or three years as oil cartel OPEC tightens its grip on global oil supply, analysts said on Thursday. With no new major non-OPEC oil source due onstream over the next few years, analysts said energy-hungry Asia will be at the mercy of OPEC which has clearly demonstrated its newfound power over international oil prices. ``We think OPEC will be able to maintain prices at this range for a long time, for as long as three years,'' said John Russel, managing director of Bangkok-based Petroleum Economics Limited (PEL) Pacific. ``It will be quite some time before there would be a significant increase in non-OPEC output.'' OPEC said on Wednesday it would raise production by a measly three percent in an effort to cool the heated market but further price gains greeted the decision, since the market saw the hike as insufficient to quench global demand. International benchmark U.S. NYMEX light crude futures hovering at $31.25 per barrel have risen almost 31 percent since early April when levels fell as low as $23.85. Prices rose to a nine-year high of $34.37 in March. Oil prices had plummeted to $10.35 per barrel in December 1998 but rebounded strongly after producers slashed output by more than 5.1 million bpd to under 75 million bpd, with OPEC producers cutting 16 percent. Analysts said they do not expect the NYMEX light crude to fall below $28-29 per barrel in coming months as a result of the latest supply increase. GAS GUZZLERS TO PAY; EXPORTERS TO GAIN They said the macro effect of high oil prices would be to knock off up to one percentage point of growth in gross domestic product (GDP) in energy-hungry countries. ``Emerging markets are very important marginal users of crude oil,'' said George Magnus, global chief economist at UBS Warburg, and based in London. ``I'm guessing, but if global growth slows from 4.5 (percent) to three over the next year, I would probably say you could trace about a third of that decline to the impact of rising energy costs.'' Korea is looking at a crude oil import bill of $20.2 billion for the year or an average price of $21.50 for the regional benchmark Dubai crude, analysts said. Dubai was assesed at a high $27.05 on Thursday. Analysts said a $1 increase in oil prices translates into an additional $900 million in import costs for Korea. ``The government has reiterated its high oil price policy to control domestic demand,'' said Sonia Song, energy analyst at CS First Boston, based in Seoul. The gains for the region's few oil exporters are big due to low budget assumptions but in some cases such as Indonesia they are not enough to hurdle over the country's myriad of economic and political problems, analysts said. Indonesia assumed an oil price of $18 per barrel in its 2000 budget and a range of $17 to $22 for the 2001 budget beginning next January. Its benchmark Minas crude was last assessed at $31. Indonesia, Asia's sole OPEC member, pumps 1.45 million barrels per day (bpd) of crude oil and condensate, while Malaysia's output was around 720,000 bpd, and Vietnam about 300,000 bpd. EXPORT REFINERS TO LOSE OUT High crude costs will eat into the margins of export-oriented refineries, especially those in Singapore, as more capacity comes onstream to meet indigenous demand. Analysts said the start up of new refineries in India and Taiwan and refurbishments of existing ones in China had led to a sharp drop in oil product imports but at the same time raised crude purchases. As a result, refiners previously selling into these markets have had to slash crude runs significantly with those in Singapore scaled back to a massive 50-60 percent of capacity. 05:24 06-22-00

To: Justa Werkenstiff who wrote (14645)	6/22/2000 10:38:00 AM
From: Boca_PETE	Read Replies (1) \| Respond to of 15132

Justa: Article on Higher Oil Prices linked below: chron.com No matter how reasonable the explanation provided, it looks like the low life demagogues will have a field day bashing and blaming big oil companies for higher pump prices during the political season leading up to the elections. They will ignore the facts that gasoline prices adjusted for inflation are now lower than in 1990 or in 1980, that gasoline bills as a percent of disposable income are the lowest in 20 years, that gasoline consumption is up by 2.4% compared to last year, that higher crude oil prices are increasingly being reflected at the pump on a delayed basis, that low inventories have been maintained in response to prior criticism that oil companies had windfall profits from maintaining high inventories in prior years rising price environments (like there's something wrong with making money for shareholders by buying low) ..... End result will be to further weaken U.S. oil companies making them more vulnerable to be taken over by foreign mega-majors. Greater dependance on foreign oil will surely follow that. What other industry averages net income as a percent of revenues in the low single digits and gets accused of making obscene profits. It's an outrage! The short sighted ignorant demagogues sicken my stomach - time to tune out! P