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Gold/Mining/Energy : Oil & Gas Price Economics -- Ignore unavailable to you. Want to Upgrade?

To: Ed Ajootian who wrote (323)	11/19/2000 1:37:55 PM
From: Rod Copeland	Read Replies (1) \| Respond to of 350

Ed, I tend to agree with you. I am nervous about the coming Spring. I'd like to know where all that extra oil has been going, however. It hasn't shown up over here (U.S.) as yet in inventories, but it seems to me that it was November of 1997 that OPEC did this same thing and in the Spring of 1998 we cratered. There is some talk that a lot of the additional production has been absorbed by China and Asia... but the present accounting system for world crude production and demand is nowhere close to being useful. I sure like where it is now!! Rod.

To: Ed Ajootian who wrote (323)	11/19/2000 4:57:11 PM
From: rajaggs	Read Replies (1) \| Respond to of 350

Ed, the difference between the supply and demand can vary. Demand can exceed supply but only for a short period and as much as can be tolerated by inventory. Let's say that inventory covers everything in the delivery chain, tankers, tanks, refineries, distribution and supply. When the demand exceeds supply, the inventory shrinks and prices are driven upwards, which is what has been happening for most of this year. Richardson is confirming this as is apparent from OPEC production increases and SPR releases. >> U.S. Energy Secretary Bill Richardson led the crusade .... , insisting that OPEC oil exporters were wrong to restrain supply while inventories of crude oil and heating fuel were dangerously low. "Our view is there is a supply problem. Stocks of crude oil, distillates and heating oil are much too low," Richardson told a news conference.<< OPEC has NOT been constraining production/supply and it's true that inventories are STILL LOW, despite OPEC increases, SPR release and prices are still higher than average by far. That indicates to me that, since inventories cannot shrink any further at this time of year (already lower than a comfortable margin), the price of energy supplies will escalate rapidly over the next 3 months. >> The Paris-based IEA in its world energy outlook said it saw growing reliance on oil and gas imports over the next two decades with OPEC nations grabbing an increased slice of a fast-growing international petroleum market. Executive Director Robert Priddle said world oil demand was projected reaching 115 million barrels a day by 2020 from 76 million bpd this year, annual growth of nearly two million bpd. A transport explosion in the developing world and the lack of a subsitute for gasoline and diesel meant efforts to reduce dependence on fossil fuel were likely to fail with oil expected to keep its 40 percent share of primary energy consumption over the next 20 years.<< This would clearly indicate that the present shortages are NOT short-term in nature. The imbalance between supply and demand will worsen over the next few years, unless their is a world-wide depression (God forbid) and the estimates by the Energy Adminstration in the US are frighteningly obsolete and misleading. They predict an increase of only 0.6% per year in the US demand for oil and a price increase of about $4/bbl over that 20 years ... and they started with about $22/bbl, last year. Even the population of the US is growing faster than that and their increase in GDP and usage of energy is faster again, than 3%. Worse still, the internal supply of oil within USA is declining, thus US is becoming MORE dependent on imported supply and paying the world price for oil. Supply and price are under pressure from increasing demand from countries like China, who have only started to use large quantities of imported oil in recent years. Their projected annual increase in usage is 7%. The projected increase in supply from OPEC is only 2%, ... so where is all the demanded oil going to come from.?? The supplies from the North Sea are predicted to decline over the next 20 years as is the oil from Alaska. NatGas will replace some of this within NA but Alaskan/Canadian Artic nat-gas is still 10 years way from reaching its markets. I, along with some others, predicted only a few months ago, that OPEC could/would grow to like $35/bbl oil very quickly. It seems to me they have developed that affinity, when they are talking about preventing a serious decline in crude pricing, what in fact what they are saying is, "there will be NO decline". It suffers somewhat in the translation, after passing through the language of political correctness.!