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Politics : Rat's Nest - Chronicles of Collapse -- Ignore unavailable to you. Want to Upgrade?

To: Wharf Rat who wrote (6759)	12/16/2007 1:39:05 PM
From: Wharf Rat	Read Replies (1) \| Respond to of 24225

OPEC had several reasons for not boosting production this month None Midland Reporter-Telegram 12/16/2007 OPEC, producer of 40 percent of the world's oil, kept their output targets unchanged, dismissing calls to add more oil to the market with prices hovering around $90 a barrel. This came as no surprise as we assumed the cartel would not boost production for several practical reasons. First, the rise in prices to current levels is not indicative of a fundamental move in the current supply and demand situation. Though a counter-seasonal, third-quarter drawdown in oil inventories has occurred, the fundamentals are not substantially different than they were earlier in the year. However, the recent 11 percent price decline suggests prices are moving lower as investors have shifted their concentration away from inflation fears toward the state of a weakening economy. Second, OPEC is concerned about future demand. Fearing a repeat of their Jakarta decision in 1997, the cartel has little interest in boosting supplies just ahead of a potential decline in global economic growth. The U.S. demand figures have been down, and the IEA recently made downward revisions to Q4 and 2008 consumption estimates. Thirdly, OPEC has already increased production by 500,000 barrels per day from Nov. 1. Assuming a monthlong lag in transportation, this crude just recently made its way to the domestic market. And finally, concerns about demand rising with the Northern Hemisphere's winter are not unfounded, however, recent forecasts suggest the U.S. and Europe are both expecting seasonally warm winter months. - The Energy Information Administration's latest long-term forecast estimates crude oil prices will average around $65 a barrel in today's dollars through 2030. The long-term forecast is up roughly $10 since last year. We note the report assumes continuation of current government policies. - Also according to the EIA, last week retail diesel prices hit $3.44 per gallon, up 18 percent since September. The rise has increased the cost of moving goods during the holiday season. This could hurt manufacturers and retailers who are already concerned about consumer spending. - For the first time in a test, a U.S. F-16 was able to use an air-to-air missile to destroy a rocket in its boost phase. The Net-Centric Airborne Defense Element theoretically would allow aircraft to intercept ballistic missiles prior to their lift into space. However, the aircraft would need to be within 100 miles of the missile within two to three minutes of the initial launch. - Bloomberg reports the U.S. and Russia have inked a deal wherein Russia will provide uranium supplies to the United States 15 years beyond the nonproliferation agreement that ensures uranium through 2013. Currently U.S. utilities receive material from dismantled Soviet warheads. The U.S. is the world's largest nuclear power generator, and Russia has the world's largest uranium enrichment facilities. Russia has the third largest reserve of uranium. - Last month the IEA estimated energy-related emissions of CO2 could increase from 27 billion metric tones in 2005 to 42 billion tons by 2030 if government policies remain unchanged. The key drivers of the rise would be China and India. This year China is expected to overtake the U.S. as the world's largest emitter. Meanwhile, India is estimated to become the third largest emitter within 10 years. - Many nations are struggling to subsidize the cost of fuels. This has particularly been the case during the late-summer and autumn months of 2007 when crude prices skyrocketed to $99. The Chinese recently increased their retail prices 10 percent in response to domestic shortages caused because refineries were being paid more to export their products. The Chinese are interesting in that they subsidize prices by taxing upstream producers between 20 and 40 percent. That windfall tax decision was instituted in May of last year. Since the government fears higher prices will hurt key sectors of the Chinese economy, they've been reluctant to remove price controls. Last year subsidies totaled upwards of $5 billion. However, revenue from the windfall tax accounted of $60 billion in revenue. Therefore, it's unlikely the Chinese will be very aggressive in cutting subsidies since they can foot the bill with the tax-generated revenue. - According to Energy Intelligence the top 10 energy firms in the world include Saudi Aramco, National Iranian Oil Company, Exxon Mobil, BP, Petroleos de Venezuela, Shell, China National Petroleum Company, ConocoPhillips, Chevron, and Total. Some 130 companies were judged across six operational categories. ------ Portions of this article were produced on December 3rd & 5th 2007 by Eric Wittenauer, Energy Futures Analyst, Global Investment Strategy A.G. Edward & Sons, Inc. Its publication is a collaborative effort and the information is obtained from sources considered reliable, however accuracy is not guaranteed by A.G.E. Past performance is not a guarantee of future results and additional information is available upon request (432)684-7335. mywesttexas.com