$57 A Barrel, Is That the Threshold For Spurring Research?

[Annie]

Links at site:


http://austinbay.net/blog/index.php?p=211

4/5/2005
$57 a barrel–Price spike or long-term hike?
Filed under: General— site admin @ 1:27 pm
The AP is quoting Venezuela’s oil minister as saying OPEC is approaching its oil production limit. OPEC production “limits” are often violated by OPEC members, but at this moment in time oil producers are pumping madly and the price continues to climb. While additional production capacity exists (500,000 barrels per day), as the AP story says, production is being stretched. Hence the current buzz word, “tight market.”

The AP’s lede:

The Organization of Petroleum Exporting Countries is running out of spare production capacity, Venezuelan Oil Minister Rafael Ramirez said Tuesday.
“OPEC’s production capacity is reaching its limit,” Ramirez told reporters, adding that it is too early for OPEC to decide on a possible half-million barrel per day production increase.

Ramirez argued that geopolitical tension in the Middle East has contributed more to recent oil price rises than have any supply problems.

Oil prices opened at new record highs of above US$58 a barrel Monday, spurred by continuing worries about tight gasoline supplies in the United States.

Here’s a link to my thoughts a month ago on oil production– the post also discusses a price analysis I made last fall.

There’s a lot of interest in re-drilling or re-developing old oil fields in Texas and the rest of the continental US. Technology has improved immensely– both exploration and production technology. Continental US ol fields obviously avoid the Middle Eastern “geopolitical tension” the Venezuelan minister mentions. Oil field services (drilling and production support) are experiencing a renaissance in many West Texas and East Texas towns. A “mini-boom” is on, with Midland, Lufkin, et al benefiting. That being noted – this extended increase in oil prices, whether a spike or a long-term hike, is a warning. The US must move to develop alternative energy resources.