On 3/18/05 19:22, "Jim Felder" <felder@KNOLOGY.NET> wrote:

> But Stan, I don't think this would do any good. The oil companies don't
> have their prices set by the government, they have their prices set by
> supply--usually--and demand--lately.

Price is set by demand and costs of the barrel and the Windfall Profits Act
from the 1970s.

OPEC recently met to increase production levels.  The problem is that many
members are already pumping over quota and at their max that the lines can
handle.  One countries oil minister said he could easily put out another 30
percent more oil if he had the pipe lines to handle it.  His pipe lines were
built on estimates for 15 years.  His pipelines are only about 5 years old.
3 years to build new pipe lines.

Also from the recent meeting---
Opec members Iran, Qatar, Venezuela and Algeria have come out in favour of
keeping output steady, with Algeria's minister saying last week that Opec
had no spare capacity to lift quotas.

Everybody that can is already exceeding quotas unofficially to take
advantage of the high prices.  This should have been lowering the price.
Instead the demand is such that even that the over 600,000 barrels a day is
not making a dent.  Everybody is holding their breath waiting for northern
america and northern europe to come out of winter  which should lower the
demand for fuel oil.  However they also noted that many consuming countries
have used up their reserves and even that may not be much help for prices.

Saudi is the only place with any reserve capacity left.  They are not going
to release that capacity because of what would happen if some other
producers went off line and there was no capacity to pick up that loss.

It is indeed a world crisis looming.  It isnt so much that we are running
out, it is that we are using it faster than it can be pulled out of the
ground.
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jimt
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