Speculation-fuelled: Rising oil prices have the world economy in turmoil.A former Iraqi oil minister says record high oil prices are more to do with speculators, including central banks, than supply and demand.
Prime Minister Kevin Rudd is pressuring G8 leaders to push for OPEC to increase oil supply.
Isam Chalabi was Iraq's oil minister before the first Gulf War and has more than 40 years experience in the industry.
He says Mr Rudd's strategy will not work.
"The question of prices today is not related to supply and demand fundamentals - everybody knows that," he told AM.
"Everybody has said so and hence it is not a matter of increasing supplies because whoever is in need of oil has been able to get it, so there is no need of problem of getting the oil."
Brian Wilson, former British energy minister under Tony Blair, agrees.
"What takes it from $US100 to $US130 is that there is a huge speculative element and the actual connection between the paper trading price of oil and anything that is happening in the physical world is now extremely remote," he told the BBC.
Mr Chalabi says only regulation of oil trading will stop the price spike.
"The world consumes 85 million barrels a day, you have trading going on over a billion - some people estimate up to two billion - barrels a day, so if something really happens to put a hold on that, I believe that the price spike will not continue and maybe it will start to decrease," he said.
9 comments:
So because I have little or no faith in an unregulated market given that little thing known as greed, I'm all for regulation. Whatever in the hell we need to do to get prices down that doesnt end in a windfall to some corporate entity selling "new technology."
With that said, I'm trying to get my mind around how regulation would actually work. This would have to be international regulation. Now how we gon' pull that off when Britian and Isreal are out only allies.
Manufacture a panic, define a fake problem, then come up with a solution called "regulation" that sounds appealing to the sheeple.
Everything that perverts our financial freedom is a product of "regulation", from the Fed to the stock market to agricultural subsidies.
But the sheeple keep falling for it over and over no matter how much "regulation" doesn't work. This is how we will end up with communism and one world government.
and what we have now, $5 for a gallon of unregulated gas, is working?
You ask how many times do we have to be shown that regulation doesnt work.
Well I ask in how many industries does manipulation and greed have to be displayed before we know that an unchecked market is a breeding ground for people to be gouged and taken advantage of. Think the LA housing market. Where all the industry players (from the corporate heads to the loan agents on the ground) saw was mo money, mo money, mo money.
LOL!! The current $5 gallon of gas is unregulated, whatever that means?
Funny.
OPEC quotas are "regulations". Refinery tax breaks are "regulations".
Well I ask in how many industries does manipulation and greed have to be displayed before we know that an unchecked market is a breeding ground for people to be gouged and taken advantage of.
Can you give an example, in the history of the United States, of an unregulated industry?
Think the LA housing market. Where all the industry players (from the corporate heads to the loan agents on the ground) saw was mo money, mo money, mo money.
Robyn, you must read up on the way the Fed works. Where do you think all that mo money comes from?
The Financial industry is one of the most heavily "regulated" in this country and the net result was the subprime debacle. Regulations favor those who pay for the regulations - not you and I.
Kinda like when Wal-Mart started fighting to raise the minimum wage. Not out of love for its workers, but to bankrupt its competitors who could not afford to pay its employees more.
Here Robyn.
http://video.google.com/videoplay?docid=-515319560256183936
This is a better education in 3 1/2 hours than you got in 4 years of college and 3 years of law school.
My point is this, and its real basic, so no need for any dissertation on the Federal Reserve this afternoon....There is (obviously) no regulation, quota or tax break in place that has the net effect of me paying less $100 to fill up my damn gas tank.
All information suggests that there is no diminished supply and that demand is unchanged (although all-too-high). Based thereon, than I'm prepared to lay the blame at the feet of corporate participants who have consistently earned three and four hundred percent in profits annually at the expense of the consumer. I'm also prepared to point fingers at speculators and oil futures traders who also apparently have in hand in this bull crap.
Tell you what, let's table my advanced oil industry primer until sometime next month. In the meantime, I propose, that OPEC, Bush, Obama, you, your mechanic, your cleaning lady, and all the rest of the world's geniuses, get together and come up with some restriction or regulation that gets prices down.
Call it a friendship pact if you are unnerved by the word regulation, just get back to me and the other billion people in this country who get pissed off every time we go get gas.
Not I may be taking a few liberties, but I probably speak for a good half billion of the lot when I say, I really dont want to debate how you do it, just get it done. Call us when gas returns to a reasonable price per barrel.
This has everything to do with the Fed. How can we expect prices to remain the same or get lower when the value of our money continues to decrease?
Is oil really going up or is the dollar, which is entirely oil-backed, going down?
In any event, I suppose the answer doesn't matter because there is no reason to lower prices.
I think it's wonderful that prices are going up. Spoiled, arrogant, wasteful Americans are getting a good lesson out of this.
Public transport is becoming more popular.
Living 10,000 miles from work will no longer be an option.
Hummers are already on the endangered species list.
And we'll probably never see the fine art of "cruising", that was so popular back in the day.
Less likely to throw away food when it costs so much.
A reduction in the use of plastic (which is petroleum-based), which is the scourge of the earth anyways, will be next, spearheaded by grocery stores who buy mountains of plastic bags that end up littering the planet.
Let the cost of gas go to $10 per gallon and maybe all the fatties of America will start riding their bikes and rollerblading to work.
"This has everything to do with the Fed. How can we expect prices to remain the same or get lower when the value of our money continues to decrease?
Is oil really going up or is the dollar, which is entirely oil-backed, going down?"
II for the win here...
rjesq - No offense, but you're sounding like the 90% of blissfully-ignorant, braindead spoiled brat Americans out there who want to bypass the real issues in favor of a quick fix so you can afford your daily $5 joe at Starbux drive-thru.
this is not a speculation problem. It is a problem of fundamentals.
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