Oil Prices Fall on Saudi Announcement

Well, at least oil prices are sensitive in both directions. Saudi Arabian oil minister Ali al-Naimi called for a conference of oil producing and consuming nations (uh, wouldn’t that be everyone?) to deal with record oil, and prices promptly dropped more than $4 today.

That still leaves us with a net gain of $6.56 per barrel if you add Friday’s gain to today’s loss. And who knows if the Saudis are really willing to do anything about the oil situation.

As a sign of good faith, Saudi Arabia has ramped up production, and it will offer larger supplies to all of the oil companies it deals with, which is a nice, effective way of passing the blame for inflated prices onto Big Oil, while still reaping the profits.

Either way, al-Naimi has dropped hope back into the system after last week’s inflation terror hit the markets. Oil prices closed at $134.39 today on the New York Merchantile Exchange, which looks gruesome, until you see the $139.12 it closed at on Friday.

The dollar was up slightly yesterday, another factor pushing oil down, and everyone managed to ignore OPEC President Chakib Khelil’s snippy remarks about the U.S. single-handedly causing oil prices to move above $70 per barrel.

Khelil told the state-run Algerie Presse Service that, “The economic crisis in the U.S. caused the dollar to drop sharply and the threats against Iran heightened geopolitical tensions.” So, yes, forget the fact that China and India are consuming ever-increasing amounts of oil and gasoline and just blame the big guy.

Of course, it’s always nice to hear dissenting remarks from within the OPEC nations.

Whether the $4 slide is sustainable, we’ll have to wait and see. The fall isn’t enough to constitute a new trend downward. But maybe if we can get everyone in the same room, like al-Naimi suggests… No that’ll just end in bloodshed.

Related Articles

• June 6, 2008 - Will George Soros Break the Bank of England Again? 
• April 23, 2008 - Weakening Dollar: Fly into some profits 
• May 27, 2008 - U.S. Treasury Bond Strategies: Barbells and Ladders
• March 11, 2008 - U.S. Recession: Will Europe destroy the dollar?
• April 17, 2008 - U.S. Recession: 10 reasons we’ve hit a bottom

Comments

[johnthebear:]

Here are some questions I would like for you to consider:

Congress is about to enact a windfall profits tax on the Major Oil Companies to return the money to us, the outraged drivers of America. Do the profits support excessive share prices? I don't think so based on chart evidence. Are the dividends outstanding? Absolutely not. China is selling most of the retail goods we Americans buy at Walmart. Should they be charged a Windfall Profits tax too? Wait till they start increasing their prices the way OPEC has done, and I might say yes! But certainly not now.

So where is the money going?

Simple, the countries that pump and sell the crude oil. Oil is $137/barrel and it cost our companies that buy and transport it to refineries huge amounts to process into gasoline and distribute in many thousands of service stations.

It is the Arab-Muslim nations that are making a killing. They have a club called OPEC that determines how much each country will sell on the open market. They control the supply through their oil monopoly. When they produce and sell more, the price goes down. The world markets and governments have absolutely no control over OPEC.

Remember the oil shortages in the 1970s? Remember the long lines at gas stations? Remember how high the prices were then? What happened.... We cut the speed limit to 55, drove less, started importing small more efficient cars that took away GM monopoly in this country. As a result of our required conservation and changed habits, we caused a major recession in the oil industry. The price of oil dropped to $10/barrel. Gas got cheap, we continued building more efficient cars and passed laws requiring that cars get higher m/g. Then in 2007, OPEC declared war on the world economies. They could not take us with their terrorist on 9/11 or their military, but they could easily declare economic war of a very effective and efficient nature. They can take over our banks, companies and effectively our future by owning our national debt. The wealth of the Arab kingdoms is unbelievable.

So what does all this mean for our future?

We have huge oil reserves offshore, oil sands in the western states, huge proven reserves in Alaska that our environmentalist wackos refuse to let us drill. The same is true in other countries.

Trees are a renewable resource and I guess you can say that people are as well. The reason for not drilling in 1979 in Anwar was little Jimmie Carter. He thought more of a few animals in Alaska than he did of humans.... my fellow Americans.

If we exterminated 95% of the caribou, they would grow back, but if we are defeated in an economic war waged by OPEC, we become SLAVES to the Muslims.

So if you agree with this notion, you should share your feelings with those unrealistic folks you know that value trees and animals more than Americans and tell them that we need to immediately begin drilling off shore and every where we can to produce as much oil in the US as possible. We cannot afford to pay the OPEC more than $400 billion a year and allow our balance of payments reach the point that OPEC can control our government. We must defeat the notion of Windfall profits tax, and even give additional tax incentives to spur our oil companies to rapidly drill on our own soil as fast as possible.

At the same time we can still go full speed ahead with alternate energy and conservation sources. The problem is America is running out of time. There is much to worry about. Do what you can to change the minds and hearts of those that are standing in the way.

2008 Jun 10 07:44 PM

[barnburner:]

johnthebear please get of your ultra-conservative soap box. Congress and the American public had all those years after the gas lines, odd and even days to get their shit together but they didn't. Give the Americans all the frigging oil in ANWR, all the off shore oil and you think they will go full speed ahead with conservation, meaningful CAFE standards-change their life styles unless forced-HELL NO, they will be back to buying hummers and expeditions to commute to work one per vehicle and there it sits in a parking lot for eight hours a day.. And of course the second car will have to be a beast so soccer mom can haul her five kids plus the neighbors to their events every night of the week (at least they can use the HOV lanes). After five years you will be screaming about the $5/gallon gas prices again and the US will be no closer to independence from foreign oil than it is now.
It will take an oil crises of catastrophic proportions to get Americans to change their energy consumption habits. OPEC is just doing what every business does, charge what the user will pay. The U.S. and British oil companies screwed over them until they got smart and nationalized their oil but not until after those companies pumped every ounce of oil out of those fields they could. Oil prices adjusted for inflation are higher now than the 70s but do you see the U.S. making even a meaningful attempt to change their consumption? I don't. One reason is that the infrastructure in the U.S. was built on the premise of cheap gas. Subdivisions are miles from work, not even a mom and pop store in the neighborhood. Water heaters keeping a 100 gallons of water hot 24/7 instead of 'on demand' water heaters like much of the rest of the world. No real public transportation in the whole country with some exceptions. A trucking industry that is vital to delivery of food and all the stuff we buy we don't need built on cheap diesel.
Maybe the next resident of the White House will be interested in a comprehensive energy bill not written by the Enrons of this world but for now-it's business as usual only it cost a lot more.

2008 Jun 10 08:47 PM

[Pragmatic O...:]

Question for paranoid, religious xenophobe John (the Bear). Since the US imports more oil from Mexico, Canada and Norway, than from Saudi Arabia, are we to assume, based on your line of thinking(?) that they are in cahoots with the “Arab-Muslim” axis of evil and are also waging “economic war” against us so that we “become slaves to the Muslims”?

You need to stop listening to “Hate Radio”, and start dealing with reality.

2008 Jun 11 09:52 AM

[jackooo:]

johnthebear
I enjoyed your ill logic and blaming environmentalists. You would rather destroy the wildlife and pollute the earth because humans are 98% morons. We killed the buffalo, the indians, the bald eagles, etc.
We owe the 2%ers more than you can imagine.
You are right about OPEC controling the price of oil. It is called a monopoly. You are also right about no control over it.
If we doubled our oil production today. TODAY. OPEC cuts productions and we are still at $4 plus a gallon. Duhh.
The 98% population could do the simpleist of things. Cut driving. Get smaller car. Install a K & N air filter. Inflate their tires 3lbs. extra.
The cities, like Huntington Beach Ca., could time the traffic lights down the main blvd so 20 cars are not stopping at lights every 4 blocks only to start up again. How about not exceeding the speed limit? Think this will happen? Duhh
Instead of charging motorcyclist for license plates, give them the registration for free. 50mpg and less pollution and less traffic is worth it. Instead I here that motorcyclist will be getting catalitic converters in Ca..
Wind fall profit tax on oil companies? Come on! Where do you think they get their money? From you and me. Sooo they raise the price of gas to get back their profits and guess what? Right!! The morons in congress accomplish another paycheck for their brilliant scheme and the 98% public applaud them.

2008 Jun 11 01:04 PM

[looking:]

The radical envios have been wrong on everything. Their only goal is to bring America to its knees. They fought the Alaska pipeline claiming it would kill off the caribou which numbered 3,000. Now there are over 32,000 caribou. The caribou it turns out like the pipeline, they use it to keep warm. Who would have thunk it. Cold animals looking for warmth.

Jackooo makes it clear the true agenda of the radical envios. Telling us to cut driving and buy smaller cars. How about a ban on electric blankets and a constitutional amendment requiring people to huddle for warmth. What killing Indians in early American history has to do with the price of oil. If we double our oil and opec cuts production to match our new output would keep prices the same. Unless of course using the oil drilled in America for America. duh

If the Democrats and the radical envios really cared about the environment they would be making a stink out of China drilling 60 miles from Key West on behalf of Cuba. But they're not because their real agenda is about big government taking over our lives and taking away our freedom. The radical envios would never let Exxon Mobil get away with drilling that close to Key West. The only way the radicals would allow it would be if the U.S., outsourced the work to China or another commie country.

Thanks to all the leftists for illustrating how they want the government to run our lives.

2008 Jun 13 02:35 AM