Fatcow
| Dear OPEC,Talking heads tell me that the price at the pump is a complicated issue.?The refineries are shutting down to retool for summer formulas.?There have been unexpected interruptions in key supply lines lately and strikes are affecting deliveries in Scotland and Nigeria.?They also say that the weak dollar is driving up prices and that demand from China is creating a whole new market that drives prices higher as increasing demand chases a limited supply.Yes, I know there is some small component of truth in each of these things, and that perhaps they all contribute somewhat to the price of gas at the pump.?But then I visit your website www.OPEC.org ?and you tell me not to worry.?You say that you have 1.7 trillion barrels of oil in the ground.?At present usage rates of 85 million barrels of oil per day this is enough to last 20,000 days or 54 more years.?In addition, you estimate that an equal amount lies in non-OPEC countries, or enough for 54 years beyond that.Plus there are present proven reserves of another?4+ trillion barrels that become economically viable above $100 a barrel.???Running the numbers, it is a pretty hard case to make that we are running out of oil!I read this in your mission statement:"It is part of OPEC's commitment to support market stability, a pledge that goes back to its inaugural meeting in Baghdad in September 1960.This commitment is enshrined in the OPEC Statute, adopted in January 1961, and remains a key guiding objective of the Organization."Have you accomplished this stated goal??The price of crude oil in 2002 was $23 a barrel.Five years later in 2007 the price had tripled to?$60 a barrel .?Two days a go the price of a barrel of oil topped $120- double what it was one year a go and over?six times what it was in 2002.Please tell me in all of this where you have maintained "market price stability".?How does this relate to your "pledge enshrined on the OPEC statute"??Given that there are trillions of barrels waiting, and given that you have planned every detail and scenario for worldwide oil demand through the year 2030 (in OPEC's Official World Outlook Report), how on earth could you possibly call this management of a stable market price??Let's cut the crap and chatter and just admit that the real reason that prices are climbing so steeply is because as a cartel you limit the supply to prearranged and carefully orchestrated quotas (1).Admittedly there are fuel taxes and refinery costs and transportation issues but the hard fact remains that the vast majority of the price of gas remains the price of crude.?I understand the need for a fair return on investment.?I understand depletion.?I'd happily allow for a reasonable margin of inflationary pressure and a positive price slope.?Even if the price of gas were to rise 10% a year each and every year, I doubt that many of us would even take notice.But this latest price hike has a bad feel to it.?It feels like gouging, greed, and rape.?With newer and better exploration and production tools, the "lifting costs" or the price of oil production has not raised much in the last 10 years and in some cases has actually fallen.(2) ??So this increase in the price of crude ends up on the bottom line.?And a five fold increase in crude oil prices means a huge if not obscene bottom line.The knock on effect is higher freight, and higher air travel prices.?It directly translates into higher food prices, and economic disruptions.?Is this part of your master plan?I know, it probably seems like a good business decision.?Make your money while you can. |
| Make your money while you can.Your real plan is to control the market to within an inch of our ability to pay and to maximize short term profits above all else.So you test the limits of our marginal propensity to spend.?You determine the extent of inelastic demand and watch gleefully as our politicians look for quick and ineffective "fixes" that will get them elected.?As the price of gas goes toward $4 and beyond, you witness a steady and unflinching demand.?You have us by the balls, it would seem.Or do you??Sure, I can probably afford to pay $4 for gas.?I can also afford to pay $5 or even $6 or perhaps one day soon even $10 per gallon.?It would hurt, but I'd still get to work in the morning.What I can't afford is this niggling feeling and the welling anger that I'm getting royally screwed.?It feels like extortion and it feels like a horrible waste.?It's entirely inequitable and my purchase at the pump only supports unconscionable greed.?At some point I can't live with that.At some point I am going to demand a change.Together with millions of my neighbors and friends, I'll demand a long term energy policy in this country that makes us energy independent.?The technology exists today.?I'd gladly pay for a car that gets 100 mpg.?I'll finally make that investment in solar.I'd finally support the full development of oil resources outside your Cartel and in North America (3) I'll become the activist that you haven't seen since your embargo of 1972.Push it.?Go ahead.?If this country put its collective might into a cohesive and publicly mandated national energy policy with the goal of energy sufficiency, it will become so in a matter of a few years, then you can happily sit on your 1.7 billion barrels of worthless black ooze.Go ahead.?Push it just a little bit more and watch the revolution begin.Notes:(1)?????Bloomberg headlines- April 22nd:?OPEC officials attending the International Energy Forum in Rome last week soundly rejected calls from consumer groups, and the International Energy Agency to increase output.The 13-country group maintained production at 32.35 million barrels a day last month(2)?????WTRG Economics Oil Price History and Analysis:
Average lifting Costs in the Middle East = $ 2.30 per barrel of crude
Average finding costs in the Middle East = $2.00 per barrel of crude.(3)?????The Market Oracle: Article 4490:
"there are huge new oil sources of oil that become economically profitable once oil rises above $100 per barrel.The Orinoco tar sands in Venezuela and the Athabasca tar sands in Canada - each of which contains larger oil reserves than the entire Middle East are viable even at $50 per barrel (Orinoco holds an estimated 1.8 trillion barrels and Athabasca 1.7 trillion barrels, versus a current Middle East estimate of 1.6 trillion barrels).?Then there's Colorado oil shale - also containing at least 1.5 trillion barrels of reserves - that becomes economically viable at about $100." |
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Last Updated ( Thursday, 17 July 2008 )
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