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OPEC warns Bush over State of the Union Speech
A slightly different topic than the other oil threads... OPEC is warning the US that Bush is talking down oil, even though he knows that it is an unrealistic goal to wean the US off of oil. By talking down oil, Bush is discouraging needed investments in OPEC oil fields.
What say you?
For my own part, I think that the US is in no position to guarantee the profitability of OPEC's investments. OPEC will have to figure out future demand as best it can, and as it has been doing for decades (not so successfully at times, granted).
Furthermore, this demonstrates that the recent high price of oil is making alternatives very attractive. Indeed, there seems to be a concerted shift of public opinion about the viability of alternatives. OPEC sees this and is scared that its customers are locked into the oil economy much less than is OPEC. See Flubber's thread for more talk about that.
Two articles from FT...
What say you?
For my own part, I think that the US is in no position to guarantee the profitability of OPEC's investments. OPEC will have to figure out future demand as best it can, and as it has been doing for decades (not so successfully at times, granted).
Furthermore, this demonstrates that the recent high price of oil is making alternatives very attractive. Indeed, there seems to be a concerted shift of public opinion about the viability of alternatives. OPEC sees this and is scared that its customers are locked into the oil economy much less than is OPEC. See Flubber's thread for more talk about that.
Two articles from FT...
Opec issues warning on Bush oil pledge
>By Carola Hoyos in Vienna and Christopher Swann in Washington
>Published: February 1 2006 22:04 | Last updated: February 2 2006 11:57
>>
The Organisation of the Petroleum Exporting Countries on Wednesday warned that President George W. Bush’s proposal to reduce US dependence on Middle Eastern oil could badly jeopardise needed investment in Gulf oil production and refining capacity.
Opec delegates and officials said the group planned to make this point in its as yet unpublished commentary in the cartel’s January bulletin next week.
Meanwhile US crude oil prices staged a rebound on Thursday with March West Texas Intermediate rising 25 cents to $66.81 a barrel as tensions over Iran’s nuclear programme continued to pre-occupy dealers
Speaking after Mr Bush’s Tuesday night State of the Union address, Edmund Daukoru, Nigeria’s energy minister and president of Opec, said: “We do believe that energy issues cannot be handled in a unilateral way; we all have to work together towards global energy security.”
Privately, Opec officials were more direct in warnings about Mr Bush’s declared intention to reduce America’s dependence on Middle East oil by 75 per cent by 2025. But they emphasised Opec would avoid a confrontational tone in its commentary.
>
Bush misfires in drive to end ‘oil addiction’
>Click here
>
An Opec delegate said: “Comments like that are unrealistic. Everyone knows the world will continue to depend on Middle East imports.” The organisation would raise concerns about such statements damping investment at meetings with the European Union and other organisations “more aligned with Opec’s view”.
Opec’s concern was shared widely across the industry. John Felmy, chief economist of the American Petroleum Institute, which represents the US oil and gas industry, said: “If one of your big customers tells you they do not want to buy from you in the future, then of course this will impact how much you invest.”
The International Energy Agency, the industrialised countries’ energy watchdog, forecast the Middle East will have to invest heavily to ensure the world’s energy thirst is satisfied.
On Wednesday Martin Bartenstein, economics minister of Austria, which holds the EU presidency, said the Middle East, with two-thirds of the world’s oil reserves, would become more rather than less important.
He told the FT: “As the person responsible for EU energy policies, I would not see myself in a position of talking about such a significant decrease in demand from a certain region. We know that the oil import dependency of the EU will ever increase, not decrease.”
He added: “Everyone . . . will have to deal with oil and gas, especially from the Middle East.” Worries over the stability of Iran on Wednesday drove the oil price up 83 cents to $68.75 a barrel in midday trading in New York.
Opec delegates and Mr Bartenstein place responsibility for oil price volatility mainly on consuming countries that have failed adequately to invest in refineries and pipelines needed to get oil to their consumers.
Mr Felmy said shifting oil imports from the Middle East could be costly for America. “As long as America has a diversified range of oil suppliers it has a lot of security of supply. If you reduce this diversification it could be costly.” About 20 per cent of oil sold to the US comes from the Middle East, with Canada and Mexico supplying more than 30 per cent of imports.
Any decrease in the US dependence on oil from the Middle East could only really be achieved by a decrease in its dependence on all foreign oil – either by conservation, alternative energy or domestically produced oil and gas, analysts said.
>By Carola Hoyos in Vienna and Christopher Swann in Washington
>Published: February 1 2006 22:04 | Last updated: February 2 2006 11:57
>>
The Organisation of the Petroleum Exporting Countries on Wednesday warned that President George W. Bush’s proposal to reduce US dependence on Middle Eastern oil could badly jeopardise needed investment in Gulf oil production and refining capacity.
Opec delegates and officials said the group planned to make this point in its as yet unpublished commentary in the cartel’s January bulletin next week.
Meanwhile US crude oil prices staged a rebound on Thursday with March West Texas Intermediate rising 25 cents to $66.81 a barrel as tensions over Iran’s nuclear programme continued to pre-occupy dealers
Speaking after Mr Bush’s Tuesday night State of the Union address, Edmund Daukoru, Nigeria’s energy minister and president of Opec, said: “We do believe that energy issues cannot be handled in a unilateral way; we all have to work together towards global energy security.”
Privately, Opec officials were more direct in warnings about Mr Bush’s declared intention to reduce America’s dependence on Middle East oil by 75 per cent by 2025. But they emphasised Opec would avoid a confrontational tone in its commentary.
>
Bush misfires in drive to end ‘oil addiction’
>Click here
>
An Opec delegate said: “Comments like that are unrealistic. Everyone knows the world will continue to depend on Middle East imports.” The organisation would raise concerns about such statements damping investment at meetings with the European Union and other organisations “more aligned with Opec’s view”.
Opec’s concern was shared widely across the industry. John Felmy, chief economist of the American Petroleum Institute, which represents the US oil and gas industry, said: “If one of your big customers tells you they do not want to buy from you in the future, then of course this will impact how much you invest.”
The International Energy Agency, the industrialised countries’ energy watchdog, forecast the Middle East will have to invest heavily to ensure the world’s energy thirst is satisfied.
On Wednesday Martin Bartenstein, economics minister of Austria, which holds the EU presidency, said the Middle East, with two-thirds of the world’s oil reserves, would become more rather than less important.
He told the FT: “As the person responsible for EU energy policies, I would not see myself in a position of talking about such a significant decrease in demand from a certain region. We know that the oil import dependency of the EU will ever increase, not decrease.”
He added: “Everyone . . . will have to deal with oil and gas, especially from the Middle East.” Worries over the stability of Iran on Wednesday drove the oil price up 83 cents to $68.75 a barrel in midday trading in New York.
Opec delegates and Mr Bartenstein place responsibility for oil price volatility mainly on consuming countries that have failed adequately to invest in refineries and pipelines needed to get oil to their consumers.
Mr Felmy said shifting oil imports from the Middle East could be costly for America. “As long as America has a diversified range of oil suppliers it has a lot of security of supply. If you reduce this diversification it could be costly.” About 20 per cent of oil sold to the US comes from the Middle East, with Canada and Mexico supplying more than 30 per cent of imports.
Any decrease in the US dependence on oil from the Middle East could only really be achieved by a decrease in its dependence on all foreign oil – either by conservation, alternative energy or domestically produced oil and gas, analysts said.
Bush misfires in drive to end ‘oil addiction’
>By Carola Hoyos in Vienna, Christopher Swann in Washington and Fiona Harvey in London
>Published: February 1 2006 22:00 | Last updated: February 1 2006 22:00
>>
George W. Bush runs the risk of alienating the world’s biggest source of oil with his plan to end America’s “oil addiction”, Opec delegates, oil ministers, energy experts and even some environmentalists said yesterday.
The president’s plan to cut US consumption of Middle East oil by 75 per cent by 2025 was neither achievable nor prudent and could make investment in the industry more difficult, they said. Investment was the most critical factor in deciding whether there would be enough oil to meet future demand.
“America is addicted to oil, which is often imported from unstable parts of the world,” Mr Bush said in his State of the Union address. “By applying the talent and technology of America, this country can dramatically improve our environment, move beyond a petroleum-based economy and make our dependence on Middle Eastern oil a thing of the past.”
Only last year, Ali Naimi, Saudi Arabia’s oil minister, called on the US and other oil-consuming countries to give producers a road map of future demand to help petrostates decide how much to spend on new production capacity. Such a road map would also help the industry avoid the pitfalls of the 1970s and 1980s, when producers spent billions of dollars on new oil production only to see demand drop – in part because of new US and European energy policies – and capacity lie idle for nearly two decades.
Mr Bush has not heeded that call, Opec delegates said.
Martin Bartenstein, the economics minister of Austria, which holds the presidency of the European Union, said: “Opec is neither evil nor an empire. It is a partner with about 35 per cent market share. It is a partner with by far the largest oil and gas reserves, so it will increase in importance in the future.”
But while promoting energy efficiency and alternative sources was generally accepted as prudent, singling out the Middle East was not, energy analysts said.
Experts are sceptical that the US can liberate itself from dependence on Middle Eastern oil producers. Even though only some 20 per cent of oil used in the US comes from the region, Middle Eastern countries account for two-thirds of the world’s proven reserves.
If global energy consumption continues to increase, so too will the market power of these producers.
“Even if America doesn’t import a drop of Middle Eastern oil, these countries will still play an increasingly important role in determining how much we pay for oil,” says Frank Verrastro, director and senior fellow in the Center for Strategic and International Studies energy programme. “You pay the global price and it doesn’t matter where you buy it from.”
Opec delegates said yesterday they were aware that much of Mr Bush’s speech was political and aimed at US citizens and not at petrostates in the Gulf.
Edmund Daukoru, Nigeria’s energy minister and Opec’s president, said: “We do believe that energy issues cannot be handled in a unilateral way. We all have to work together towards global energy security.”
Perhaps the most fervent reaction came from within traditionally Bush-friendly territory. Myron Ebell, director at the Competitive Enterprise Institute, a conservative think-tank, said: “The president’s hackneyed and dangerous energy rhetoric that we are addicted to oil is an indication that the administration is addicted to confused thinking about energy policies. [His goals] will be hindrances to creating a bright energy future for American consumers.”
Even those who agree that less oil is good questioned the speech.
Jim Footner of Greenpeace, the international environmental pressure group, said: “We’ll wait and see what concrete action [Mr Bush] takes before getting our hopes up. After all, there is a treaty to reduce America’s dependence on oil – it’s called Kyoto, and Bush walked away from it.”
The administration has made much of its investment in energy efficient technology. However, much of this has been a reallocation of research funds, says Bill Prindle, the deputy director of the American Council for an Energy-Efficient Economy.
“The budget requests from the White House for funding on energy efficiency has actually fallen 14 per cent in real terms since 2002,” he said.
>By Carola Hoyos in Vienna, Christopher Swann in Washington and Fiona Harvey in London
>Published: February 1 2006 22:00 | Last updated: February 1 2006 22:00
>>
George W. Bush runs the risk of alienating the world’s biggest source of oil with his plan to end America’s “oil addiction”, Opec delegates, oil ministers, energy experts and even some environmentalists said yesterday.
The president’s plan to cut US consumption of Middle East oil by 75 per cent by 2025 was neither achievable nor prudent and could make investment in the industry more difficult, they said. Investment was the most critical factor in deciding whether there would be enough oil to meet future demand.
“America is addicted to oil, which is often imported from unstable parts of the world,” Mr Bush said in his State of the Union address. “By applying the talent and technology of America, this country can dramatically improve our environment, move beyond a petroleum-based economy and make our dependence on Middle Eastern oil a thing of the past.”
Only last year, Ali Naimi, Saudi Arabia’s oil minister, called on the US and other oil-consuming countries to give producers a road map of future demand to help petrostates decide how much to spend on new production capacity. Such a road map would also help the industry avoid the pitfalls of the 1970s and 1980s, when producers spent billions of dollars on new oil production only to see demand drop – in part because of new US and European energy policies – and capacity lie idle for nearly two decades.
Mr Bush has not heeded that call, Opec delegates said.
Martin Bartenstein, the economics minister of Austria, which holds the presidency of the European Union, said: “Opec is neither evil nor an empire. It is a partner with about 35 per cent market share. It is a partner with by far the largest oil and gas reserves, so it will increase in importance in the future.”
But while promoting energy efficiency and alternative sources was generally accepted as prudent, singling out the Middle East was not, energy analysts said.
Experts are sceptical that the US can liberate itself from dependence on Middle Eastern oil producers. Even though only some 20 per cent of oil used in the US comes from the region, Middle Eastern countries account for two-thirds of the world’s proven reserves.
If global energy consumption continues to increase, so too will the market power of these producers.
“Even if America doesn’t import a drop of Middle Eastern oil, these countries will still play an increasingly important role in determining how much we pay for oil,” says Frank Verrastro, director and senior fellow in the Center for Strategic and International Studies energy programme. “You pay the global price and it doesn’t matter where you buy it from.”
Opec delegates said yesterday they were aware that much of Mr Bush’s speech was political and aimed at US citizens and not at petrostates in the Gulf.
Edmund Daukoru, Nigeria’s energy minister and Opec’s president, said: “We do believe that energy issues cannot be handled in a unilateral way. We all have to work together towards global energy security.”
Perhaps the most fervent reaction came from within traditionally Bush-friendly territory. Myron Ebell, director at the Competitive Enterprise Institute, a conservative think-tank, said: “The president’s hackneyed and dangerous energy rhetoric that we are addicted to oil is an indication that the administration is addicted to confused thinking about energy policies. [His goals] will be hindrances to creating a bright energy future for American consumers.”
Even those who agree that less oil is good questioned the speech.
Jim Footner of Greenpeace, the international environmental pressure group, said: “We’ll wait and see what concrete action [Mr Bush] takes before getting our hopes up. After all, there is a treaty to reduce America’s dependence on oil – it’s called Kyoto, and Bush walked away from it.”
The administration has made much of its investment in energy efficient technology. However, much of this has been a reallocation of research funds, says Bill Prindle, the deputy director of the American Council for an Energy-Efficient Economy.
“The budget requests from the White House for funding on energy efficiency has actually fallen 14 per cent in real terms since 2002,” he said.
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