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Iraq war makes oil prices higher |
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Oil shortages cause high oil prices cause high gas prices
Cheney predicted Iraqi output would return to 3 million barrels per day by the end of 2003. It never made it back to pre-war levels and was below 1.5M barrels/day in January according to the Wall Street Journal and the Associated Press.
How much difference does this make? All the oil experts talk about Iraq pushing the price up, but know one knows by how much. For comparison, the Dept. of Energy tells us that total world output is expected to grow by 0.8M barrels/day in 2006.
OPEC crude oil production stays flat in 2006 compared to 2005, instead of increasing along with non‐OPEC supply to meet demand growth. ... Non‐OPEC supply is expected to grow by 0.8 million bbl/d in 2006. DOE
Iraq's shortfall is greater than the expected increase in world oil production in 2006. News of Iraqi production. About the graph
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The most complete explanation so far:
Rising oil price not causing disaster
Apr. 25, 2006, Knight Ridder Newspapers, KEVIN G. HALL
WASHINGTON - ... The fundamentals of supply and demand are the most important factors behind today's high prices. Spare production capacity in the OPEC oil cartel is thought to be only 1.5 million to 1.9 million barrels per day, in a world that consumes 85 million barrels each day.
That leaves little room for disruption, and there are plenty of disruptions:
• Iraq's oil production is 900,000 barrels a day below prewar levels.
• In Nigeria, political insurgents are shutting in 530,000 barrels each day.
• In Venezuela, production is down 400,000 barrels per day.
• In the Gulf of Mexico production is 330,000 barrels per day from Katrina and Rita.
"The world oil market is in the grip of a slow-motion supply shock, in which a $70 to $75 barrel price reflects an aggregate disruption of over 2 million barrels a day," Daniel Yergin, the chairman of Cambridge Energy Research Associates, said.
The biggest market mover is Iran's standoff with the West over its nuclear program. Oil traders fear that Iran, the world's fourth-largest oil producer, may respond to the threat of economic sanctions by withholding oil from the market. And if there's a military confrontation, other vital Middle Eastern oil supplies could be threatened.
...
We don't think that's the major reason [speculation] for the increase in (oil) prices," cautioned Laurence Kantor, a managing director for London-based Barclay's Capital. Today's high prices are "a bit puffed up," he said, but the demand for oil amid tight supplies remains the driving factor.
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OPEC Will Keep Oil Output Steady As U.S. Stores Rise
March 9, 2006, Wall St. Journal, By Bhushan Bahree, Page A2
VIENNA -- OPEC is responding in part to geopolitical jolts, which have buoyed prices by cutting crude-oil output in places like Nigeria and Iraq.
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OPEC Is Likely to Hold Output, Even as Some See a Price Drop
March 8, 2006, Wall St. Journal, By Bhushan Bahree; Page A2
VIENNA – ... Supply outages in Iraq, Nigeria and other troubled oil-producing lands have kept prices high this year. ... The market for crude is global, and so is the price, and thus geopolitical shocks in places like oil-rich Iraq can sway the cost for everyone everywhere.
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OPEC: Unsteady Exporters
By PETER A. MCKAY
March 8, 2006; Page C1
Here's a sobering fact about the global supply of oil: Venezuela, Iran, Iraq and Nigeria combined produce roughly as much oil as Saudi Arabia, the world's No. 1 source of crude.
That helps explain why oil ministers from the 11-member Organization of Petroleum Exporting Countries are unlikely to cut production at their meeting today. They don't have to. The output of key members is already compromised.
Violence has hindered pumping in Nigeria, where production is down by roughly 200,000 barrels per day, and in Iraq, where analysts estimate output at 1.8 million barrels a day, 13% below prewar levels.
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http://zfacts.com/p/361.html | 01/18/12 07:17 GMT
Modified: Wed, 20 Sep 2006 23:57:16 GMT
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Details the preventable blunders and missed opportunities, from Bush's giving the Pentagon the lead managing postwar Iraq to our inability to work with Iraqi leaders such as Ayatollah Ali al-Sistani. Diamond expresses admiration for US Administrator L. Paul Bremer, who sincerely wanted to bring democracy to Iraq, but was wholly unprepared and unrealistic, resulting in "one of the major overseas blunders in U.S. history."
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