Ecuador To Ask OPEC For Exception To Cutbacks, 11/10/2008

Ecuadorian Oil Minister Derlis Palacios

Following last month's decision to cut back oil production, in which Ecuador was asked to curtail prodction by 27,000 barrels/day, Ecuador is stuck between a rock and a hard place. Ecuador is at the opposite end of the spectrum of an OPEC nation like Saudi Arabia. After the cut, Ecuador is producing 493,000 barrels/day. If prices do not rally, Ecuadorian oil minister Derlis Palacios has asked that Ecuador be exempt from any further production cuts. Ecuadorian oil production is marginal and pays for about 40% of the national budget. Any further cuts may seriously impact the nation's economy. However, Palacios did rule out leaving the cartel altogether over the matter.

See the article here. -V

OPEC President: Oil Cuts Likely If No Price Rally, 11/08/2008

OPEC President Chekib Khelil

OPEC President Chekib Khelil said yesterday that if oil prices do not rally in response to the 1.5 million barrel/day cutback that OPEC agreed to in their last meeting, more cuts in production will follow. Khelil expressed that he hopes the recent cut will bring prices up and stabilize the oil markets in such a way that is suitable to both oil exporting nations and consumer nations. Unfortunately, the global economic crisis has not been kind to oil prices as they have still been on the decline. Accroding to Khelil, OPEC will most likely continue cutting production in order to maintain a balance between supply and demand through the beginning of 2009. Further decisions regarding production policy will be made at OPEC next meeting in Oran, Algeria on December 17, 2008.

See the article here. -V

Agency Predicts A Return Of Triple-Digit Oil Prices, 11/06/2008

The International Energy Agency, which advises nations energy policy, stated that supply shortfalls that sent oil prices sky-rocketing earlier this year are far from resolved and may yet lead to another period of triple-digit oil prices. Furthermore, daily world oil consumption is expected to rise 10 million barrels/day over the next two decades. The IEA predicts that daily global oil consumption will be at 106 million barrels/day by the year 2030. Most of that oil will be held by OPEC countries, who hold over 45% of the world's known oil reserves. The agency stated that the problem lies not in having enough oil, but being able to access the oil in time to meet the growing demand. The IEA stated that, "Globally, oil resources are plentiful, but there can be no guarantee that they will be exploited quickly enough to meet the expected consumption growth." Even if we are somehow able to meet the consumption growth, we must still consider the fact that we must drastically cut our carbon emissions or face grave circumstances from global warming. According to the IEA's annual World Energy Outlook, (Authors Note: The IEA's WEO is a very interesting read, I highly suggest you take a look. The Executive Summary is available for free online at the link above.), "The future of human prosperity depends on how successfully we tackle the two central energy challenges facing us today: securing the supply of reliable and affordable energy; and effecting a rapid transformation to a low-carbon, efficient and environmentally benign system of energy supply.”

See the article here. -V

Well Prepared: Oil, 11/06/08

With all the financial woes facing the world today and steeply declining oil prices, it may seem like an odd time to invest in oil, but in an effort to prop up the global oil market prices, the United Arab Emirates is doing just that. The recent decline in oil prices may be setting the stage for a steep jump in the near future. Since early October, American oil consumption has fallen by an estimated 2 million barrels/day, and global daily consumption may fall next year for the first time since 1991. Abroad, oil demand is falling and car sales around the world are decreasing enormously. OPEC has tried to stabilize markets by cutting production by 1.5 million barrels/ day beginning November 1, 2008, and another cut may soon be on the way. While oil prices are falling, production costs are also falling, but not enough to outweigh the strain of $50/barrel. prices. With all the cuts in production, if demand begins to rise again, the price of oil will have to rebound to this summer's record prices in order to stimulate supply. Good news for investors in the long run, hard luck for consumers.

See the article here. -V

Barack Obama Elected 44th President of the United States, 11/04/2008

Barack Obama won the race to become the 44th President of the United States of America. In the spirit of the election and the subject matter of this blog, I thought it would be important to familiarize myself and readers with President-Elect Obama's stance on energy issues. Below is a link to the offical Barack Obama website in which he outlines his Comprehensive New Energy for America Plan. In it, you will find Obama's plan to eliminate oil-imports from the Middle East and Venezuela over the next 10 years, plans for renewable energy and "green-collar" job creation, and much more. Enjoy!

Comprehensive New Energy for America Plan

Saudis Delay Cuts To Oil Shipments, 11/04/2008

Despite OPEC's recent agreement to curtail oil production by 1.5 million barrels/day, Saudi Arabia has yet to inform any of its customers of any cuts or decreases in November's oil supply. Saudi Arabia is notorious within OPEC for often going to great lengths to ensure that world markets remain well supplied and prices remain low. According to trade sources in Europe and Asia, Saudi oil supply will not be cut in the November and may stay at full production through December. As far as the production cuts are concerned, OPEC president Chakib Khelil told Algerian radio that the kingdom was key to OPEC's success and warned that prices could be affected if the world's biggest oil exporter took its time over the cuts. We will have to wait and see if the Kingdom decides to play along with OPEC's plan to put a floor under the dropping price of oil.

See the article here. -V