Can you say "Higher Gas Prices comming to my town soon"?

http://www.chron.com/cs/CDA/story.hts/business/energy/436408

Jan. 21, 2000, 7:43PM

Energy Agency predicts oil spot shortages possible by summer

By NELSON ANTOSH Copyright 2000 Houston Chronicle

As a trio of OPEC members talked tough on Friday about holding production cutbacks all the way to September, beyond the previous March 31 goal, dire predictions about oil shortages are starting to appear.

An alarming report this week by the International Energy Agency said world inventories are being drawn down to the extent that shortages are possible by this summer.

From Houston, energy research director Nizam Sharief of Hornsby & Co. has predicted that worldwide crude inventories will decline by 3.4 million barrels per day in the first quarter and 2 million barrels per day in the second quarter.

"We believe that with these accelerated inventory decline rates, world inventories will decline below 1996 levels," Sharif wrote in his latest review. "Such action should result in spot shortages. It should also be mentioned that there were spot shortages in the United States in the first quarter of 1996."

These shortages of refined products should develop by late in the first quarter, predicts Hornsby & Co. At that point, Sharief predicts OPEC will signal an increase in production which will force crude oil prices down to about $22 per barrel.

The word "shortage" brings to mind people waiting in line, hoping the pumps don't quit before it is their turn.

"I'm not sure I would use that word for the next few months," said Stephen A. Smith of Houston, an analyst with Dain Rauscher Wessels. In a free market there are no shortages, he said. You just have to pay more to get what you want.

Assuming OPEC production is 2 millions barrels per day short of what is needed, projecting that to the end of September indicates a 540 million barrel shortfall. "This is unprecedented," said Smith.

Inventories would be 7 or 8 percent below the seasonal norm, which he calls a massive shortfall. In early 1996, the most recent period of strong prices, there was a 4 percent deviation from the norm and it caused $25 oil, he said.

Even the shortfall by the end of the first quarter, when demand tends to bunch up, promises to be unprecedented, said Smith.

The market is in the process of bidding up prices in anticipation of short supplies. "We haven't seen trade and volatility on the oil market like this in non-wartime conditions for 15 years," Peter Gignous of Salomon Smith Barney told Reuters on Friday.

But if prices for crude oil push past $30 per barrel the political pressures on OPEC to ease up on the production constraints will intensify, Smith predicted.

Motorists are the most in danger of getting clobbered. A combination of high demand and reduced production because of scheduled refinery maintenance will result in "minimal to no" gasoline inventory gains in the first quarter, according to Hornsby & Co.

Current gasoline inventories are 191.3 million barrels, which is 20.1 million barrels below 1998.

The first quarter is traditionally a period when inventories are built. The 2000 driving season is, thus, likely to begin with the lowest level of gasoline inventories in years. "Consequently, it is our view that gasoline prices will outperform crude oil prices," the report said.

That means prices at the pump are likely to go up even faster and farther, in relative terms, than prices for crude oil.

-- Helium (HeliumAvid@yahoo.com), January 22, 2000

Answers

Ok...Ok already! People have been complaining about dirty oil for years, and all the damage and destruction it does: oil spills, acid rain, automobile pollution, global warming. Yeah, we all know that and we *are* all sick of it...and sick of hearing about it. Yeah, it's costing us LOTS...everyone. Even future generations.

So, it's been staring us right in the face. Has been since 1937. Why don't we just blow these 'cartels' off and...

(read the Hugh Downs/ABC News article) at:

http://www.bashar.com/GSP/door-sol.htm

Yeah - like actually read it. Literally.

I mean really, what ARE we all waiting for to get this going? We've had this option 1937...and it's now Yr2000. How retarded can people get?

Answer: Visit Planet Earth

MiKeY 6th Grade

-- MiKeY (MiKey@LiksIT!.com), January 22, 2000.