Wednesday, September 9, 1998

Oil shortage due in two years, OPEC exec says

Bloomberg News

LONDON -- The world is headed for an oil shortage in about two years because consumption is rising and companies are cutting back on exploration after a year-long slump in prices, OPEC's top executive said. "The ax has fallen on many exploration and production programs," said Rilwanu Lukman, general secretary of the Organization of Petroleum Exporting Countries. "This could result in a possible supply crunch." A 30-percent drop in oil prices is discouraging new investment at a time when world oil demand is expected to rise by 2.5 million barrels a day, or 3.2 percent, in the next few years as weakened Asian economies recover, Lukman said.

The current worldwide oil glut was caused by rising output by OPEC in the past year, waning Asian demand and an unusually warm winter that cut heating oil consumption. OPEC's attempts to support prices by pledging to cut 2.6 million barrels a day in production have so far failed. Crude oil prices in London reached $11.55 a barrel last month, the lowest level in almost a decade. "The global economy is expected to grow at a healthy pace as the Asia crisis bottoms out," Lukman said. Asian growth combined with reduced exploration activity "will lead to an erosion of spare capacity," he said. The Paris-based International Energy Agency said demand is likely to increase, especially in Asia, as the population and incomes climb. Asia's "long-term energy needs are enormous," said Robert Priddle, executive director of the IEA. "The recession does not appear to have bottomed out yet, but demand growth will resume in the next four years." Until Asian demand recovers, oil prices will be influenced largely by how much OPEC and non-OPEC producers can cut their output.

http://www.detroitnews.com/1998/biz/9809/09/09090062.htm

-- Cave Man (caves@are.us), June 12, 2000

Answers

We're all going to dieoff.

-- FutureShock (gray@matter.think), June 12, 2000.

Your handle says it all.

-- Cave Man (caves@are.us), June 12, 2000.

FS:

You haven't used that line in a while; good sarcasm.

"The ax has fallen on many exploration and production programs," said Rilwanu Lukman, general secretary of the Organization of Petroleum Exporting Countries. "This could result in a possible supply crunch."

I know that I would say that if I wanted to raise prices.

Best wishes,,,

-- Z1X4Y7 (Z1X4Y7@aol.com), June 12, 2000.

"OPEC kingpin Saudi Arabia told Asian term customers on Monday to expect cutbacks of 9 to 11 percent in July on its standard oil contracts, against lower cuts of six to eight percent in June."

http://www.foxmarketwire.com/wires/0612/f_rt_0612_2.sml

Sounds to me like there is no swing capacity left.

-- Cave Man (caves@are.us), June 12, 2000.