OPEC keeps taps tight, oil price rises

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Tuesday, June 13, 2000

OPEC keeps taps tight, oil price rises

Carol Howes National Post

CALGARY - Oil prices jumped and could push gasoline prices above their current record levels following comments by OPEC ministers yesterday that suggest crude oil production might not rise for months.

Even if there is an early production increase, oil markets do not believe it will be enough to offset demand during the peak driving and air-conditioning months of mid-summer.

Oil closed at $31.73 yesterday, up $1.95, putting it at its highest since the Organization of Petroleum Exporting Countries agreed in March to raise output by 7%.

The message that drivers' pain might go on for months was reinforced by Chakib Khelil, Algeria's Oil Minister, who said OPEC was unlikely to raise production next week when it meets in Vienna, and might wait until September to pump more oil to meet the world's insatiable demand.

And as prices climbed, questions were raised about Ottawa's good faith in March when it offered to cut gas taxes to ease pump prices if the provinces matched the federal government penny for penny.

Steve West, the Alberta Treasurer, said he wrote to Paul Martin, but the Finance Minister rebuffed him, saying the plan could not proceed unless all the other provinces signed up. "I always say put your money where your mouth is," said Mr. West, speaking at the World Petroleum Congress. "We did and they refused."

Dan Miller, British Columbia's Minister of Energy and Mining, questioned Mr. Martin's challenge, saying: "I'm not sure how real that is. The other question is, when you start to provide relief in some areas, where do you stop? If the price of lumber goes up should you provide domestic relief for domestic consumers of lumber?"

A spokesman for Ralph Goodale, federal Minister of Natural Resources, said the government is not prepared to move ahead on cutting taxes without the agreement of all provinces and territories.

Ontario has said it refuses to cut taxes because it cannot be certain the savings will be passed on to consumers.

Yesterday's oil price jump was sparked in part because of comments by Rilwanu Lukman, OPEC's secretary-general, who told the National Post in an exclusive interview that the cartel, whose 11 countries pump two-fifths of the world's oil, would decide on production levels at its meeting on June 21.

http://www.nationalpost.com/home.asp?f=000613/316456

-- Martin Thompson (mthom1927@aol.com), June 13, 2000


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