Venezuela Blames U.S. Refinery Activities, Taxes, for Oil prices

greenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread

Fair use for educational/research purposes only!

Venezuela Blames U.S. Refinery Activities, Taxes for Soaring Oil Prices By Alexandra Olson Associated Press Writer

CARACAS, Venezuela (AP) - The president of OPEC said Friday the oil cartel is not to blame for soaring oil prices - an apparent rebuff of U.S. lobbying for members to pump more oil into the world market. Ali Rodriguez, who is also Venezuela's oil minister, said global economic growth, falling U.S. refining activities and high gasoline taxes in industrialized countries, not lack of supply, are driving up prices. World oil prices hover at more than $30 a barrel, levels not seen since the 1991 Gulf War.

The Organization of the Petroleum Exporting Countries "has to be careful in raising production because if stocks increase too much, prices could fall sharply in the second half of next year as they did in 1998," Rodriguez said in a televised interview, referring to a period in 1998 when prices crashed to nine-year-lows.

Tensions between the United States and Venezuela over oil prices have swelled since President Hugo Chavez toured OPEC countries last week, campaigning for keeping prices at current levels. Chavez called current prices "fair not high" and urged fellow OPEC countries to present a united front against U.S. pressure to increase oil production.

Venezuela is a major exporter of crude oil to the United States and the third largest exporter in the world.

Oil prices have become a major electoral issue in the United States with Republicans in Congress criticizing the Clinton administration for not taking a hard line against OPEC.

While some of OPEC's smaller producers lean toward Venezuela's policy of protecting current prices, the cartel's largest producer, Saudi Arabia, has threatened to increase production. Despite reports that the kingdom leaked an extra 125,000 barrels of oil into the market in July, Rodriguez insisted that Saudi Arabia is respecting its OPEC production quotas.

"The Saudis officially have declared that they will comply with OPEC agreements and won't make any decisions unilaterally," said Rodriguez.

But speaking to reporters later Friday, Rodriguez acknowledged reports that OPEC is exceeding its established quotas by between 200,000 and 1 million barrels a day. He said he was worried that overproduction could lead to another price crash like the one in 1998.

Rodriguez has said the world does not demand more heavy crude oil, the type of petroleum most OPEC countries produce. Nevertheless, he conceded that OPEC would consider an output boost in its next ministerial meeting, set for Sept. 10 in Vienna.

He also said OPEC will stick to a self-imposed band system which requires the cartel to add an extra 500,000 barrels of oil to the market if prices stay above $28 a barrel for more than 20 consecutive days. However, the last time prices surpassed that ceiling, OPEC ignored the band system.

AP-ES-08-18-00 1847EDT

http://ap.tbo.com/ap/breaking/MGIU6YZF2CC.html

-- Martin Thompson (mthom1927@aol.com), August 18, 2000


Moderation questions? read the FAQ