IMF Says Economic Outlook Clouded by Energy Costsgreenspun.com : LUSENET : TB2K spinoff uncensored : One Thread
West Frets About Oil Prices
IMF Says Economic Outlook Clouded by Energy Costs
From Wire Reports
Sept. 20 Oil prices vaulted to a 10-year high today, prompting the International Monetary Fund to renew warnings that rising energy costs are casting a shadow over the global economic outlook.
Soaring energy prices received some of the blame for driving the U.S. trade deficit to a record $31.89 billion in July. And blue-chip stocks tumbled on the New York Stock Exchange as investors again worried about the impact of rising energy costs on corporate profits.
New supply figures underlined fears that the countrys pre-winter stock cushion is running perilously thin.
October crude on the New York Mercantile Exchange hit a new peak of $37.80 a barrel after a weekly government report showed U.S. crude oil stocks fell 2.4 million barrels from last week and heating oil inventories grew just 630,000 barrels to remain more than a third below last year's levels.
Consumers could see heating bills jump 20 percent to 30 percent this winter, an energy policy expert told the nations governors.
The grim prediction came from Daniel Yergin, chairman of the Cambridge Energy Research Associates, a research firm. The Energy Department has issued similar forecasts.
What we can try to do is better understand the extent of market pressure and the potential impact for the customers, said Yergin, who won the Pulitzer Prize for his book, The Prize, a history of the oil industry.
Several of the countrys largest producers, suppliers and regulators of natural gas took part in the one-day meeting in an attempt to help governors develop plans for their own states.
Clinton May Tap Oil Reserve
In Washington, President Clinton said on Tuesday he wanted a few more days to assess oil market reaction to the Organization of Petroleum Exporting Countries recent production increase before deciding whether to release oil from the Strategic Petroleum Reserve.
We have some time before it would be too late to affect the supplies and availability of all the products well need as the cold weather sets in, Clinton said.
The president said oil prices have been complicated by speculation on whether Iraq will stop exporting oil, uncertainty over the amount of excess capacity U.S. refineries have to process oil and how much crude is sitting in tankers on the high seas.
The oil stockpile was established by Congress in the mid 1970s after the Arab oil embargo. Crude oil is held in underground salt caverns in Texas and Louisiana. Oil from the reserve has been released only once a national emergency situation during the Persian Gulf War.
Energy Secretary Sees Dangers
Energy Secretary Bill Richardson said Tuesday oil prices approaching $38 a barrel were dangerously high and the White House would not hesitate to use all options, including the Strategic Petroleum Reserve, to fight soaring energy costs.
But a spokesman for Republican presidential hopeful George W. Bush said the Texas governor would only release oil from the reserve as a last line of defense against a true oil disruption.
He does not believe it should be used to alleviate political pressure and does not believe that it would have a lasting impact on domestic energy prices, the spokesman said.
U.S. Cool to French Proposal
The United States reacted cooly today to a French proposal for a meeting on soaring oil prices between Washington, the European Union and OPEC representatives.
France said it would propose to this weekends meeting of the Group of Seven finance ministers that immediate talks take place between representatives of the United States, EU and OPEC on the matter.
U.S. officials said oil would definitely be on the agenda for a meeting of the finance ministers in Prague this weekend but gave little sign of support for a separate meeting.
OPEC blames high prices on U.S. refinery bottlenecks, market speculation and high consumer government taxes.
We have increased production by over 3.2 million bpd in six months. Thats a lot of oil to put in the market in such a short time and should do the job, OPEC Secretary General Rilwanu Lukman said in Jakarta today.
Since most in OPEC already are pumping to capacity, any significant extra crude would have to come from leading producer Saudi Arabia.
The Associated Press and Reuters contributed to this report.
-- (M@rket.trends), September 21, 2000