INSTITUTE FOR ORGANIZATION RESEARCH
http://www.anarchy.no/iifor.html - IIFOR P.B. 4777 Sofienberg N- 0506 Oslo - Norway
ANARCHIST BLACK GOLD SITE
EVERY DAY: FOLLOW IIFOR'S REPORTS ON THE CRUDE OIL PRICE...
TRADED CRUDE OIL PRICES NOTED IN US $ BBL - PER BARREL - UPDATED
The IIFOR in general recommends a crude oilprice at about 140 - 160 US $, as fair and efficient, taking into account a.o.t. the environmental factors, say, carbondioxide pollution, and the intergenerational perspective, i.e. the welfare of the future generations from a scarce exhaustible important resource. This interval is an approximation of free contract traded pricing according to the l'Internationale des Fédérations Anarchistes, IFA's, and other relevant anarchist-principles, applied on crude oil production and distribution, i.e. not slave contracts, see http://www.anarchy.no/ifa.html. The IIFOR's general recommendation of the optimal crude oilprice will be adjusted for inflation, technological change including development of alternative energy resources, discovering of new oil and natural gas fields, developing countries need for crude oil, etc.
The anarchists world wide have called for joint market actions to cut crude oil poduction as much as to hike the world's average price to about 150 US $ per barrel over longer time, to boost renewable energy-production toward an optimal level seen in dynamic perspective, i.e. significant investment in -- and use of -- efficient backstop technology; in relation to solutions to the manmade global warming problem.
14.06.2008: Concerned that skyrocketing oil prices might induce a worldwide economic slump, Saudi Arabia is planning to increase oil production next month by about 500 000 barrels a day. The current prices are also making alternative fuels more viable, threatening the long-term prospects of the oil-based economy. Saudi Arabia is currently pumping 9.45 million barrels a day, which is an increase of about 300 000 barrels from last month. The Organisation of Petroleum Exporting Countries (OPEC) on Friday cut its 2008 estimate of growth in world oil demand, as high prices and slower economic growth brake demand in major industrialised countries, the United States in particular. Global oil demand is now projected to rise by 1,28 per cent in 2008, the Organisation of the Petroleum Exporting Countries said in its June monthly report, lowering its prior estimate of 1,35 per cent. This will probably contribute to a lowering in the crude oil price.
23.06.2008: Oil prices have risen after emergency talks among the world's top oil powers and leading consuming nations over the weekend ended with no real resolution. The rises came despite Saudi Arabia's promise to increase daily output by an extra 200 000 barrels a day. The Saudi petroleum minister, Ali I. Al-Naimi, said the country will reach the 9,7 million level by July.
01.01.2009: The crude oil demand in a) China, India and other emerging economies and b) in the oil-producing countries, will still be relatively high, but c) the demand in the OECD countries will be lowered a bit due economic depression, that we now estimate will be worse than we forecasted earlier. Our updated estimate of the world's average crude oil price for 2008 is about 97 US $ per barrel. The 2008 monthly averages are: Jan. 92, Feb. 95, Mar. 104, Apr. 109, May 123, Jun. 132, Jul. 133, Aug. 113, Sep. 97, Oct. 72, Nov. 52, Dec. 40.
10.01.2010: The averages for the first half of 2009 are Jan. 43, Feb. 43, Mar. 47, Apr. 50, May 57, Jun. 69. The averages for the second half of 2009 are Jul. 64, Aug. 73, Sep. 68. Oct. 73, Nov. 77, Dec. 74. The world's average crude oil price for 2009 was about 62 US $ per barrel.
31.01.2011: The monthly averages for 2010 are Jan. 76, Feb. 74, Mar. 79, Apr. 85, May 76, Jun. 75, Jul. 76, Aug. 77, Sep. 78, Oct. 83, Nov. 85, Dec. 91. The average price of 2010 was about 80 US $ per barrel.
The 2011 monthly averages are: Jan. 97, Feb. 104, Mar. 115, Apr. 123, May 115, Jun. 114, Jul. 117, Aug. 110. Sep. 113. Oct. 110, Nov. 111, Dec. 108. The average price for 2011 was about 111 US $ per barrel.
The 2012 monthly averages are: Jan. 111, Feb. 119, Mar. 125, Apr. 120, May 110, Jun. 95, Jul. 103, Aug. 113, Sep. 113, Oct. 112, Nov. 109, Dec. 109. The average price for 2012 was about 112 US $ per barrel.
If the anarchists' call for joint market action results in effective and significant cuts in supply the price may be hiked above this level.
An estimate on more long term is as mentioned about 150 US $ per barrel, this price is due to efficient backstop technology in relation to solutions to the manmade global warming problem. A backstop technology provides resources at a constant marginal cost, i.e. corrected for inflation, for an indefinitely long time. In the relatively short run a price up to 200 US $ per barrel is a possibility, mainly due to speculations, but not very likely to happen.
IIFOR calls for joint market action - Updated
Norway, OPEC, Russia and Mexico! Cut the crude oil supply in joint market action!
PS. The green and eco-anarchist movements also join in this action, see http://www.anarchy.no/direkteaksjon.html.
The IIFOR report presents links to main crude oil price sites on Internet:
EVERY DAY NEW UPDATES OF THE OTHER MAIN
OIL PRICE, MARKET AND ENVIRONMENT INTERNET SITES
WORLD WIDE AND CHECK IF THE PRICES ARE WITHIN IIFOR'S FORECASTS AND RECOMMENDATIONS:
Updated and historical analysis of the crude oil price and market from WTRG - both futures and spot prices: http://www.wtrg.com/
Updated energy prices, among them North Sea Brent from Bloomberg: http://www.bloomberg.com/energy/
Futures energy prices, among them Light Crude (NYM) from CNN: http://money.cnn.com/markets/commodities.html
Updated analysis of the crude oil price, forecasts and market from INDECO: http://www.indeco.no/
Oilnergy.com spotprices for several crude oils: http://www.oilnergy.com/1cashpet.htm
Crude oil stocks and prices: http://www.oilnergy.com/
New York Mercantile Exchange of energy and metals - CME Group: http://www.nymex.com
American Petroleum Institute: www.api.org/
Crude oil reserves, the energy market and environment in Norway and global: http://www.eia.doe.gov/emeu/iea/
A pessimistic view on the oilmarket: www.oilcrash.com
The funny site of the crude oil market: http://www.anarchy.no/conspir1.html
Oil price, production and distribution related to terrorism and the Middle East problems: http://www.anarchy.no/ija431.html
Oilprice and Anarchy: http://www.anarchy.no/a_nor.html
Other links on crude oil and/or anarchism : http://www.anarchy.no/links.html
Also try the search engine with the keywords 'oil', 'olje', etc. at: www.anarchy.no
A note on the world's crude oil traded prices
Crude oil is sold through a variety of contract arrangements and in spot transactions. Oil is also traded on futures markets but not generally to supply physical volumes of oil, more as a mechanism to distribute risk. These mechanisms play an important role in providing pricing information to markets. In fact the pricing of crude oils has become increasingly transparent from the 1990s onwards through the use of marker crude oils, often just called marker crudes, such as West Texas Intermediate (WTI USA), Brent (Europe and Africa), Dubai and Oman (Middle East), and Tapis and Dubai (in Asia). The main criteria for a marker crude is for it to be sold in sufficient volumes to provide liquidity (many buyers and sellers) in the physical market as well as having similar physical qualities of alternative crude oils.
In addition the marker crude should provide pricing information. WTI does this through its use on the New York Mercantile Exchange, as the basis of a futures contract where trade is equivalent to seemingly many hundreds of millions of barrels per day, even though physical WTI production is less than 1 million barrels per day. Thus, a given real amount of crude oil, is usually sold and bought very many times. A futures contract for crude oil is a promise to deliver a given quantity of crude oil later on, but this rarely occurs, as participants are more interested in taking a position on the price of the crude oil. Futures markets are a financial instrument to distribute risk among participants with the side effect of providing transparency on the pricing of crude oil.
Thus, the futures crude oil prices may sometimes be highly correlated with the real traded prices, but not always. Say, the futures contract prices noted today for delivery of crude oil at a given day, T, later on, may in a way reflect the markets expectations about the real traded price on this day T, but of course these expectations may be wrong more or less, and may change, perhaps already the next day. Thus the real traded crude oil price on day T, may be quite different from the futures prices noted for this day T in general. Furthermore, the futures contract prices for delivery later on - noted today, may of course differ quite a lot from today's average real traded price. Say, if today's futures contract prices reflects a false belief among the persons buying futures about a major cut in supplies later on at day T, both the real traded price today as well as the real traded price on day T will in general be less than today's futures prices.
Futures markets may be easy to bluff by enronism and similar mafia activities and plutarchs, and thus give unrealistic pricing, and IIFOR in general cannot recommend to use prices from futures markets as basis for real trade of crude oil, i.e. on a realistic basis. NYMEX is more or less an enronist bluff paper-exchange that no-one should take seriously for real trade of crude oil. In general futures markets are just expensive bureaucracy reflecting irrational psychological factors, and not the real market situation. The best would be to get rid of all futures markets as they are just examples of expensive bureaucratic directly unproductive profitseeking behavior. It was a big failure of the Swedish Nobel Committee in Economics to give the Economical Nobel Prize to the inventor of futures markets.
Brent offers pricing information based more on the physical trading of oil through spot trading and forward trading, but also offers futures trading, but usually not to the same extent as WTI. Dubai and Oman pricing is based more on the physical trades of Dubai and Oman but due to falling production levels questions are being raised about the appropriateness of Dubai as a marker crude.
Medio 2008 we se speculators drive up the price of crude oil via the futures market. This could and should be stopped by a transaction tax on the futures trade.
In Asia there is for the time being no futures exchange where crude oil is traded and which would provide pricing information to the same extent as WTI and Brent. In Asia the pricing mechanism for, say, Tapis, a marker for light sweet crudes in the region, is based on an independent panel approach where producers, refiners and traders are asked for information on actual trades and where there have been none, their best guess. Any estimates that are wildly high or low are discarded and the quoted price is then an average of views on the market price for Tapis.
Traded crude oil pricing, the determination of the real market prices, is usually based on a formula approach where a marker crude is used as the base and then a quality differential as well as a demand/supply (premium/discount) is added, depending on the crude oil being purchased. Thus in times of tight supply this premium will usually rise and over time gradually drag up the Marker crude price, whilst in times of surplus supply, a reduced premium or even a discount will drag down the Marker crude price. Of course big changes/announcement/events that can significantly influence crude supply levels will sometimes result a large step change in the prices of crudes (eg. OPEC announcements; a war; major refinery outages). That is, crude oils being purchased do not always slavishly follow marker crudes.
Marker crudes are indicators of what is happening in markets. It is usually true to say that the cost of crude oil is a major cost for refiners. However, the relationship between such a cost and the final price for a product produced from that crude oil, such as petrol or diesel is not as direct as one would think. There are, for instance, additional petroleum product markers which may give a guide to prices. Prices are not just a function of costs, but are also strongly influenced by demand and the pricing strategy of the sellers on different levels of the distribution from producers to consumers, as well as public regulations and taxes. There are also a number of other variables which affect the crude oil prices, say, the perception of the purchasers and sellers in the market as to the price risk over time, can also add or subtract premiums to a product marker price as well as average real market price.
If the crude oil price goes over the optimal level over some time, the surplus could very well be going to a fund for combined birth control, food, education and real investment program for the poorest countries, to contribute to an approximately optimal population in all countries of the world.
While WTI sometimes may be a useful marker for what is happening with crude oil prices, especially in the USA, it is not always so as indicated above, and a significant proportion of, say, Australian imports are from Asia and a more appropriate marker for this market may well be Tapis. However the single most important marker of today is most likely Brent. It may be seen as a crude estimate of the world's average crude oil price.
The prices world wide in general may be affected to different degrees by what is happening in the markets, and there are often local variations in price level. As a general rule of the thumb the marker crude oil Brent is for the time being estimated to be used as a basis for about 60% of the market. Prices of crude oil markers and real market prices are affected by a myriad of factors from overall supply/demand for crude oil, supply/demand for petrol, freight rates, competition and strategies and public regulations in the crude markets, as well as in the regional and domestic markets for petrol. They all have a role in determining the real market prices for crude oil, and the role that each of these elements plays can change over time.
New crude oil price forecasts from IIFOR
New crude oil price forecasts from IIFOR: The forecast for 2019 is 45-75 US $ per barrel. An estimate on very long term is about 150 US $ per barrel.
These estimates are based on a.o.t. the article "Oil-Rich Nations Use More Energy, Cutting Exports" from NY-Times December 9, 2007: The economies of many big oil-exporting countries are growing so fast that their need for energy within their borders is crimping how much they can sell abroad, adding new strains to the global oil market. Experts say the sharp growth, if it continues, means several of the world's most important suppliers may need to start importing oil within a decade to power all the new cars, houses and businesses they are buying and creating with their oil wealth. Indonesia has already made this flip. By some projections, the same thing could happen within five years to Mexico, the No. 2 source of foreign oil for the United States, and soon after that to Iran, the world's fourth-largest exporter.
In some cases, the governments of these countries subsidize gasoline heavily for their citizens, selling it for as little as 7 cents a gallon, a practice that industry experts say fosters wasteful habits. “It is a very serious threat that a lot of major exporters that we count on today for international oil supply are no longer going to be net exporters any more in 5 to 10 years,” said Amy Myers Jaffe, an oil analyst at Rice University. Rising internal demand may offset 40 percent of the increase in Saudi oil production between now and 2010, while more than half the projected decline in Iranian exports will be caused by internal consumption, said a recent report by CIBC World Markets. The report said “soaring internal rates of oil consumption” in Russia, in Mexico and in member states of the Organization of the Petroleum Exporting Countries would reduce crude exports as much as 2.5 million barrels a day by the end of the decade. That is about 3 percent of global oil demand. It may not sound high, but experts say demand for oil is so inflexible, and the world has so little spare production capacity, that even small shortfalls can raise prices. In 2002, when a labor strike in Venezuela took 3 percent of global production off line, oil prices spiked 26 percent within weeks.
The trend, though increasingly important, does not necessarily mean there will be oil shortages. More likely, experts say, it will mean big market shifts, with the number of exporting countries shrinking and unconventional sources like Canadian tar sands becoming more important, especially for the United States. And there is likely to be more pressure to open areas now closed to oil production. Greater political stability and increased drilling in some important oil states, notably Iraq, Iran and Venezuela, could help offset the rising demand from other oil exporters. “Ten years from now, world capacity to produce oil could be 20 percent higher than today,” said Daniel Yergin, chairman of Cambridge Energy Research Associates. “But a lot will depend on how the geopolitics work out.” Growth in demand among oil exporters is one aspect of a larger issue, breakneck economic growth in parts of the developing world. China and India are expected to account for much of the increase in global oil demand in the next 20 years. But Fatih Birol, chief economist at the International Energy Agency in Paris, rated consumption growth among oil exporters as the second-biggest threat to meeting the world's oil needs. “It's a big problem, and growing all the time,” Mr. Birol said.
Internal oil consumption by the five biggest oil exporters — Saudi Arabia, Russia, Norway, Iran and the United Arab Emirates — grew 5.9 percent in 2006 over 2005, according to government data. Exports declined more than 3 percent. By contrast, oil demand is essentially flat in the United States. CIBC's demand projections suggest that for many oil countries, including Saudi Arabia, Kuwait and Libya, internal oil demand will double in a decade. Factors contributing to the trend include increased industrialization, higher government spending and increasing personal consumption. According to a World Bank report, economic growth in the Middle East and North Africa has doubled since the 1990s, and Russia has done even better. Oil money is giving many countries the means to invest in their own economic development, and robust global growth is creating markets for their goods — including plastics, chemicals and fuels refined from oil. To be sure, many oil-exporting states have a long way to go before they achieve Western living standards. The global oil market is still dominated by traditional consumers, particularly the United States, which uses nearly a quarter of the world's oil. Perhaps surprisingly, though, some producing countries have surpassed the United States in oil consumption per person. They include Bahrain, Kuwait, Qatar and the United Arab Emirates.
Particularly in oil-producing countries with large populations, like Indonesia, Russia and Mexico, a rapid rise in car ownership is a big factor driving consumption increases. Russian farmers are replacing horses and carts with gas-guzzling four-wheel-drive vehicles, while urban consumers are snapping up BMWs even before they learn to drive. “Most of the producing countries have young populations entering the driving age and can more readily afford to buy cars because the price of fuel is low,” said Charles McPherson, an oil expert at the International Monetary Fund. “It's certainly pulling product off the international markets.” Some oil-exporting countries use price controls and subsidies to ensure cheap fuel for their people. These programs are politically popular, even though experts say they contribute to wasteful energy use. Kuwaitis, for instance, often leave their air conditioning — powered by electricity generated from natural gas or oil-derived fuels — running for weeks while on vacation, said an official at the World Bank. Sportsmen of the United Arab Emirates ski indoors on manufactured snow and play golf on lush courses that require desalinated water produced with fuels refined from oil. Saudis, Iranians and Iraqis pay 30 to 50 cents a gallon for gasoline. Venezuelans pay 7 cents, and demand is projected to rise as much as 10 percent this year. Auto sales have tripled in four years. “Where cheap oil is viewed as a national human right, you've virtually got runaway demand,” said Chris B. Newton, an executive of the Indonesian Petroleum Association in Jakarta.
Indonesia flipped from exporting oil to importing it three years ago because of sagging production in depleted fields and rising demand. Iran, Algeria and Malaysia are vulnerable in the next decade. Most oil experts view Mexico as the next country likely to flip, in as little as five years. Rapidly falling production in Mexico's aging Cantarell oil field is part of the problem. Also significant, though, is the rising number of cars on Mexican roads. They have nearly doubled, to almost 16 million, in the last decade, and gasoline consumption is growing 5 percent a year. In Mexico City the other day, a bricklayer named Jaime Guerrero arrived at a local Chevrolet dealership. His extended family cried “bravo!” as he signed the papers for his first car. “To have a new car in my name is a dream transformed into reality,” said Mr. Guerrero, 26. He and his family piled in and weaved through the chaotic traffic of the capital, hunting for a priest to douse the car with holy water. “I don't worry about the climate or shortages of oil in the world,” Mr. Guerrero said. “I just worry if gasoline prices go up.”