April 2, 2004

Oil and Gas prices

Lynne Kiesling over at Knowledge Problem has been following the news of Gas prices recently and has a couple of interesting items today: Item one here bq. According to this Los Angeles Times article this morning, the US EPA is considering a temporary waiver of the oxygenate switchover to ethanol in New York and California that took effect this spring. Information that the government is considering this waiver moved oil and gasoline market prices strongly downward. Lynne quotes from this LA Times article: bq. Benchmark crude followed suit, falling $1.49, or 4.2%, to $34.27 a barrel on the Nymex, where the price of oil has fallen more than 10% since hitting a 13-year high of $38.18 on March 17. bq. "Just one statement about granting the waivers brought gasoline prices down," said Phil Flynn, senior oil analyst at Alaron Trading in Chicago. "When the price of gasoline tanked, not only did it bring down crude, it brought down" all petroleum-related futures. Scroll down and read the comments especially the second one from Barry Posner who explains the significance of this and a bit about the oil refining business. The next entry here suggests that OPEC might not reduce production by 4% after all... Lynne points to an article in the Miami Herald: bq. But members continue to produce well above their targets to capitalize on the high prices. bq. "Perception seems to be having the strongest hand right now," said Mark Baxter, director of Southern Methodist University's Maguire Energy Institute. "The question is, how disciplined is OPEC and will they be willing to live within their quotas? Historically, they've shown they're not. At $35 and $36 oil, there's not much incentive for them to live within the quotas." Heh... We may be addicted to oil but the OPEC nations are addicted to something far more insidious - $$$ Posted by DaveH at April 2, 2004 1:34 PM