July 06, 2008

OPEC President Predicts Oil Prices Will Go Higher

Chakib Khelil, president of OPEC predicted that oil prices will continue to rise.

'The price of oil will rise again in the coming weeks.

And he should probably know whether or not oil prices are going to rise. Looking at the oil market chronology, every time the price of oil starts to decline OPEC lowers production and sends prices skyward again.

But he contends that OPEC supply isn't the cause of high oil prices but instead blames it on factors outside of OPEC's control.

'I believe 60 percent of the rise in the oil prices is due to the fall in the exchange rate of the dollar and to geopolitical problems, and 40 percent to the intrusion of bio ethanol on the market,' he said.

I find his choice of words curious. It sounds like he is trying to say that this is their market and how dare ethanol intrude on their market.

But I really can't see any logical reason as to how ethanol could cause a rise in oil prices. Actually the opposite should be true since increased ethanol production means that less petroleum is needed lowering demand.

Of course he could be trying to say that the 40% is a punishment for trying to lower our dependence on petroleum through the production of ethanol.

Either way I figure that anything that intrudes on OPEC's market is a good thing.


Anonymous said...

Bush increased his bellicose talk against Iran in order to help McCain and hurt Obama.

It backfired and Obama did not go down in the polls. In fact, many Americans begin to wonder why we aren't talking to our enemy, something we did often ever since WW2. And because of Bush's language and tone, the price of oil skyrocketed due to the afffect that talk had on tensions in that part of the world. Increased tensions in the middle east always has that affect.

Oil prices fluctuate and go down a little, but then Bush announces talks with Iran. Oil prices plummet over the next 2 weeks because the speculators saw how tension was going down.

That's why I call this drop in prices as the Obama drop.

Michael A. Gregory said...

I call what you are experiencing a bad Kool-Aid trip.

Anonymous said...

america should seriously turn to alternative fuels

Otherwise, OPEC will control America's oil prices

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