Reuters said:House passes bill to sue OPEC over oil prices
Tue May 20, 2008 2:27pm EDT
By Tom Doggett
WASHINGTON (Reuters) - The House of Representatives overwhelmingly approved legislation on Tuesday allowing the Justice Department to sue OPEC members for limiting oil supplies and working together to set crude prices, but the White House threatened to veto the measure.
The bill would subject OPEC oil producers, including Saudi Arabia, Iran and Venezuela, to the same antitrust laws that U.S. companies must follow.
The measure passed in a 324-84 vote, a big enough margin to override a presidential veto.
The legislation also creates a Justice Department task force to aggressively investigate gasoline price gouging and energy market manipulation.
"This bill guarantees that oil prices will reflect supply and demand economic rules, instead of wildly speculative and perhaps illegal activities," said Democratic Rep. Steve Kagen of Wisconsin, who sponsored the legislation.
The lawmaker said Americans "are at the mercy" of OPEC for how much they pay for gasoline, which this week hit a record average of $3.79 a gallon.
The White House opposes the bill, saying that targeting OPEC investment in the United States as a source for damage awards "would likely spur retaliatory action against American interests in those countries and lead to a reduction in oil available to U.S. refiners."
The administration said less oil going to refineries would limit available gasoline supplies and raise fuel prices. House passes bill to sue OPEC over oil prices
Foreign investment in U.S. oil infrastructure has declined in the last decade. But the state-owned oil companies of several OPEC nations are owners of U.S. refineries, and those investments could be affected if the legislation becomes law, said Arlington, Virginia-based FBR Capital Markets Corp.
The bill also requires the Government Accountability Office to carryout a study on the effects of prior oil company mergers on energy prices.
The Senate would still have to approve the House measure.
The Senate previously approved similar legislation as part of a broad energy bill. However, the OPEC-suing provision was removed after White House opposition in order to get the underlying energy legislation signed into law.
(Editing by Christian Wiessner)
Again, the profiteering of the futures market is pushing crude prices up more. I really hope the bottom falls out of these speculators butts. If the other 48 states override Florida and California, possibly, maybe, domestic drilling and production will return.oldguy said:On the morning news just a minute ago they were predicting a higher then average hurricane season possibly driving gas to $5.50 - $6 a gallon by mid summer
2strokerfun said:Seems to me that it used to be illegal to trade oil futures in the U.S. I remember in about 1981 a local rich guy whom the local minor league field was named after was sent to federal prison for trading futures (so, of course, they ignored the millions he donated and renamed the field after he was convicted). So, doing some quick research, it appears crude futures trading started on the NY mercantile in 1983. Wonder how it would affect oil prices if they stopped trading futures again.
NY Times The Cassandra of Oil Prices Louise Story said:The analysts who predict lower prices say there are supplies of oil that the bullish analysts are missing. “This year will be a year in which supply will be put into the market by stealth by OPEC and by countries we call black-hole countries,” said Edward L. Morse, chief energy economist at Lehman Brothers. China is one example, he said.
NewYork Times said:The Cassandra of Oil Prices
The New York Times
By LOUISE STORY
Published: May 21, 2008
Arjun N. Murti remembers the pain of the oil shocks of the 1970s. But he is bracing for something far worse now: He foresees a “super spike” * a price surge that will soon drive crude oil to $200 a barrel.
Arjun Murti at Goldman Sachs studied the 1970s’ oil spikes. One had drivers lined up at a gas station in San Jose, Calif., in 1974.
Henny Ray Abrams/Associated Press
The oil options pit at the New York Mercantile Exchange; oil prices touched $129.60 Tuesday.
Mr. Murti, who has a bit of a green streak, is not bothered much by the prospect of even higher oil prices, figuring it might finally prompt America to become more energy efficient.
An analyst at Goldman Sachs, Mr. Murti has become the talk of the oil market by issuing one sensational forecast after another. A few years ago, rivals scoffed when he predicted oil would breach $100 a barrel. Few are laughing now. Oil shattered yet another record on Tuesday, touching $129.60 on the New York Mercantile Exchange. Gas at $4 a gallon is arriving just in time for those long summer drives.
Mr. Murti, 39, argues that the world’s seemingly unquenchable thirst for oil means prices will keep rising from here and stay above $100 into 2011. Others disagree, arguing that prices could abruptly tumble if speculators in the market rush for the exits. But the grim calculus of Mr. Murti’s prediction, issued in March and reconfirmed two weeks ago, is enough to give anyone pause: in an America of $200 oil, gasoline could cost more than $6 a gallon.
That would be fine with Mr. Murti, who owns not one but two hybrid cars. “I’m actually fairly anti-oil,” says Mr. Murti, who grew up in New Jersey. “One of the biggest challenges our country faces is our addiction to oil.”
Mr. Murti is hardly alone in predicting higher oil prices. Boone Pickens, the oilman turned corporate raider, said Tuesday that crude would hit $150 this year. But many analysts are no longer so sure where oil is going, at least in the short term. Some say prices will fall as low as $70 a barrel by year-end, according to Thomson Financial.
Experts disagree over the supply of oil, the demand for it and whether recent speculation in the commodities markets has artificially raised prices. As an energy analyst at Citigroup, Tim Evans, reportedly put it, trading commodities these days is like “sticking your hand in a blender.”
Whatever the case, oil analysts like Mr. Murti have suddenly taken on the aura that enveloped technology analysts in the 1990s.
“It’s become a very fashionable area to write about,” said Kevin Norrish, a commodity analyst at Barclays Capital, which began predicting high oil prices around the same time as Goldman. “And to try to get attention from people, people are coming out with all sorts of numbers.”
This was not always the case. In the 1990s, oil research was a sleepy area at banks. Many analysts assumed oil prices would hover near $15 to $20 a barrel forever. If prices rose much above those levels, they figured, consumers would start conserving, suppliers would raise production, or both, causing prices to decline.
But around the turn of the century, oil company after oil company started missing predicted production. Mr. Murti, who covers oil companies like ConocoPhillips and Valero Energy, decided to study the oil spikes of the 1970s.
Since starting his career at Petrie Parkman & Company, a Denver-based investment firm acquired by Merrill Lynch in 2006, he had been conservative in his calls on oil. But by 2004, he concluded the world was headed for a long supply shock that would push prices through the roof. That summer, as oil traded for about $40 a barrel, Mr. Murti coined what has become his signature phrase: super spike.
The following March, he drew attention by predicting prices would soar to $105, sending shock waves through the market. Angry investors questioned whether Goldman’s own oil traders benefited from the prediction. At Goldman’s annual meeting, Henry M. Paulson Jr., then the bank’s chief executive and now Treasury secretary, found himself defending Mr. Murti.
“Our traders were as surprised as everyone else was,” Mr. Paulson reportedly said. “Our research department is totally independent. Our trading departments have no say about this.”
Over time, Mr. Murti was proved right again. Oil crossed $100 in February. Mr. Murti’s forecasts now feed into many of Goldman’s economic and corporate forecasts, affecting research of companies like Ford and Procter & Gamble. His research is distributed widely among investors.
“Even if you disagree with their views, the problem is that Goldman does carry so much credibility,” said Nauman Barakat, senior vice president for global energy futures at Macquarie Futures USA. “There are a lot of traders who are going to buy based on their reports.”
His sudden fame unsettles Mr. Murti. He rarely grants interviews, citing concerns about privacy, and he declined to be photographed for this article. He is not the bank’s only gas prognosticator: Jeffrey R. Currie predicts oil prices out of London.
Mr. Murti, for his part, discounts suggestions that his reports affect market prices. “Whenever an analyst upgrades a stock or downgrades a stock, sometimes you get a reaction that day, but beyond a day, fundamentals win out,” he said.
Mr. Murti falls into the camp of oil analysts who believe that supply is likely to remain tight because of geopolitical factors. These analysts predict higher prices because production is declining in non- OPEC countries like Britain, Norway and Mexico.
The analysts who predict lower prices say there are supplies of oil that the bullish analysts are missing. “This year will be a year in which supply will be put into the market by stealth by OPEC and by countries we call black-hole countries,” said Edward L. Morse, chief energy economist at Lehman Brothers. China is one example, he said.
But while oil and gas prices have been rising for a while now, Americans have only just begun to reduce gasoline consumption, so their efforts to conserve have not dragged down oil prices.
“The fact that the U.S. gasoline demand can be down and that the U.S. gasoline consumer is no longer driving world oil prices is a monumental event,” Mr. Murti says. He spends most of his time talking to money managers and analysts, many of whom keep asking him if oil prices will stay high if speculators abandon the market, and says he applauds investors for driving up oil prices, since that will spur investment in alternative sources of energy.
High prices, he says, “send a message to consumers that you should try your best to buy fuel-efficient cars or otherwise conserve on energy.” Washington should create tax incentives to encourage people to buy hybrid cars and develop more nuclear energy, he said.
Of course, if lawmakers heed his advice, oil analysts like him might one day be a thing of the past. That’s fine with Mr. Murti.
“The greatest thing in the world would be if in 15 years we no longer needed oil analysts,” he says.
So, if I understand the article right, Congress has the idea that, if they pass a law that says OPEC must abide by U.S. laws, then by God those OPEC scoundrels wouldn't dare disobey our laws and will just fall submissively in line. Sound about right?fatcat216 said:You think that's funny...This one will have you snorting your coffee onto your computer screen:
http://www.reuters.com/article/wtMostRead/idUSWAT00953020080520
I honestly thought is was out of The Onion when I read it.
yesrickyd said:Has the price per barrel gone up because out dollar is not worth as much?
Other 48?If the other 48 states override Florida and California, possibly, maybe, domestic drilling and production will return.
That is exactly what we would have too.i want the black dude to win.
Patman said:Might I suggest a book called "Pirates of Manhattan" for some very interesting reading.
If I had the mineral rights on my place, I'd sink a well. 1-2 barrels a day would make it worth looking at.Patman said:Not in my backyard and let other people change seems to be part of what has kept us in the pickle we're in.
just-startin said:What annoys me is that high speculative spot prices seem to manifest themselves at the pump almost instantly ( despite the fact that there are stores in-country, purchased at older, cheaper prices ) but production price drops seem to lag forever or not even materialise.
One of my friends did a stint at Mobil Oil here in NZ as a crude oil buyer, and the rule then (10yrs ago) was to stockpile at the lowest price they could then set the price on the new stock when that came into the market, but competition kept the oil companies reasonably even... but now, they can bump the price up whenever they like, and it's more like a challenge to see who can go the highest the earliest :p
just-startin said:I must admit that I look around at how much our lifestyle is currently dependant on cheap, abundant, energy. I harbour a certain nagging feeling of panic at the prospect of what a crazy shift in energy prices will bring.
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