10/06/2004

Oil extends record run to $51.48 per barrel

Reuters reported that oil raised to a record high on Wednesday. This has many fearing a supply crunch during the winter. The article cited as the main reason for the price jump as being due to the up coming elections in the United States and instability in Iraq, as well as storms in the Gulf of Mexico, during hurricane Ivan and the other storms there were nearly 453,000 barrels per day that were being kept from arriving on American shores. With OPEC pumping nearly at capacity this gives little leeway for another long lasting disruption in supply.

Supply had been disrupted by natural disasters. The Hurricane season of 2004 caused supply to drop by half the daily number of barrels pumped by Indonesia (the smallest OPEC member nation). The main reason for the extra high prices was the drop in supply, although the instability in the region obviously attributes for the already high oil prices prior to the major hurricane season. Instability in the Mideast is a major concern that is something that has been a cause for rising oil prices since the 70's. The fact that the U elections are a major factor in the rising oil prices may cite that a changing of commander of chief may be beneficial to relations with OPEC nations and help lower ultra-high oil prices.

The article was found at http://story.news.yahoo.com/news?tmpl=story&cid=580&e=3&u=/nm/20041006/bs_nm/markets_oil_dc

5 comments:

John West said...

Oil prices are affecting a lot of peoples lives in this country. Those with less disposable income, are feeling the crunch at the gas pumps. The solution is a hard one. The U.S. simply does need to find a way in which we are not so dependent upon foreign oil. OPEC knows that what is says goes, at least to a certain extent. America must take charge and lead the rest of the world into the development of alternative sources of energy.

Bryce Larkin said...

With the price of a barrel of oil going up, what is going to happen to the prices of products? Everything that is being transported by any means will increase their prices. One main problem that I see is a monopoly with the oil companies. When OPEC decides to raise the price, it goes up. I wonder how we could break up OPEC.

pramahaphil said...

Amen, Bryce

Maudi said...

The oil crisis is going to continue. The reason for this is the problems in the Middle-East and the mass amount of oil that is being consumed her in the U.S. The United States needs to stop relying on oil from other countries and start exploring other avenues. One of which is the huge amount of oil that is in Alaska.

Dr. Tufte said...

OPEC has not been a serious threat in almost 20 years.

And the oil companies do not have a "monopoly". If they did, why hasn't there stock price gone through the roof?

Further, oil prices are only at record levels in nominal terms. Want to know something: my salary is at record levels in nominal terms too. So's yours, more than likely.

All of this smacks of budding mass hysteria.