ÿþ<html> <head> <meta http-equiv="content-type" content="text/html;charset=iso-8859-1"> <title>OnlineColumnist&reg;.com: Putin Punishes Georgia</title> <meta name="generator" content="Adobe GoLive 4"> <style type="text/css"> .style2 { font-size: large; font-weight: bold; font-family: Arial; } .style3 { font-size: large; font-weight: bold; } </style> </head> <body bgcolor="white" vlink="black"> <center> <table cool width="624" height="2719" border="0" cellpadding="0" cellspacing="0" gridx="16" showgridx gridy="16" showgridy> <tr height="79"> <td width="133" height="118" rowspan="2" valign="top" align="left" xpos="0"><a href="aboutdiscobolos.html"><img height="110" width="62" src="images/discobolos.logo.transp.gif" border="0"></a></td> <td width="7" height="118" rowspan="2"></td> <td width="482" height="79" colspan="2" valign="top" align="left" xpos="140"><img height="75" width="450" src="images/banner.GIF"></td> <td width="1" height="118" rowspan="2"></td> <td width="1" height="79"><spacer type="block" width="1" height="79"></td> </tr> <tr height="39"> <td width="182" height="39"></td> <td width="300" height="39" valign="top" align="left" xpos="322"><a href="aboutdiscobolos.html"><img height="14" width="267" src="images/divisionofNEW.GIF" border="0"></a></td> <td width="1" height="39"><spacer type="block" width="1" height="39"></td> </tr> <tr height="24"> <td width="624" height="24" colspan="6" valign="top" align="left" xpos="0"> <table border="0" width="100%" bgcolor="black" cellspacing="0"> <tr> <td> <table border="0" width="100%" bgcolor="#99ffcc" cellspacing="0" cellpadding="4"> <tr> <td align="center"> <div align="left"> <a href="index.html"><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular" size="2"><strong>HOME</strong></font></a><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular" size="2"><strong> &#149; <a href="articlesindex.html">ARTICLES</a> &#149; <a href="books.html">BOOKS</a> &#149; <a href="teflon.html">THE </a><a href="teflon.html">TEFLON</a><a href="teflon.html"> REPORT</a> &#149; <a href="mailto:letters@onlinecolumnist.com">REACTIONS</a> &#149; <a href="aboutdiscobolos.html">ABOUT DISCOBOLOS</a></strong></font></div> </td> </tr> </table> </td> </tr> </table> </td> </tr> <tr height="2"> <td width="133" height="2">&nbsp;</td> <td width="489" height="2576" colspan="3" rowspan="2" align="left" xpos="133" content valign="top" csheight="2573"> <p class="style2">Oil Price Madness</p> <p><b><font face="Arial,Geneva,Helvetica">by John M. Curtis</font></b><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular"><b><a href="books.html"><br> </a></b></font><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular"><b>(310) 204-8700</b></font></p> <p><font size="2" face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular"><i>Copyright September 9, 2008<br>All Rights Reserved. </i></font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </p> <p class="MsoNormal"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <span class="style3">P</span>roving that world oil prices have little to do with supply-and-demand, the price of crude oil continues to plummet off it record high of $147 a barrel June 11.<span style="mso-spacerun: yes">&nbsp; </span>Energy experts predicted $200-plus barrel by year s end, spelling disaster for the transportation sector and overall economy.<span style="mso-spacerun: yes">&nbsp; </span>Since that peak, oil has dropped over 40%, closing Sept. 9 at around 100 a barrel.<span style="mso-spacerun: yes">&nbsp; </span>China, India and the rest of the industrial world continue to pressure demand, despite the fact that crude oil and gasoline inventories have steadily risen.<span style="mso-spacerun: yes">&nbsp; </span>Only a stubborn worldwide recession, in part fueled by runaway energy prices, could account for the precipitous drop in consumption.<span style="mso-spacerun: yes">&nbsp; </span>Organization of Petroleum Exporting Countries [OPEC] meeting in Vienna, not known for dropping prices, agreed to hold current production levels, signaling lower prices, abundant supplies and stability for the immediate future.<span style="mso-spacerun: yes">&nbsp; </span></p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-tab-count:1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>Despite a string of disastrous hurricanes, oil prices continued their downward slide, ignoring Wall Street s wild speculation.<span style="mso-spacerun: yes">&nbsp; </span>Oil futures traders still have extremely low margin requirements, allowing traders maximum leverage.<span style="mso-spacerun: yes">&nbsp; </span>Short sellers have now dominated the market, continuing to hammer the price of crude oil.<span style="mso-spacerun: yes">&nbsp; </span>Retailer gas sellers have watched prices drop about 20%, helping GOP presidential nominee Sen. John McCain s (R-Ariz.) chances in November.<span style="mso-spacerun: yes">&nbsp; </span> All the signals are the hurricane will be a miss as far as infrastructure goes, so that should keep us moving toward $100 a barrel, said Jim Ritterbusch, president of Ritterbusch Consultancy.<span style="mso-spacerun: yes">&nbsp; </span> Ritterbusch was one of many analysts predicting $200 a barrel oil in June, ignoring the very real possibility that high fuel prices would cause recession.<span style="mso-spacerun: yes">&nbsp; </span>Oil industry executives got what they asked for:<span style="mso-spacerun: yes">&nbsp; </span>Recession-fueled conservation.</p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-tab-count:1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>When the oil industry pushed the pedal-to-the-metal when it came to profits, their feeding frenzy didn t anticipate causing a worldwide recession. <span style="mso-spacerun: yes">&nbsp;</span>Consumers and virtually all other industries felt the pinch of inflated fuel prices.<span style="mso-spacerun: yes">&nbsp; </span>Obscenely high jet fuel costs have practically bankrupted the airline industry.<span style="mso-spacerun: yes">&nbsp; </span>Driving pump prices to record levels decimated consumer spending, responsible for two-thirds of Gross Domestic Product.<span style="mso-spacerun: yes">&nbsp; </span>Raking in record profits over the last two years, the oil industry plunged the rest of the economy into recession.<span style="mso-spacerun: yes">&nbsp; </span>White House officials refused to rein-in ExxonMobil and ChevronTexaco, while they gouged businesses and consumers, before taking down the the economy.<span style="mso-spacerun: yes">&nbsp; </span>When mortgage giants Fannie Mae and Freddie Mac went under Sept. 6, it raised more worries in the economy about the solvency of the nation s leading financial institutions.</p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-tab-count:1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>OPEC grew more worried about a worldwide recession hurting crude oil demand, signaling that they would not seek an output cut.<span style="mso-spacerun: yes">&nbsp; </span> We will probably stay at the present level, said OPEC president and Algerian oil minister, Chakib Khelil, refusing to knuckle-under to more fringe demands to cut production.<span style="mso-spacerun: yes">&nbsp; </span>Keeping the price of crude high helps no one, not least of which U.S. and European economies currently under pressure to stay solvent.<span style="mso-spacerun: yes">&nbsp; </span> The market is fairly well-balanced, said Saudi Arabia s oil ministers Ali Naimi<span style="mso-spacerun: yes">&nbsp; </span> I think things are in balance, in a healthy position, supporting the $100 a barrel benchmark.<span style="mso-spacerun: yes">&nbsp; </span>Even Venezuela s ordinarily tough oil minister Rafael D. Ramirez urged the cartel to hold firm on production.<span style="mso-spacerun: yes">&nbsp; </span>OPEC blames recent downturn in<span style="mso-spacerun: yes">&nbsp; </span>oil prices on speculators shorting the market, driving prices back to normal moving averages.</p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-tab-count:1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>Hurricanes, earthquakes, tsunamis, terrorism, revolutions, demand in China and India, etc., have little to do with the price at the pump.<span style="mso-spacerun: yes">&nbsp; </span>Big Oil knows how to manipulate news to drive prices up or down.<span style="mso-spacerun: yes">&nbsp; </span>They also know when consumers stop spending and inventories pile up how to drop prices, especially before competitive elections.<span style="mso-spacerun: yes">&nbsp; </span>Gouging consumers and businesses has tanked the economy and driven consumers into hibernation, creating surpluses of refined products like gasoline, diesel fuel, jet fuel, home heating oil, etc., now flooding the market.<span style="mso-spacerun: yes">&nbsp; </span>OPEC s knee-jerk response to swell inventories and plummet prices is to cut production.<span style="mso-spacerun: yes">&nbsp; </span>Big Oil must take more responsibility for tanking the economy.<span style="mso-spacerun: yes">&nbsp; </span>Industry executives can t argue high prices encourage conservation, while, at the same time, dropping prices when it suits their profit margins.</p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-tab-count:1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>Big Oil has gone too far gouging businesses and consumers, eventually taking down the economy.<span style="mso-spacerun: yes">&nbsp;&nbsp; </span>Now that consumers belt-tightened, Big Oil is left with growing inventories and lowered profit margins.<span style="mso-spacerun: yes">&nbsp; </span>Regardless of how much OPEC cuts production, today s global slowdown should continue to cut consumption.<span style="mso-spacerun: yes">&nbsp; </span> Right now, fundamental prices would probably be in the range of between $90 and $100, suggesting prices could go even lower before they aroused concern, said Iraqi Oil Minister Hussain al-Shahristani, believing that the world is currently oversupplied.<span style="mso-spacerun: yes">&nbsp; </span>What OPEC doesn t get is that cutting production will exacerbate a global economic slowdown, further eroding the price of oil.<span style="mso-spacerun: yes">&nbsp; </span>Instead of teaming up Big Oil, OPEC should do its part to accelerate growth in the industrial and developing worlds.<span style="mso-spacerun: yes">&nbsp; </span> More price-gouging and market manipulation only make the situation worse.</p> <p><b><u>About the Author</u></b><br> </p> <p><b>John M. Curtis </b>writes politically neutral commentary analyzing spin in national and global news. He&#x2019;s editor of OnlineColumnist.com and author of <a href="books.html">Dodging The Bullet</a> and <a href="books.html">Operation Charisma</a>.<br> </p> <p></p> </td> <td width="1" height="2576" rowspan="2"></td> <td width="1" height="2"><spacer type="block" width="1" height="2"></td> </tr> <tr height="2574"> <td width="133" height="2574" valign="top" align="left" xpos="0"><img height="172" width="111" src="images/johninframe3.jpg"></td> <td width="1" height="2574"><spacer type="block" width="1" height="2574"></td> </tr> <tr height="1" cntrlrow> <td width="133" height="1"><spacer type="block" width="133" height="1"></td> <td width="7" height="1"><spacer type="block" width="7" height="1"></td> <td width="182" height="1"><spacer type="block" width="182" height="1"></td> <td width="300" height="1"><spacer type="block" width="300" height="1"></td> <td width="1" height="1"><spacer type="block" width="1" height="1"></td> <td width="1" height="1"></td> </tr> </table> <table border="0" cellpadding="0" cellspacing="2" width="597"> <tr> <td><font size="1" face="Arial,Geneva,Helvetica"> <hr noshade size="1"> </font><a href="index.html"><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular" size="2"><strong>Home</strong></font></a><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular" size="2"><strong> || <a href="articlesindex.html">Articles</a> || <a href="books.html">Books</a> || <a href="teflon.html">The Teflon Report</a> || <a href="mailto:letters@onlinecolumnist.com">Reactions</a> || <a href="aboutdiscobolos.html">About Discobolos</a></strong></font> <div align="left"> <p><font size="1" face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular">This site designed, developed and hosted by the experts at</font><font size="2" face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular"> <a href="http://www.cmeonline.net" target="_blank"><img height="30" width="138" src="images/cmelogoANIM.gif" border="0" align="absmiddle"></a></font></p> </div> <p><font size="2" face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular">&copy;1999-2005 <a href="aboutdiscobolos.html">Discobolos Consulting Services, Inc.</a><br> (310) 204-8300<br> All Rights Reserved. </font></td> </tr> </table> </center> </body> </html>