We need solar powered airplanes!

[F9 Driver]

Nuke em all & drill through the glass! (just kidding George - take your finger off the button)

http://www.reuters.com/financeNewsArticle.jhtml?type=businessNews&storyID=7475595

OPEC Approves of $50 Oil, Holds Output
Sun Jan 30, 2005 08:01 AM ET
By Peg Mackey and Francois Murphy


VIENNA (Reuters) - OPEC producers agreed Sunday to keep output limits on hold, convinced that oil prices near $50 a barrel are not stifling world growth.

The Organization of the Petroleum Exporting Countries took little time to settle on no change in supply quotas, despite worries among consumer nations about inflated fuel costs.

Gone are the concerns that dominated in OPEC last year about the impact of rising crude prices on the economic growth that drives demand for its oil.

With inflation among the world's big economic powers in check and low interest rates still generating above trend growth, cartel ministers see no reason for cheaper oil.

"I am comfortable with the market between $45 and $55," said Edmund Daukoru, Nigeria's Presidential Adviser on energy. "Between $45-$55 (for U.S. crude) has not affected global economic growth."

"We think the high price will not affect the global economy. There won't be a strong negative for the economy," said Kuwait's OPEC President Sheikh Ahmad al-Fahd al-Sabah.

OPEC now appears ready to defend oil prices at a floor of about $40 a barrel for U.S. crude, or $30-$35 for a reference basket of cartel crudes.

Ministers agreed to suspend the old $22-$28 range for the basket, set in March 2000, but are in no hurry to set a new target, saying prices are too volatile.

"We have to wait until the second quarter of this year to know exactly where the price indicator will head," said Sheikh Ahmad. "But I believe that $35 is a suitable price as an average price for the OPEC basket of crudes."

"Somewhere between $30-$40," said Iranian Oil Minister Bijan Zanganeh.

Economists agree there is little sign yet of an energy price shock, partly because the U.S. dollar's decline on currency markets has protected non-dollar importers from the rise in dollar-denominated oil prices.

"Yes, oil prices are high but the U.S. economy hasn't skipped a beat and the weaker dollar has insulated many growing economies from a shock," said Yasser Elguindi, analyst for Medley Global Advisers.

"High oil prices are not hurting demand because the value of the dollar allows emerging economies to afford higher prices."

Several in the 11-member group, including Saudi Arabia, said they can detect no significant slowdown in world growth. They point to forecasts that oil demand in energy-hungry China will rise strongly again this year.

Ministers, meeting next in Isfahan, Iran on March 16, may yet decide to shave production to contain a seasonal quarter stockbuild.

At Friday's U.S. close of $47.15 a barrel, oil prices were too high to justify arranging cuts now for implementation at the start of April, when seasonal demand ebbs.

"Now is not the time to cut," said Zanganeh.

But some in OPEC worry the mid-March meet comes a little late for comfort to adjust supply. Middle East exports take six weeks to reach Western markets. Should inventories build too quickly and prices fall, said group president Sheikh Ahmad, he would intervene and call a ministerial teleconference to take action.

 

[AQ PILOT]

I like your intro statement the best...but why stop him?

 

[F9 Driver]

'Cause Halliburton (sp?) isn't ready yet

 

[crashpad]

"Somewhere between $30-$40," said Iranian Oil Minister Bijan Zanganeh.

"Now is not the time to cut," said Zanganeh.

I kinda like this guy, he's the only one on our side.

 

[N8Dogg]

$50 a barrel? I wonder how management will make up the difference? Get ready to have your pockets picked AGAIN!

 

[lowecur]

Oil between $40-$50 per barrel

CASM needs to be around 8 to weather the musical chair airline crisis. Carriers are content to let oil costs quickly shake out the industry in the next 12 months. Those who hesitate to get their costs in line in the next few months will pay a dear price, as even with the loss of a legacy or an LCC, some of those who are left will be holding on by a thread as it will take years to see stabilization.

This article shows the cost to produce a barrel of crude is still cheap, and the author intimates that the tar sands in Canada could find themselves at the predatory mercy of OPEC if they arbitrarily wanted them out of business. He then retreats and says the global expansion of the world economy will probably not allow that to happen, as there will be plenty of profits for all.

ENERGY ECONOMICS​

[font=Garamond, Times]Oil, Oil Everywhere . . .[/font]
[font=Verdana, Times]Why is it expensive? Because it's so cheap.[/font]

[font=Verdana, Times]BY PETER HUBER AND MARK MILLS[/font]
[font=Verdana, Times]Sunday, January 30, 2005 12:01 a.m.[/font]

[font=Verdana, Times]The price of oil remains high only because the cost of oil remains so low. We remain dependent on oil from the Mideast not because the planet is running out of buried hydrocarbons, but because extracting oil from the deserts of the Persian Gulf is so easy and cheap that it's risky to invest capital to extract somewhat more stubborn oil from far larger deposits in Alberta.


The market price of oil is indeed hovering up around $50 a barrel on the spot market. But getting oil to the surface currently costs under $5 a barrel in Saudi Arabia, with the global average cost certainly under $15. And with technology already well in hand, the cost of sucking oil out of the planet we occupy simply will not rise above roughly $30 a barrel for the next 100 years at least.

The cost of oil comes down to the cost of finding, and then lifting or extracting. First, you have to decide where to dig. Exploration costs currently run under $3 per barrel in much of the Mideast, and below $7 for oil hidden deep under the ocean. But these costs have been falling, not rising, because imaging technology that lets geologists peer through miles of water and rock improves faster than supplies recede. Many lower-grade deposits require no new looking at all.

To pick just one example among many, finding costs are essentially zero for the 3.5 trillion barrels of oil that soak the clay in the Orinoco basin in Venezuela, and the Athabasca tar sands in Alberta, Canada. Yes, that's trillion--over a century's worth of global supply, at the current 30-billion-barrel-a-year rate of consumption.

Then you have to get the oil out of the sand--or the sand out of the oil. In the Mideast, current lifting costs run $1 to $2.50 per barrel at the very most; lifting costs in Iraq probably run closer to 50 cents, though OPEC strains not to publicize any such embarrassingly low numbers. For the most expensive offshore platforms in the North Sea, lifting costs (capital investment plus operating costs) currently run comfortably south of $15 per barrel. Tar sands, by contrast, are simply strip mined, like Western coal, and that's very cheap--but then you spend another $10, or maybe $15, separating the oil from the dirt. To do that, oil or gas extracted from the site itself is burned to heat water, which is then used to "crack" the bitumen from the clay; the bitumen is then chemically split to produce lighter petroleum.

In sum, it costs under $5 a barrel to pump oil out from under the sand in Iraq, and about $15 to melt it out of the sand in Alberta. So why don't we just learn to love hockey and shop Canadian? Conventional Canadian wells already supply us with more oil than Saudi Arabia, and the Canadian tar is now delivering, too. The $5 billion (U.S.) Athabasca Oil Sands Project that Shell and ChevronTexaco opened in Alberta last year is now pumping 155,000 barrels per day. And to our south, Venezuela's Orinoco Belt yields 500,000 barrels daily.

But here's the catch: By simply opening up its spigots for a few years, Saudi Arabia could, in short order, force a complete write-off of the huge capital investments in Athabasca and Orinoco. Investing billions in tar-sand refineries is risky not because getting oil out of Alberta is especially difficult or expensive, but because getting oil out of Arabia is so easy and cheap. Oil prices gyrate and occasionally spike--both up and down--not because oil is scarce, but because it's so abundant in places where good government is scarce. Investing $5 billion over five years to build a new tar-sand refinery in Alberta is indeed risky when a second cousin of Osama bin Laden can knock $20 off the price of oil with an idle wave of his hand on any given day in Riyadh.


The one consolation is that Arabia faces a quandary of its own. Once the offshore platform has been deployed in the North Sea, once the humongous crock pot is up and cooking in Alberta, its cost is sunk. The original investors may never recover their capital, but after it has been written off, somebody can go ahead and produce oil very profitably going forward. And capital costs are going to keep falling, because the cost of a tar-sand refinery depends on technology, and technology costs always fall. Bacteria, for example, have already been successfully bioengineered to crack heavy oil molecules to help clean up oil spills, and to mine low-grade copper; bugs could likewise end up trampling out the vintage where the Albertan oil is stored.

In the short term anything remains possible. Demand for oil grows daily in China and India, where good government is finally taking root, while much of the earth's most accessible oil lies under land controlled by feudal theocracies, kleptocrats, and fanatics. Day by day, just as it should, the market attempts to incorporate these two antithetical realities into the spot price of crude. But to suppose that those prices foreshadow the exhaustion of the planet itself is silly.

The cost of extracting oil from the earth has not gone up over the past century, it has held remarkably steady. Going forward, over the longer term, it may rise very gradually, but certainly not fast. The earth is far bigger than people think, the untapped deposits are huge, and the technologies for separating oil from planet keep getting better. U.S. oil policy should be to promote new capital investment in the United States, Canada, and other oil-producing countries that are politically stable, and promote stable government in those that aren't. Messrs. Huber and Mills are co-authors of "The Bottomless Well: The Twilight of Fuel, the Virtue of Waste, and Why We Will Never Run Out of Energy," just out from Basic Books. [/font]

 

[F9 Driver]

And the rich get richer...

And ya wonder why "W" isn't upset about what high oil prices are doing to the economy...He's too busy trying to figure out how to spend the profits!

http://www.reuters.com/financeNewsArticle.jhtml?type=businessNews&storyID=7484737

Prices Drive Record Exxon Mobil Profit
Mon Jan 31, 2005 08:33 AM ET
NEW YORK (Reuters) - Exxon Mobil Corp. (XOM.N: Quote, Profile, Research) , the world's largest publicly traded oil company, on Monday reported the highest quarterly profit in its history, driven by lofty crude oil and natural gas prices.


Net income in the fourth quarter rose to $8.42 billion, or $1.30 a share, from $6.65 billion, or $1.01 a share, a year earlier.

Analysts' average earnings forecast was $1.05 a share, according to Reuters Estimates.

Revenues shot up to $83.36 billion from $65.95 billion a year earlier.

Surging demand from growing Asian giants India and China, coupled with fears of a disruption in supplies from regions like Russia, Iraq and Nigeria, sent oil prices soaring to record levels in the quarter. Crude prices topped $55 a barrel in late October.
var year = new Date() document.write('© Reuters ' + year.getFullYear() + ". All Rights Reserved." ); © Reuters 2005. All Rights Reserved.

 

[General Lee]

At least they didn't CUT production. They just didn't raise production.


Bye Bye--General Lee

 

[embraerjetpilot]

Thank you Mr. Bush

Sucks to have a weenie in the WHite house who wont stand up for his own people.

 

[sstearns2]

Let's see here,

From the British Petroleum website -

Proven world wide oil reserves - 1,146,000,000,000 barrels

Daily world oil consumption - 79,112,000 barrels

So that shows that we burn thru the proven oil reserves in just under 40 years at current consumption.

There is certainly more oil in the earth than we have proven, but consumption also increases by 2-3 percent per year.

There is currently no replacement for oil in sight. Nothing even comes close to meeting our appetite for energy and petroleum byproducts (paint, plastic, solvents, makeup, etc). I think this is the most serious problem facing the industrialized world, but virtually no one seems to care.

Scott

 

[FDJ2]

Associated Press
Airlines Ascend on Upgrades, Oil Prices
Monday January 31, 2:48 pm ET

Airline Shares Higher After Analyst Upgrades; Crude Oil Declines on OPEC Decision


NEW YORK (AP) -- Airline shares traded mostly higher in Monday trading, lifted by sinking crude oil prices and positive investment rating changes on four stocks by analysts at Merrill Lynch.

Analyst Michael Linenberg upgraded America West Holdings Corp. and Continental Airlines Inc. to "Buy" from "Neutral," and raised Delta Air Lines Inc. and AirTran Holdings Inc. to "Neutral" from "Sell," saying those stocks have declined 25 percent to 30 percent so far this year, creating a buying opportunity for investors.

[size=-2]ADVERTISEMENT[/size]
Delta shares led the rally, rising 34 cents, or 6.8 percent, to $5.37. America West shares gained 24 cents, or 5.1 percent, to $4.98, AirTran rose 39 cents, or 4.8 percent, to $8.56 and Continental added 26 cents, or 2.6 percent, to $10.44.

"Our rating upgrades should not be construed as us having a more positive view on industry fundamentals," Linenberg wrote in a research note. "Rather we think the recent sell-off has created a buying opportunity for some of the names, especially airlines that could benefit from catalysts outside of lower fuel prices and further contraction of U.S. Airways."

Linenberg said he views as positive moves by America West to scale back capacity and limit its transcontinental service because of poor yields, adding that he believes the company's revenue bottomed out in the third quarter last year.

He also noted that Continental is losing the least amount of money among the major carriers, and has an increasingly probable chance of landing $500 million in needed wage concessions over the next several months.

"Moreover, as low-cost carriers continue to put pressure on domestic yields, Continental leads its major counterparts in seeking out promising international markets," he wrote.

Meanwhile, low-cost carrier AirTran, which was profitable last year and is expected to post a surplus in 2005, has dropped about 60 percent from a recent November high, as Delta lingers near levels when investors expected an imminent bankruptcy.

"In our view, for the time being, bankruptcy is no longer a concern," Linenberg wrote. "Also, even if Delta's new fare structure falls short of plan, the revenue impact could be somewhat mitigated by the approach of the seasonally stronger spring and summer period."

The American Stock Exchange Airline Index, which has fallen more than 20 percent since the start of 2005, increased 1.1 points, or 2.3 percent, to 48.14 points.

On the New York Mercantile Exchange, crude oil fell 33 cents to $46.85 per barrel following an OPEC decision to hold production at current levels.