OxBowBusiness

Oil Prices Again

I am now despairing as much over oil prices as I am over Tony Blair's Cabinet colleagues.

The latest pile of poo comes from the normally excellent and reliable Knowledge@Wharton.

Read this lengthy document and see whether you agree or disagree with what has become conventional wisdom now.

China is the big bogey man now and I believe that China has sorted out its oil requirements to have little or no real effect on oil prices as they affect the rest of us.

Real oil prices are way below 1980s levels so there is scope for even more adjustment there.

I know Kuwait, for example, is working on expanding its long term output by almost 65%. Other oil producers are producing more and more, the Azerbaijan-Turkey pipeline is slowly coming on stream.

The real problem is the Oxbridge conspiracy theory types in the markets who catch cold every time world politics sneeze. The oil price should be taken away from these people.

A fact to get you stirring: a barrel of oil costs $2.25 to produce in Saudi Arabia (more in other countries, less in yet others). The market price is around $74 at the moment.

Can anyone honestly tell me that such a massive differential reflects the above concerns and those wittered on about in the Knowledge@Wharton article? Thought not!


Duncan Williamson

posted by Duncan Williamson @ 4:07 AM