Getting Away With It in 2008: The Year That Was

All things change,” the Greek philosopher Heraclitus supposedly wrote over 2,500 years ago – but nothing like they did in 2008!

As 2008 comes to a close, almost nothing has turned out as was expected at the beginning of the year – whether we consider oil prices, the war in Iraq, political corruption or the collapse of the U.S. financial system.

By Victor Davis Hanson
The Washington Times

– OIL: For much of the year, the price of oil skyrocketed; by July, it had reached $147 a barrel. Petroleum prophets warned us that it would soon top $200 – and that we should brace for a future of permanently scarce energy. Geo-strategists added that cash-flush petrol states like Iran, Russia and Venezuela would cause global mischief for decades to come.

Then oil crashed with the stock market in September. Even the infamous cartel tactics of the Organization of Petroleum Exporting Countries haven’t restored energy prices. The money we’re saving could translate into a nearly half-trillion-dollar annual stimulus package for the U.S. economy – and the near-bankruptcy of Mahmoud Ahmadinejad, Hugo Chavez and Vladimir Putin.

So, the year ends with politicians contemplating new energy taxes – and how to raise free-falling gas prices enough to encourage alternate fuels in a world currently flush with excess cheap oil.

– Iraq: 2008 opened with presidential candidates blaming each other over Iraq, declaring that the surge had not brought more stability, and accepting the recommendations of a staged withdrawal offered by the Iraq Study Group.

Yet we ended the year with applause for Gen. David Petraeus – and an admission that his surge and a change in tactics have brought increased security to Iraq. As of this writing, five American soldiers so far have been killed this month in Iraq; more Americans are often murdered in a single day on the streets of major American cities.

– Politics: The Democrats promised an end to the “culture of corruption” of congressional Republicans. Then human nature in 2008 proved more reliable than promises of reform politics.

So we ended the year with a surge of Democratic malfeasance that easily matched the former Republican Congress. Crusading New York Gov. Eliot Spitzer resigned in disgrace after disclosure of his junkets with a prostitute. “Hot Rod” Blagojevich, governor of Illinois, was caught on a wire discussing how to sell Barack Obama’s Senate seat to the highest bidder.

Then there’s Rep. Charles Rangel of New York, the chairman of the House Ways and Means Committee. The sheer range of his alleged transgressions is shocking….

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http://www.washingtontimes.com/news/2008/
dec/28/the-that-was-then-year/

Brits Prepare for Oil Price Rise Following OPEC Action

Oil prices could jump again as the world economy recovers from the downturn, Gordon Brown has warned.

By James Kirkup, Political Correspondent
The Telegraph (UK)

The Prime Minister was hosting a summit of energy ministers from the OPEC cartel of oil-producing states in London.

The meeting was called when oil prices were hitting record highs above $140 a barrel during the summer, pushing petrol prices over £1 per litre.

 
A driver leaves a petrol station in Manila. Oil has continued to trade at four-year lows, falling below US$40, despite OPEC’s pledge of a record output cut as the IMF called for moves to boost the slowing global economy.(AFP/File/Romeo Gacad)

Now oil has fallen below $40 a barrel as a global slowdown cuts demand.

Mr Brown said that the collapse in oil revenues among oil-producers could ultimately lead to another price spike when economic growth resumes.

He said that if OPEC nations cut back their investment in oil production, demand will eventually come to exceed supply again, forcing prices up.

Britain wants “a new partnership between oil-producing and oil-consuming countries,” Mr Brown said,

Without greater stability and predictability in oil prices, consumers will inevitably be hit by more fluctuations in the future.

“Wild fluctuations in market prices harm nations all round the world,” Mr Brown told the meeting. “They damage consumers and producers alike.”

He added: “The risk now is that investment in oil and other energy sources will once again stagnate, supply capacity will begin to tighten just as demand responds to improving economic conditions.”

Mr Brown has previously offered oil-rich countries the chance to invest in alternative energy production in Britain and other Western economies, including wind, wave and nuclear power.

Read the rest:
http://www.telegraph.co.uk/finance/financetopics/oilprices/3849
668/Gordon-Brown-warns-of-oil-price-rise-amid-
economic-downturn.html

OPEC Cuts Production 2.2 Million Barrels Per Day

OPEC says it is cutting 2.2 million barrels a day from its output — the largest ever at one time — to stem crude prices that have plummeted over 70 percent from summer highs of nearly $150.

An OPEC statement says its latest announcements means it is taking 4.2 million barrels a day off the market compared to September levels. The 4.2 million figure includes more than 500,000 barrels of overproduction OPEC said in September it would eliminate and a formal cut of 1.5 million barrels a day that it agreed on last month.

That amounts to a new reduction of 2.2 million barrels announced Wednesday.

In practice, “it’s 2.2” said OPEC President Chakib Khelil.

Members among the 13-nation organization were officially producing a daily 29.045 million barrels in September.

–Associated Press

Wednesday: OPEC Likely to OK 2 Million-Barrel Oil Cut; Your Price Will Go Up

OPEC oil ministers say they will likely approve a cut of 2 million barrels a day from their output as of early next year. And major non-OPEC producers will likely take hundreds of thousands more barrels off the market.

Saudi Arabia and other major OPEC producers are saying ahead of their meeting Wednesday that a cut of that magnitude is in the offing, as early as January.

Additionally, Russian media are quoting Deputy Premier Igor Sechin as saying Moscow is ready to take 300,000 barrels off the market. And the oil minister of Azerbaijan tells The Associated Press that his country is willing to cut back by the same amount.

A 2-million barrel cut would be the largest single reduction ever by OPEC.

–Associated Press

 
The Molikpaq offshore oil platform off Sakhalin island in far eastern Russia. OPEC is set to announce a significant cut in oil output as the cartel seeks to support plummeting crude prices and producers’ incomes, while non-OPEC oil exporter Russia may also slice production.(AFP/File/Ursula Hyzy)

OPEC Could Make Biggest Production Cut Ever This Week To Raise Prices

OPEC ministers could make their deepest oil supply cut ever when they meet on Wednesday to combat shrinking demand, bulging stocks and a $100 collapse in prices.

By Barbara Lewis and William Maclean
Reuters

For many in the Organization of the Petroleum Exporting Countries, up to 2 million barrels per day (bpd) must be removed to keep up with a slump in consumption that has knocked two-thirds off prices since July.

“We have to act — we see a very sizeable reduction,” OPEC Secretary-General Abdullah al-Badri told reporters on his arrival on Monday in this western Algerian city.

OPEC President Chakib Khelil agreed.

“Everybody is supporting a cut — I don’t have any doubt about it.”

 
Oil rigs extract petroleum in the Los Angeles area community of Culver City, California. World oil prices have rebounded on expectations that crude exporters’ cartel OPEC will cut production at a key meeting in Algeria this week, dealers said.(AFP/Getty Images/File/David McNew)

Benchmark U.S. crude rose more than $2 a barrel toward $49 in early trade — still far from the “fair” price of $75 a barrel identified by Saudi Arabia, the world’s biggest crude exporter, at the end of November.

After slashing a combined two million barrels daily, 7.3 percent of its output at two previous meetings, OPEC was on course to chop at least another five percent off a world market that burns 86 million barrels of oil each day.

Saudi Arabia, had yet to make public comment on its position, but OPEC chief Khelil said Riyadh had already cut back in anticipation of further supply curbs.

Read the rest:
http://biz.yahoo.com/rb/081215/business_us_opec.html?.v=1

Russia to Attend OPEC Summit

The head of OPEC says Russia and three other non-cartel members will take part in the oil producers’ summit next week in Oran, Algeria.

Chakib Khelil says Russia will send its deputy prime minister in charge of energy and its oil minister to Wednesday’s summit. The other guest countries invited by the 14-member cartel are Oman, Azerbaijan and Syria.

Khelil asserts that a final consensus has been reached by the Organization of Petroleum Exporting Countries to reduce oil output levels.

The OPEC head, who is also Algeria’s oil minister, spoke Saturday.

Associated Press

Oil Prices Soar as Russia Announces Output Cut

Crude oil prices jumped more than 10 percent Thursday after Russia said it was ready to join forces with OPEC and cut output.

Traders shrugged off a forecast of the first decline in oil demand in 25 years, instead anticipating joint efforts by the Organization of the Petroleum Exporting Countries and Russia to slash production in an effort to bolster prices.

 
Oil rigs extract petroleum in the Los Angeles area community of Culver City, California. Crude oil prices jumped more than 10 percent Thursday after Russia said it was ready to join forces with OPEC and cut output.(AFP/Getty Images/File/David McNew)

Light sweet crude for delivery in January closed at 47.98 dollars a barrel on the New York Mercantile Exchange, a gain of 4.46 dollars, or 10.25 percent, from Wednesday’s close.

In London, Brent North Sea crude for January jumped 4.99 dollars, or 11.77 percent, to settle at 47.39 dollars a barrel on the InterContinental Exchange.

AFP

After the benchmark New York contract closed Friday at a four-year low of 40.50 dollars, the market has increasingly focus on next week’s OPEC meeting in Oran, Algeria.

Russia is ready to join forces with OPEC to stem the plunge in crude prices and could even become part of the oil cartel if membership were in Moscow’s interests, Russia President Dmitry Medvedev said Thursday.

“Our partners, colleagues from the oil club (OPEC) are asking us to have a coordinated policy and whoever I meet, they are asking quite actively,” he said in remarks broadcast on state television.

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http://news.yahoo.com/s/afp/20081211/bs_afp
/commoditiesenergyoilprice_081211214936

Russia Will Join OPEC’s Plan to Cut Output

Faced with falling oil prices, Russia is preparing to announce that it will work with OPEC in coordinating a reduction in output, the minister of energy said Wednesday.

Earlier this fall, a Russian official floated the idea of storing oil, rather than exporting it, to help the Organization of the Petroleum Exporting Countries stabilize prices, but this is the first time that the Kremlin has offered to reduce output.

By Andrew Kramer
The New York Times 

Workers weld a first juncture of the Eastern Siberia-Pacific Ocean pipeline in Siberia’s Tynda-Skovorodino region, eastern Russia, October 2006. Russia said Wednesday it would announce proposals to reduce its oil output by December 17, signalling the energy superpower’s readiness to cooperate with OPEC to prop up falling crude prices.(AFP/File/Str)

World oil prices, which have been slumping around $40 a barrel, rose in response to the comments by the minister of energy, Sergei I. Shmatko, in early trading in New York Friday. Oil settled at $43.10 a barrel, up $1.03.

Mr. Shmatko said that by Dec. 17, the date of the next scheduled OPEC meeting, Russia will announce a plan to reduce the country’s oil production, the Interfax news agency reported. The minister offered no details of how this would be done, or how much oil might be taken off the market. Mr. Shmatko said Russia would also seek to persuade other non-OPEC producers to reduce output. A spokeswoman for the ministry declined to elaborate.

While formally at arms length, Russia and OPEC have flirted over some form of cooperation through the fall.

It is development sure to alarm consumers, who where just breathing a sigh of relief as American gasoline prices dipped below $2 a gallon. It is unclear, however, how much effect Russia’s increasingly anti-Western government might have on prices.

The Russian oil sector is a blend state-owned and private companies including a major joint venture with BP, the British oil giant, that would have to answer to stockholders for a reduction in revenue caused by a drop in output. Producing and transporting oil is costly in Russia and idling pipelines and fields could severely damage the industry.

Typically in oil price slumps, Russia and the Soviet Union before it has continued to pump oil freely, benefiting from the support for world oil prices provided by OPEC’s members, while not sharing in the financial loss of cutbacks. Norway and Mexico also benefit from OPEC while not belonging to it.

Other non-OPEC countries, meanwhile, have rejected any cooperation with OPEC. A spokesman for the ministry of petroleum and energy in Norway, the world’s fifth-largest oil exporter, said Wednesday that his country would not cooperate with the cartel, regardless of Russia’s decision, Bloomberg news reported.

In this fall’s steep drop off in oil prices, Saudi Arabia had been pressuring non-OPEC countries, particularly Russia, to cooperate. Russia pumps about 9.8 million barrels of oil a day, the second-greatest output in the world after the Saudis, and exports about seven million barrels of crude oil and refined products, mostly to Europe.

Read the rest:
http://www.nytimes.com/2008/12/11/business/worldbu
siness/11oil.html?_r=1&scp=1&sq=opec,%20russia&st=cse

Global demand for oil to plummet

Global oil demand will collapse next year and commodities will not return to the highs they reached this summer in the foreseeable future, two authoritative reports said on Tuesday as they forecast a long and painful worldwide recession.

The stark conclusions came as the World Bank’s chief economist predicted that the world faced “the worst recession since the Great Depression”.

By Javier Blas in London and Krishna Guha
FT

 
A view of an oil refinery off the coast of Singapore.(Vivek Prakash/Reuters)

The US energy department said global oil demand will fall this year and next, marking the first two consecutive years’ decline in 30 years.

“The increasing likelihood of a prolonged global economic downturn continues to dominate market perceptions, putting downward pressure on oil prices,” it said, forecasting that demand would drop 50,000 barrels a day this year and a hefty 450,000 b/d in 2009. US oil demand will drop next year to the lowest level in 11 years.

Meanwhile, the World Bank’s Global Economic Prospects report said the commodities boom of the past five years – which drove up prices 130 per cent – had “come to an end”.

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http://www.ft.com/cms/s/0/bcda848c-c62a-11
dd-a741-000077b07658.html

Iran: Nuclear? Rich With Oil? A Threat? Some Dubious Ideas Linger….

The incoming Barack Obama administration has already been inundated with reports, policy recommendations and position papers vying for the president-elect’s attention on the Iran nuclear issue. Although nicely wrapped in the semantics of a “fresh” or “game-changing” approach, the majority are familiar and lack novelty, and this should come as no surprise as many were penned by old US foreign policy hands like Dennis Ross and Martin Indyk.

As a result, even when they seem to be suggesting a reasonable “new thinking” in the US’s Iran policy, wedded to the idea of “engagement” and or “dialogue without preconditions”, these noble efforts are, however, undermined by their reliance on dubious assumptions. Not to mention their restrictive methodologies, which ultimately veer them back towards the same old plans for “coercive diplomacy”.

By Kaveh L Afrasiabi 
Asia Times 

There are also the limits to the “dialogue without preconditions” logic put forth by, among others, the president of Council on Foreign Relations, Richard Haass, in a new collaborative report with Indyk published by the Brookings Institution. Although positive in many respects and apparently earning the disapproval of Israel, the Haass-Indyk call for engaging Iran in dialogue without preconditions falls short of what is really necessary and lacking in Washington today, that is, dialogue without false assumptions.

One such false assumption that has been adopted like an article of faith by nearly all the pundits and nuclear experts in the US today, is that Iran is fast approaching a “nuclear breakout capability” – in light of Iran’s double process of mastering the nuclear fuel cycle and advancing its missile technology. This has warranted the word “crisis”, to quote US Senator Jon Kyl. [1] Not to be outdone by politicians, a number of nuclear experts, such as David Albright, have echoed the sentiment.

Read the rest:
http://atimes.com/atimes/Middle_East/JL06Ak01
.html
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Ahmadinejad, Iran Worry Oil’s Price Shrinks Thier Importance

Iran’s President Mahmoud Ahmadinejad has for the first time admitted that the fall in world oil prices will affect the economic projects of his government, local media reported on Thursday.

“If we fix the oil price at 30 dollars a barrel in the budget, we will have to abandon much of our economic projects … We have to set it at 30 to 35 dollars as we don’t determine the oil price on international markets,” he said.

He acknowledged that “oil prices will be low for some time” because of the global recession.

Iran, which is OPEC’s second largest producer, has an official oil output of 4.2 million barrels a day, with half of the country’s budget dependent on its crude exports.

 
Iranian President Mahmoud Ahmadinejad (left) Foreign Minister Manouchehr Mottaki in Tehran on December 1, 2008. Ahmadinejad has for the first time admitted that the fall in world oil prices will affect the economic projects of his government, local media reported.(AFP/File/Atta Kenare)

Ahmadinejad boasted only last month that his government could run the country “with a barrel of oil priced at between eight and five dollars.”

“Even if we reach the point where the enemies do not buy our oil any more, we can manage the country. Thanks God, fluctuations in oil prices will have no effect on the next budget,” he said.

From:  AFP

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http://news.yahoo.com/s/afp/20081204/wl_midea
st_afp/iranpoliticseconomy_081204163303