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Shell CEO says record oil not due to shortage »

Posted by: engineer 3 months, 2 weeks ago

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Oil prices at a record high above $135 a barrel are rising due to market sentiment rather than a shortage of supply, Royal Dutch Shell's chief executive said on Thursday.

Read Full Story at uk.reuters.com

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Comments So Far: 46

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engineer3 months, 2 weeks ago

"What we say and what we see is there are no physical shortages," Shell's Jeroen van der Veer told Reuters television. He runs the world's second-largest fully publicly traded oil firm by market value.
"There are no tankers waiting in the Middle East, there are no cars waiting at gasoline stations because they are out of stock. This has to do with psychology in the markets and you cannot forecast psychology".
His view that there are no shortages chimes with that of other oil producers, such as members of the Organization of the Petroleum Exporting Countries. Others, such as the U.S. government, say supply is tight.
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  Beau78903 months, 2 weeks ago
  
  So much for the idea that it has to do with an amazing rise in demand from China and India.
  Interesting that van der Veer didn't mention what's causing the rise in the price of gasoline to outpace that of crude oil...
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  mivan43 months, 1 week ago
  
  What we need to do (read the entire post before negging) is ration oil products to all rich and poor. The rich now being affected will do something about it. Rationing would be done on a personal basis based on the ave consumer use. Doesn't matter how much money you have you only get the same amount as the next guy. Corporations are somewhat exempt, but if you are caught using company fuel for any private business mandatory Jail time for you. Just watch how fast the Rich who control this come up with a viable alternative! Gas used in rentals go against you and so does non business air, boat and bus travel with each travel supplier charging a customer a divided by fuel usage charge against the customers allocation. THIS is ONLY a rough draft a final draft would have to take some other items into account, YES I know this would hurt some businesses, but the net negative could be controlled through legislation
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    mivan43 months, 1 week ago
    
    Note, speculators driving up the price would also have the same problem and now would divert their cash to developing a solution and this redirection of cash and effort would take allot of speculation money out of oil; driving oil down
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  mesodude3 months, 1 week ago
  
  The moral of this story is that a lack of transparency in pricing will always be used to screw us the consumer. This is why people who insist that all we need to do is drill til the cows come home are either living in a fantasy world or working for the oil companies. If we allow Big Oil to drill more, they will come up with ever more creative reasons why they have to charge us extortionist prices. Don't trust oil shills.
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  mark-stevens3 months, 1 week ago
  
  The world is consuming 87 million barrels a day, the world is producing 85 million barrels a day!
  All those SUV's... and now the chickens home come to roost
  T Boone Pickens, an oil billionaire, says eveything we've been told is a lie.
  T Boone is now investing into wind turbines. He is starting his own electric company. Enough power for 1.2 million homes to start.
  85 million barrels a day... how many dinosaurs were there?
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texangelwings3 months, 2 weeks ago

Interesting, I guess that CEO of Shell should know what he is talking about!
I know one thing for sure, without good paying jobs, most people will be unable to afford to keep paying more money for gasoline and all derivatives of oil.
Thanks engineer!

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ML2007Comment removed: User banned.18 Replies
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  engineer3 months, 2 weeks ago
  
  The government will after January 2009 when the oil men are out
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  jimdoze3 months, 2 weeks ago
  
  I see. You would have the U.S. Government step in and control the price of a worldwide commodity?
  That shows how thoroughly misunderstood these matters are.
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    engineer3 months, 2 weeks ago
    
    Yes! Unfortunately Laissez Faire does not work here because of abuse. Laws and rules are put in when abuse is present. This is why insurance, banks and other industries have been regulated. Big oil is doing the same thing. Maybe you should understand.
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      jimdoze3 months, 2 weeks ago
      
      Many here think the U.S. is a bully now. Can you imagine what the world would think if the U.S. took it upon itself to set oil prices... Whooooaaaa!!!!
      Besides, the U.S. couldn't do that if it tried... and neither can the international oil companies. Many of the international oil companies buy on the spot market and/or directly from foreign suppliers as well as produce some of their own. The oil and gas companies that are really raking in the relative windfalls are the smaller, independent U.S. producers.
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    donald513 months, 1 week ago
    
    Jim, why are the Chinese paying less for gas than us - refutes your argument. What a fool to expand our control worldwide - haven't you neocons learned this hasn't worked in Iraq or even Afghanistan. Was the King of Saudi Arabia a liar to Dimya last week too?
    What part of Dumya's deregulation and dropping of collateral requirements to back wall street buys don't you get?
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  not2needy3 months, 2 weeks ago
  
  Yeah ML, you are so right about that. Fact is, the oil companies are making hay while the sun shines. When the oil pres/vp are gone, there WILL be something done about this mess, and they know it...SO they are making record profits while they can.
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    tiredofwhiners3 months, 1 week ago
    
    Good analysis of corporate existence. Oil companies are supposed to make $$ when they can, and they do reinvest a lot of it back into exploration and development. The real money maker is state and federal taxes and they don't do anything or risk anything for it. Is it 8 cents per gallon that big oil makes? and much more (16 cents average?)for taxing entities. Of course the biggest money maker of all are the OPEC countries who make HUGE profits on their oil.
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      AnteUp3 months, 1 week ago
      
      tiredofwhiners ~
      If all you say is true? Reinvesting in R & D, and all that.
      Then WHY have their PROFITS been breaking established
      records - not in the amount, NO - in the percentage of profit?
      All while the majority of American's earnings AND savings
      have declined.
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      mesodude3 months, 1 week ago
      
      "Oil companies are supposed to make $$ when they can, and they do reinvest a lot of it back into exploration and development."
      --They invest a lot of it back into ways of getting more oil so they can turn more of a profit. You seem to be troubled by state and federal taxes but why do you suppose the GOP thinks the oil companies need or deserve billions of our tax dollars in subsidies on top of their record profits? You make it sound like the "poor" oil companies are "only" making 8 cents per gallon but that 8 cents is coming out of a trillion and a half dollars in sales. They're not feeling any pain.
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      donald513 months, 1 week ago
      
      ..with a name like "tiredofwhiners", I'm sure you have a reputation of climbng all over your fellow man to get to the top!
      Greed creats the greatest rationalizers and most unscrupulous people in America!
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    donald513 months, 1 week ago
    
    Not2, the big oil guys will make money even if we relied more on alternative means. The Repug Congress threw out all the Energy Anti-monopoly laws from after the Depression... to allow big oil to buy up their future competitors and futher control the energy market. At least two of the big oil companies run regular TV commercials of their ownership of alternative means as blantant proof (but look how little they invest in them).
    It will take decades for America to overcome the damage done by the Repug Congress and Dumya!
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  AnteUp3 months, 1 week ago
  
  ML2007 ~
  My usual economic guru, Paul Krugman, seemed to say that
  speculators are NOT responsible all that much.
  That still confuses me. I have heard that, because of the
  unstable stock market, hedge funds were speculating more on
  oil than they have in the past and that speculation was a huge factor in driving the price of oil up.
  Hedge funds - like with hedge fund managers? That would be
  the guys that Congress protects from paying taxes at the
  rate that most of us do? 15% versus what we pay?
  Sen. Schumer(D) and plenty of others has been very vocal
  about protecting them from what? From doing their fair
  share? Would you and I pay LESS if they had to participate
  FAIRLY? You bet!
  I am not economically astute - far from it.
  I'd be interested to hear what others think.
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jimdoze3 months, 2 weeks ago

At some point, those owning contracts will sell them into the demand and take the edge off. Just as market psychology can inflate prices (i.e. over-value) beyond the supply/demand equilibrium point, so too can it do the reverse. Such was the situation when President Reagan dispatched GHW Bush to Saudi in the early 80s. The price of oil had gone so low that the domestic U.S. industry was in danger of total collapse.
Overall growth in world demand for oil HAS outstripped growth in supplies over the past decade. That is a simple fact that the markets are well aware of.
It will be interesting to see how the Petrobras discoveries off the coast of Brazil pan out. It could be another 5 years before the scope is known.
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  engineer3 months, 2 weeks ago
  
  jimdoze
  You obviously didn't understand what the CEO said. Reread it!!!
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    jimdoze3 months, 2 weeks ago
    
    I read it. I completely and thoroughly understand it.
    There is a difference between long term supply and demand issues and short term shortages. There are no short term shortages, as he said. Oil tankers continue to move supply to whoever buys it. If you can't pony up $130/bbl, you don't buy it. Refiners continue to produce gasoline and other oil products.
    He did not address the growth of long term demand versus the growth of supplies. That is, without a doubt, an issue that underlies the psychology of the oil markets.
    By the way, what he said obviates the issue I have oft seen made on these pages... that U.S. presence in Iraq is cause for the high price of oil. My stand on that is just the reverse.
    What's your point?
    
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      jimdoze3 months, 2 weeks ago
      
      In case I am mis-interpreted here:
      obviate: to prevent by interception
      Therefore, what he said precludes (or renders untenable) the argument often made on these pages... which is that the U.S. presence in Iraq is cause for the high prices.
      Quite simply, that is not the case. As I said, I believe that the opposite is true. That without the U.S. there, there would be shortages and prices would likely be far higher... or the world economy would be in the tank and sovereign nations would be seriously considering military moves to secure supplies.
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Aidenag3 months, 2 weeks ago

It is time to move beyond oil, and this article is just another piece of proof of such need. from supply and demand issues, to environmental harm, to world stability, and the fact most oil comes from some of the biggest human rights abusers on earth. It's time for people to get over it, and find something new. As this article shows, oil has become so volatile that shortages aren't even needed to cause price spikes anymore, and this sort of thing is only going to get worse.
Personally im saving up for the 'Zap-X' car due out in 2010. Sure it costs a lot($60k estimate) but for 644 horse power, all wheel drive, 0-60 in 4.8sec, 350 mile range per 10min of charging, and a cost of only 1 cent per mile to power(thats right 1 CENT PER MILE), i just don't see how people can still be wanting a gas guzzler. Not when its cheaper to drive an electric, that has more HP, quicker acceleration, and with today's battery technology, able to go long distances, on short charge times.
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  jimdoze3 months, 2 weeks ago
  
  "It is time to move beyond oil"
  Agreed.
  "cost of only 1 cent per mile to power"
  Only if you have suspended the first law of thermodynamics... or the car is a feather.
  Keep in mind that the energy to supply you that recharge still comes primarily from hydrocarbons... whether coal or gas... and some oil generators... and, as it is "piped" to you through wires, it loses some of the efficiency of production obtained by large generators.
  Industrial economies require industrial sources of energy. Solar and wind, while helpful, are generations from providing that industrial energy base. The only serious industrial alternative available now is nuclear fission power.
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    Aidenag3 months, 2 weeks ago
    
    It costs the consumer only 1 cent per mile to drive it.. It has nothing to do with thermodynamics.. And everything to do with the cost of electricity. That 1 cent figure is averaged from the national price of electricity. Might be a bit more in some area's or a bit less in others, but when looking at the national average cost of electricity as of a few months ago, that is what it breaks down to. The Zap-X requires 1 cent worth of electricity to travel 1 mile...
    And yes i know most electricity comes from dirty fuel sources such as coal. But here in my region, 95% of our power comes from dams, and even then, i still opt for the solar/wind packages the power company offers so im getting 50% from those, and the other 50% from hydro.
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      tiredofwhiners3 months, 1 week ago
      
      1.) I don't have 60K to spend on anything.
      2.) I seriously question the cost of electicity to power a high performance vehicle at 1 cent per mile. You may be disappointed in 2010 when the real cost comes out.
      3.) I hope I'm proven wrong on this but I doubt it.
      4.) A good friend said there's a car coming that will burn sea water for fuel. That would be about 0 cents per mile fuel cost. I seriously doubt that too and I told him so.
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        Aidenag3 months, 1 week ago
        
        Why is 1 cent so hard to believe? the current electric cars on the market for sale right now, using old lead batteries only cost 2 cents per mile to charge....
        I swear, if people really knew how cheap and fast electric is, they would switch in a heartbeat. Unfortunately it seems Big Oil and Detroit auto has most people fooled still.
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nostalgia3 months, 1 week ago

How much of increase in the price of gas has to do with the quality of the oil on the market?
I see figures on the total amount of oil being produced but some of it is not suitable for producing gas - "sour" crude high in sulfur
Right now the Iranians are storing the oil they produce in tankers floating in the Gulf
"Iran, OPEC's second-largest oil producer, is using 20 tankers to collect and store crude"
"The discount on the nation's high-sulphur crude versus Oman and Dubai petroleum has more than doubled since the start of the year to $3.45 a barrel as refiners processing Iranian oil lower their operating rates for plant maintenance. Some of Iran's heaviest and most sulphurous crude oils can only be processed by a limited number of refineries with specialized equipment."
So how much of the oil being pumped is suitable for producing gas?

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Global_Warmer3 months, 1 week ago

The government's profit on oil is much higher than the oil companies. Yeah, that's what we need, the government taking over.
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  donald513 months, 1 week ago
  
  ...yah, you'd think the Congress would have never had to raise the debt ceiling for Dumya to 11 trillion! Or, for sure the Iraqis would pay for the war from oil profits!
  When most of Americans are suffering and the Bush Adminstration does nothing - you justify it so? What BS!
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    Global_Warmer3 months, 1 week ago
    
    I hope you know what you just said, because I can't understand a damn thing that you just typed. Perhaps you should finish the 5th grade and come back.
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tiredofwhiners3 months, 1 week ago

I see there's some argument about regulation of the commodity markets (oil). Some controls may be good but I worry about government control of anything in the free markets. The economic knowledge I see in our govt. is about third grade i.e. almost nil. I really don't see the U.S. regulating our commodities as being effective vs. the world forces driving oil up or down. And China and India DO have an impact on prices, no question about it. The supply may be OK now but the future is questionable.
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raats66623 months, 1 week ago

One other VERY IMPORTANT factor that no one seems to be mentioning is the value of the US$.
YES, there is the speculator who are having an effect and YES, there is the increase in demand from China and India.
But the SINGLE biggest issue is that since the Nixon Administration oil around the world has been traded in US$ EXCLUSIVELY. As the value of the dollar INCREASES the oil costs LESS (more bang for your buck) as the value of the dollar DECREASES oil costs MORE (LESS bang for your buck).
Although the price of a barrel of oil is now MORE then 400% HIGHER then it was when GWB took office nearly half of that is because of the value of the US$.
The Canadian$ is currently nearly equal to that of the US$ (.99-$1). Ten years ago it was roughly 75%. Today the Hong Kong$ is 7.80 to the US$. Ten years ago the difference was over 12 to 1. Today the Chinese Yen is 6.85 to the US$. Ten years ago it was over 11 to 1.
Until the US$ gets back on track NOTHING else is going to fix this.
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  canadianrancher573 months, 1 week ago
  
  ratts6662- Your comment is one that is dead on, although up here in Canada we are now paying over 5 dollars per US gallon for gas, with the big change we have seen with our currency in the last few years that should not be the price, there is quite a bit of gouging going on but we have also seen this in machinery prices as well.
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  donald513 months, 1 week ago
  
  I like all those gold commercials on TV now that tell you gold has appreciated 250% since Dumya took over. It really is an indicator of how Dumya has devalued the dollar and the well being of most Americans.
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Norma1563 months, 1 week ago

We need an energy policy that makes sense. More refineries. We haven't built one since the 70s. Off shore drilling. Some 85% of US reserves are unavailable to E&D companies. Clean coal technologies are available. Nuclear power. Instead, we get ethanol mandates which have driven up the price of food worldwide. The oil companies don't make these policies.
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  donald513 months, 1 week ago
  
  Under the former Repug Congress the oil companies did make the laws... for which we suffer now! Dumya and his vetos only further propigate the life of the former "Do Nothing" Congress, the House that only had to work 4 days a week under Hastert, the Senate where Ted Stevens wouldn't even ask the big oil CEOs to tell the truth!
  Perhaps the Cheney energy meeting with Ken Lay for which the minutes are still classified has the roots of the vile repug plan.
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