an oil barrel
was Friday afternoon and I was listening to 2UE when the phone rang.
Jonesie and Lawsie's mate Mike Carlton was slagging off at the cyclists
from Critical Mass who had blocked the Harbour Bridge again on their
let the bugger ring for a while before I picked it up. It was one of
the consumer groups. There was talk of a 7 cent-a-litre rise in the
price of petrol and wild rumours of a dollar a litre by this time next
year They wanted me to look into what the bastards from the oil companies
were up to. It was another conspiracy they said, and they wanted names.
wasn't sure they were right but the money was good and they wanted info
fast, so I took the brief.
My first port of call was my old friend Charlie Richardson, the energy
no conspiracy", he said. "The immediate crisis has been caused
by Iraq putting a shot across the bows of the UN, but the underlying
problems are the real story. You'll remember that the oil the Iraqis
can sell under the 'oil for food' program gets renegotiated every six
months, well, the UN decided to delay its decision by two weeks and
the Iraqis jacked up and refused to sell -- they make up about 5 per
cent of world production at the moment -- and that sent the price from
$25 to $28 a barrel".
can't be all there is to it", I said. "That's as high as it
was during the Gulf war. It's gone up from $10 a barrel in a year."
no, the Iraqi decision comes on top of the OPEC production cuts, which
were designed to get the price off the floor ... and that was reinforced
by Saudi Arabia, Venezuela and Mexico, who aren't in OPEC, going along
with the cuts."
of course we're going into the northern winter, and the Yanks will be
stocking up with oil for heating."
right, and South-East Asia is struggling out of its little crisis and
starting to buy more oil."
the price could stay up for some time?" I asked.
it'll go up and it'll go down down, but the trend will be pretty relentlessly
up. You've got to remember that none of these manoeuvrings with supply
would work for the oil producing countries if it wasn't for the underlying
geological reality -- we've used about half of the stuff and it's getting
harder and harder to find and more and more expensive to extract. At
the moment we're discovering 6 billion barrels annually but we're using
23 billion -- and if South East Asia booms again it'll jump pretty quickly
to 26 billion."
Clinton be doing?"
imagine he'd be putting pressure on the Mexicans and the Venezuelans
to increase production and the Japanese and the Europeans would be pressuring
the Saudis, but these people know that a bigger and bigger percentage
of the world's oil reserves will be in their hands with each passing
year. They've got the world over an oil barrel."
the days of cheap oil are over?"
it. It's going to be uphill all the way -- and of course it'll fuel
the radical cyclists look good doesn't it" I said, "Instead
of slagging off at them, the media ought to be calling them heroes,
patriots even. Think of how much we'd save on the oil import bill if
a quarter of the population cycled to work."