... Oil Minister Says "High Oil Prices Unjustified"; Highest March Price in History; Republicans Say Obama Not Doing Enough
Wall of Supertankers Heads For US
Brent crude at $125, US Crude at $110, and soaring gasoline prices everywhere have caused quite a stir. See Highest Price Ever of Gasoline in March; State-by-State Gas Price and Gas Tax Comparison for a discussion.
In response to high prices, Saudi Arabia has a plan to send a wall of supertankers to the U.S. to knock down prices and Republicans have attacked President Obama for not doing enough.
Please consider The price that launched a wall of ships
In a matter of days, Saudi Arabia has hired the largest number of super-tankers in years. When the tankers load their cargo in Ras Tanura, the world's largest oil terminal, in the next couple of weeks and start a 40-day voyage towards the US Gulf coast, they will deliver a wall of oil with a single aim: to bring prices down.
"This is the first time in several years for [Saudi Arabia] to hit the market with such volume - and in such a short time frame," says Omar Nokta, a shipping expert at specialist investment bank Dalham Rose & Co.
Last week, Vela, the shipping arm of Saudi Aramco, hired over a few days 11 so-called very large crude oil carriers, each capable of shipping 2m barrels, to deliver to US-based refiners. "In 2011, Vela fixed one VLCC to the US every other month," Mr Nokta says.
The hiring spree was the most public move by the kingdom in a series of efforts aimed at bringing down oil prices from $125 a barrel towards $100. "They want to bring prices down. That is it," says a former Western oil official.
Saudi Oil Minister Says "High Oil Prices Unjustified"
Please consider Naimi calls high oil prices 'unjustified'
Saudi Arabia's powerful oil minister Ali Naimi sought to cool overheating oil markets on Tuesday, saying high oil prices were "unjustified" and that the kingdom could boost its output by as much as 25 per cent if necessary.
Supply was much more robust than it had been in 2008 when crude rose to $147 a barrel, he said.
As the west's nuclear stand-off with Iran escalates, oil prices have rallied this month to a post-2008 peak of $128 a barrel with markets bracing for European Union sanctions on Iranian crude that could knock out a chunk of global supply. Jitters have been fuelled by supply outages in Syria, Yemen and South Sudan.
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Christine Lagarde, managing director of the International Monetary Fund, said on Tuesday that rising energy prices had now overtaken Europe's sovereign debt crisis as the biggest worry for the global economy. Speaking in New Delhi, she said that while the world financial system had strengthened over the past three months, volatile oil prices would have "serious consequences".
But Mr Naimi insisted that supply was "much more firm today than in 2008", the time of the last big oil increase. Saudi Arabia had 2.5m b/d of additional production capacity, which it could bring online if necessary.
Saudi Arabia is likely to be producing about 9.9m b/d of oil in April and exporting roughly 7.5m-8m b/d of that, he said. Asked if the kingdom could ease prices by exporting more oil, he said customers were not asking for additional crude. "We are ready and willing to put more oil on the market, but you need a buyer," he said.
Republicans Say Obama Not Doing Enough
MarketWatch reports Republicans launch new attacks on Obama, Chu over gas prices
Republicans launched fresh attacks on the Obama administration on Tuesday over the soaring price of gasoline, ripping the White House in an election-year bid for the upper hand with consumers.
Testifying before the House Oversight and Government Reform Committee, Energy Secretary Steven Chu was peppered with questions about what the administration has done to bring down gasoline prices, which are now averaging $3.85 a gallon versus $3.55 a gallon a year ago.
Republican presidential candidates Mitt Romney and Newt Gingrich have called for Chu to be fired as gasoline prices climb. On Tuesday, Gingrich released an ad highlighting Chu's September 2008 statement (retracted since he became head of the Energy Department) that he'd like to see gasoline prices at similar levels to Europe's and his support for the Chevrolet Volt.
Gingrich -- who competes against Romney, Rick Santorum and Ron Paul on Tuesday in the Illinois Republican primary -- has touted a plan to bring gasoline prices down to $2.50 a gallon if elected president. The White House has criticized that plan as unrealistic.
Obama has said that there's little that can be done from Washington in the short term to lower gasoline prices and that there's no "silver bullet" to bring them down in a global market.
Warmongering Fools
Obama is essentially correct when he says "no silver bullet" on energy prices. Moreover, Gingrich is a fool if he really believes he can bring prices down that low without other devastating consequences such as a massive recession and 13% unemployment.
Finally, the leading Republican warmongers are angling for war with Iran, something sure to send oil prices to new highs should it happen. With $trillion deficits as far as the eye can see, the last thing the US needs to do is start another idiotic war, one likely to cause a supply shock sending gasoline prices over $5 if not much higher.
If you want a good reason for high gas prices, you can blame six things
- Fed policies - The Fed and its supporters in both political parties are to blame
- Fractional Reserve Lending - The Fed is to blame
- US Policy in the Mideast - Republicans other than Ron Paul will make matters worse
- Deficit spending - both political parties are to blame
- Warmongering - both political parties are to blame
- Peak Oil
Drill Baby Drill is an inane response to those fundamental problems.
