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Page added on March 31, 2005

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Shoulder Shock: The New Rite of Spring

Wednesday March 30, 3:01 pm ET

Recent statements by OPEC officials reveal a situation that investors, consumers, and the news media have yet to fully appreciate: The Organization of the Petroleum Exporting Countries has lost control over the price of oil.

Yahoo!
Ironically, during the era of Arab oil embargoes in the 1970s, this would have been great news. But today, the cartel is pumping as fast as it can — and it still isn’t enough to keep the price of crude within OPEC’s target range. As spot prices top $56 a barrel on what seems like an inexorable march toward $70 or higher, Kuwait’s energy minister tells the Associated Press that a “careful rethink is required about the current state of the market, which appears to have undergone some structural changes recently.”

No rethinking is necessary. The situation is painfully simple: Global demand is now greater than available supply — not so much of crude as of refined products.

Yahoo!



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