For months, the OPEC has scrambled, with little success, to keep a lid on oil prices. With war threatening as the cartel's ministers meet in Vienna, Austria, this week, prospects for the global economy are so cloudy, analysts say, there is not much left for OPEC to do.
The oil producers are not alone in their plight. Around the world, and especially in the US, the problem of planning for the unknowable is upsetting the decisions of consumers, businesses and investors. That is hampering an economy struggling to better last year's meager growth, weighing on stock prices and subduing consumer spending.
Oil is a significant component of all those calculations. Crude oil prices have hit their highest levels since the Persian Gulf War of 1991, and S&P's estimates that high energy prices have cost the economy US$50 billion in consumer purchasing power, or 0.5 percentage point of growth, just since last fall. The Energy Department predicts that by April, consumers will be paying record-high prices for gasoline in much of the US.
In any effort to assess how prices will move -- and how the economy will react -- the echoes of history are inescapable. Just like in the fall of 1990, the massing of American troops near Iraq and fears that oil supplies from the Persian Gulf will be disrupted have pushed the price of oil well above US$30 a barrel for weeks.
But moste similarities end there, according to industry analysts. While few experts expect a war to lead to shortages of oil, most doubt there will be a replay of the events of the Gulf War.
Most analysts say that key indicators of the oil industry's health -- notably low inventories of oil and petroleum products at American refineries -- suggest that prices will remain steep regardless of military action.
A year-long series of production cuts by OPEC last year gradually reduced global oil supplies as world economies were growing stronger. Then a strike in Venezuela stripped 4 percent of the world's oil supply from the market. So the balance between supply and demand is much tighter than it was on the eve of the Gulf War.
Today, a war in Iraq would remove about 2 million barrels of oil a day from the market, analysts estimate. Some believe that OPEC, which does not disclose its production, has the spare capacity -- concentrated in Saudi Arabia -- to replace that oil. Others say they think the cartel's members are already pumping at full capacity, both in an effort to keep prices from spiraling even higher, at the risk of stifling demand, and to take advantage of the unusually high prices.
Ultimately, the price of oil will likely swing with the progress of a war, analysts say.
‘ABUSE OF POWER’: Lee Chun-yi allegedly used a Control Yuan vehicle to transport his dog to a pet grooming salon and take his wife to restaurants, media reports said Control Yuan Secretary-General Lee Chun-yi (李俊俋) resigned on Sunday night, admitting that he had misused a government vehicle, as reported by the media. Control Yuan Vice President Lee Hung-chun (李鴻鈞) yesterday apologized to the public over the issue. The watchdog body would follow up on similar accusations made by the Chinese Nationalist Party (KMT) and would investigate the alleged misuse of government vehicles by three other Control Yuan members: Su Li-chiung (蘇麗瓊), Lin Yu-jung (林郁容) and Wang Jung-chang (王榮璋), Lee Hung-chun said. Lee Chun-yi in a statement apologized for using a Control Yuan vehicle to transport his dog to a
Taiwan yesterday denied Chinese allegations that its military was behind a cyberattack on a technology company in Guangzhou, after city authorities issued warrants for 20 suspects. The Guangzhou Municipal Public Security Bureau earlier yesterday issued warrants for 20 people it identified as members of the Information, Communications and Electronic Force Command (ICEFCOM). The bureau alleged they were behind a May 20 cyberattack targeting the backend system of a self-service facility at the company. “ICEFCOM, under Taiwan’s ruling Democratic Progressive Party, directed the illegal attack,” the warrant says. The bureau placed a bounty of 10,000 yuan (US$1,392) on each of the 20 people named in
The High Court yesterday found a New Taipei City woman guilty of charges related to helping Beijing secure surrender agreements from military service members. Lee Huei-hsin (李慧馨) was sentenced to six years and eight months in prison for breaching the National Security Act (國家安全法), making illegal compacts with government employees and bribery, the court said. The verdict is final. Lee, the manager of a temple in the city’s Lujhou District (蘆洲), was accused of arranging for eight service members to make surrender pledges to the Chinese People’s Liberation Army in exchange for money, the court said. The pledges, which required them to provide identification
INDO-PACIFIC REGION: Royal Navy ships exercise the right of freedom of navigation, including in the Taiwan Strait and South China Sea, the UK’s Tony Radakin told a summit Freedom of navigation in the Indo-Pacific region is as important as it is in the English Channel, British Chief of the Defence Staff Admiral Tony Radakin said at a summit in Singapore on Saturday. The remark came as the British Royal Navy’s flagship aircraft carrier, the HMS Prince of Wales, is on an eight-month deployment to the Indo-Pacific region as head of an international carrier strike group. “Upholding the UN Convention on the Law of the Sea, and with it, the principles of the freedom of navigation, in this part of the world matters to us just as it matters in the
RSS