XXXXX DRUDGE REPORT XXXXX MONDAY MAY 29 2000 20:46:08 ET XXXXX

SENATOR WARNS SUMMER GAS PRICES COULD HIT $2.25 A GALLON

Gasoline prices will hit $2.25 a gallon this summer unless action is taken now, U.S. Sen. Charles Schumer [D-NY] predicted Monday.

Schumer said the Clinton administration could help drive prices down by releasing federal oil reserves into the market -- immediately.

Schumer declared: "It points a dagger at the heart of our economy... If OPEC continues to constrict supplies of oil and we fail to release reserves, the price of gasoline will go to $2 this summer and $2.25 by Labor Day."

Energy Secretary Bill Richardson tells Tuesdays NEW YORK TIMES that Schumer is being an "alarmist" and gas prices will be at a national average price of $1.40 to $1.45 a gallon by the end of summer.

-- CPR are you listening? ($@2.25), May 30, 2000

Answers

BIG FREAKING DEAL!!!!

Thats about 1/2 of Europe and Japan.

And Americans are spoiled rotten because of it. The price of Gas is STILL less in real dollars than in was in 1980 and at $2.25 reaches parity with MILK.

I have little sympathy for the fat, dumb and happy American Consumers who think nothing of making four trips in the SUV for groceries, dry cleaning, Soccer and the trip to the Golden Arches where they donate $10 a pound for chopped meat boiled in fat and grease.

Most American vehicles are being subsidized at the expense of Mass Transit. It is fact that the Big Three went to some effort to convince municipalities that Buses were cost effective vs. mass transit rails and now many cities are paying for dismantling their Trolley systems.

Give the world a break and walk.

-- cpr (buytexas@swbell.net), May 30, 2000.

Thats about 1/2 of Europe and Japan.

What has this to do with your continuous ranting about gasoline prices going down in the USA ??

-- Ain't Gonna Happen (Not Here Not@ever.com), May 30, 2000.

The message from the following snippets of news seems to be that we should not expect energy prices to decline anytime soon. Note that the shortfall so far is more political than physical, so political solutions are possible. Some of these are edited for brevity.

Kuala Lumpur, May 29 (Bloomberg) -- Oil exporters will likely hold off boosting output in June to halt rising prices as some of OPEC's members don't have spare output capacity and won't be able to raise production until the year end, producers said.

Iran, Indonesia and the United Arab Emirates, three of the 11 members of the Organization of Petroleum Exporting Countries, said today they won't back any increase when the group's ministers meet in June.``Many of the OPEC members are at their full production capacity right now. It's going to be very difficult for OPEC to agree to increase production,'' said Marianne Kah, chief economist at Conoco Inc., the fourth-largest U.S. oil company.

Still, OPEC, which produces 40 percent of the world's oil, will have to raise oil output this year to keep its benchmark price from rising beyond the group's target of $22 to $28 a barrel, said Mark Moody-Stuart, chairman of Royal Dutch/Shell Group on Saturday. ``To stay in that band before next winter you have to increase production,'' he said.

(end snip)

The rest of the article takes a generally more optimistic tone, including a rather surprising statement that Iran and Venezuela could boost production by 300,000 barrels a day. Iran may have the ability, but Venzuela has been repeatedly listed as being at or near peak production.

TOKYO, May 27, IRNA -- Statistics released by Japan's Ministry of International Trade and Industries (MITI) on Friday stated that Japan imported 17.05 million barrels of Iranian oil during last month, an increase of 52.7 percent in comparison with April 1999, IRNA said.

MITI noted that total oil imports in the month of April totaled 139.01 million barrels, registering a rise of 6.9 percent. It added that for the first time in last 27 years, 88.1 percent of the total oil imported by Japan was from the Middle East. (end snip)

Thursday 25 May 2000

Chris Varcoe, Calgary Herald

Welcome to Canada's gaspatch. After a long run, crude oil is slowly being nudged off centre stage by natural gas as the premier commodity in Canada's energy sector.

Financially, natural gas prices in Western Canada are at their highest sustained level since the resource was deregulated in 1986. On the New York Mercantile Exchange, natural gas prices are up 75 per cent this year, with product for June delivery jumping 6.8 per cent Wednesday to $4.073 US per million Btu.

Experts say the price is going up because of supply concerns in North America. Continental consumption is creeping up at a rate of two per cent annually.

South of the border, U.S. gas production is faltering.

For consumers, fears of insufficient supply will mean higher home heating bills -- possibly doubling this winter, according to one estimate. (end snip)

-- Cash (cash@andcarry.com), May 30, 2000.

Experts duel over future oil supply scenarios

Updated 10:47 AM ET May 22, 2000

By Andrew Kelly

HOUSTON (Reuters) - The world's growing reliance on Middle East oil is likely to push prices up, along with demand, over the next two decades, according to some of the experts taking part in a recent conference on global oil supplies in Houston.

Their warnings were countered, however, by others who said talk of an impending oil supply crisis and perpetually rising prices was nothing new and the old warnings, which ignored technological advances, had turned out to be wrong.

Taking the more pessimistic line, consultant Jack Zagar of Malkewicz-Hueni Associates told the conference Friday that an era of relatively cheap, abundant oil was nearing its end.

Zagar cited an International Energy Agency forecast that global demand would grow to 112 million barrels per day in 2020 from around 73 million in 1997 and that the market share of Middle East producers would grow to 62 percent from around 25 percent.

He said the IEA's corresponding prediction of an oil price around $25 per barrel appeared to be underestimating the effect of this shift in power to Saudi Arabia and its neighbors.

"The growing control of the market by the Middle East is in my opinion not consistent with $25 oil," Zagar said.

Oil companies continued to report a steady rise in reserves from year to year, but this mainly reflected improved estimates of reserves found many years ago, he said, adding that corrected figures showed a leveling off of reserves since the 1980s.

"We now find only one barrel for every four produced," he told the conference, organized by the Baker Institute for Public Affairs at Rice University.

More optimistic was Michael Lynch of Wharton Economic Forecasts Associates, who said it was too soon to bemoan the demise of non-OPEC oil production. He argued that the Organization of Petroleum Exporting Countries would face stiff competition for the foreseeable future.

Those who warned of a looming supply shortage, Lynch said, typically underestimated the importance of smaller oilfields and other factors that would keep production flowing.

"People historically have not factored in technological improvement or infrastructure improvement," he said.

Zagar was dismissive of technological advances such as 3-D and 4-D seismic exploration, saying they had not been needed to discover the giant oilfields found several decades ago which still account for the bulk of current production.

"We can now see even the smallest needle in a haystack and in some cases oil itself. But, unfortunately, the needle is still a needle," he said.

U.S. benchmark oil prices have recently hit $30 a barrel, as OPEC production cuts have slashed global stockpiles of oil and prices have rebounded sharply from lows of almost $10 in late 1998.

B.N. Murali, vice president for technology at Halliburton Co., told the conference much of his company's efforts were aimed at boosting the amount of oil that producers can recover from a given field, typically around 30 percent at present.

"If technology can raise that by a few percentage points, we'll have a hell of a lot more oil," he said.

Roger Anderson, professor of Earth Sciences at Columbia University, said technological advances were enabling producers to squeeze more oil from the earth, not simply get the available oil out more quickly.

"I believe what we're seeing ... is that we're getting a whole lot more oil out of the ground through the whole cycle of the field," he said.

But Matt Simmons, founder of investment bank Simmons & Co., said non-OPEC oil production had been flat over the last four years, with discoveries becoming ever smaller and oil companies struggling to offset the depletion of their older fields.

Over the next decade, the Middle East would have to do the "heavy lifting" of meeting growing demand for oil around the world, but this implied "higher prices than many of us are comfortable with," he said.

http://news.excite.com/news/r/000522/10/energy-supplies

-- Cave Man (Caves@are.us), May 30, 2000.

CPR:

If you will check, I think you will find that the difference in price between the US and the UK is in the TAXES. Earlier this year there was an article explaining this and stating that, I think, approximately 80% of the $4 and something price in the UK was taxes. That means that a $4 gallon of gas in the UK costs $0.80 per gallon before taxes. If you are unhappy with those prices, address your comments to the appropriate governmental bodies.

Or are you suggesting that the US government impose a $3.20 per gallon tax? If so, may I suggest that you take a hike.

-- Greybeard7 (Wolverine_in_nc@hotmail.com), May 30, 2000.

CPR writes "and now many cities are paying for dismantling their Trolley systems". CPR, what Trolley System are you speaking of in my city? Dere ain't no Trolley, here, in this hugh American City. The bus system is bad at best. To inform you, not everyone owns a gas sucking SUV. A lot, own prudent vehicles. Never the less, the trucker who bid this year contracts, based on last years gas prices, is having a hard time. Hence begins the domino effect. Why would you or anyone wish mis-fortune on a society? Based on the false assumption that the whole society is eating Bon-Bons? It isn't so. I drive past the Day Labor Pool office, every morning. People, less materially fortunate. My well is going dry, and I am feeling sorry for myself for the money I must borrow for another well. Slap me in the face until I wake up and Thank The Heavens I have a good, steady job, and I Can borrow the money for continued water.

-- CPR (you@redeceived.com), May 30, 2000.

I don't care about the price of gas. I care about whether or not the Trail Blazers are gonna whoop the Lakers buttocks.

-- Ginger Space (Ging@er.space), May 30, 2000.

Someone who is not CPR wrote:

"CPR writes 'and now many cities are paying for dismantling their Trolley systems'. CPR, what Trolley System are you speaking of in my city? Dere ain't no Trolley, here, in this hugh American City. The bus system is bad at best."

Don't know which "hugh(sic) American city" you're referring to, but if it existed before 1920 it probably had a comprehensive urban and interurban trolley system. Back in those days you could get on a trolley in East Corinth, Maine, and travel all the way to Richmond, Virginia, on trolley systems. General Motors and Ford began buying them up and dismantling them in the 1920s and 30s, replacing them with supposedly more efficient bus systems that were deliberately overpriced and underserviced to pressure people into buying cars. It was a well-documented phenomenon.

-- Cash (cash@andcarry..com), May 31, 2000.

I wouldn't believe a dirtbag like Charles Schumer if he were drunk on truth serum and strapped into a lie detector. That man's as slimy as the dish with the mystery contents waaaaaaay in the back of my fridge.

Chuckie Schumer can kiss my ass, and his prediction can too.

-- Charles Screwmer, I mean Schumer (chuckie@childsplay.com), May 31, 2000.

Charles,

I feel the same way about Ted Kennedy.

But OTOH I'd believe him if he said his liver hurt.

Frank

-- Someone (ChimingIn@twocents.cam), May 31, 2000.