President Clinton to Lobby OPEC On Boosting Oil Exports Source: Knight Ridder/Tribune Business News Publication date: 2000-08-24

Aug. 24--WASHINGTON--President Clinton said Wednesday he will lobby the president of Nigeria and other OPEC leaders to try to persuade them to ease prices by boosting their oil exports.

Vowing to do what he can to bring down oil prices substantially, Clinton said he would warn the heads of the Organization of the Petroleum Exporting Countries about the economic dangers of lofty crude prices.

Clinton is scheduled to leave Friday for a two-day trip to Nigeria, where he will mean with the president, Olusegun Obasanjo.

"If the price gets too high, they will cause recession in other countries and then the purchases will drop dramatically, and for a longer period of time," Clinton said. "They're much better off with a price that's below where it is now, but one that can be sustained."

It's a message that has gained importance with this weeks run-up in oil prices.

Light, sweet crude oil for delivery in October jumped 80 cents Wednesday to close at $32.02 a barrel on the New York Mercantile Exchange, after hitting a high of $32.80 during the trading day.

The price of oil products such as gasoline and heating oil are also returning to the highs reached earlier this summer.

Clinton argued that oil prices need to be in the low- to mid-$20 range to sustain economic growth while at the same time encouraging new oil production.

"I will clearly discuss it with President Obasanjo and with others in the weeks ahead," Clinton told reporters here Wednesday before leaving for a trip to New Jersey.

Clinton's trip comes little more than two weeks before OPEC oil ministers are to gather on Sept. 10 in Vienna, Austria, to reconsider their production ceilings.

Clinton said he is aware that most OPEC producers just don't have the capability to pump significantly more crude.

"We have to look at where there is excess capacity," Clinton told reporters Wednesday. "Part of this (is) a question of whether the OPEC nations can increase their production."

Nigeria, for instance, is only producing about 2.035 million barrels a day, which is short of its OPEC-agreed ceiling of 2.091 million barrels, the Washington-based Petroleum Finance Co. estimates.

For that reason, prodding the Nigerians won't help bring down oil prices, noted Raad Alkadiri, an analyst with Petroleum Finance.

"There is one country that can effectively change the situation at the moment and that's Saudi Arabia," Alkadiri noted. "When the Saudis decide it's time for a significant production increase and show willingness to act unilaterally, they can manage the markets and bring prices lower."

The oil markets were spooked Wednesday by a larger-than-anticipated drop in U.S crude supplies, noted Kyle Cooper, an oil analyst with Salomon Smith Barney in Houston.

The American Petroleum Institute reported late Tuesday that U.S. oil inventories had dropped 7.8 million barrels, or about 2.7 percent, the previous week, a far more substantial draw-down than Cooper and other analysts had expected.

Natural gas traders, meanwhile, continued to watch Tropical Storm Debby, fearing a move into the Gulf of Mexico would cause supply disruptions in that key gas production area.

Gas prices for September delivery rose 8.5 cents, or nearly 2 percent, on the New York Mercantile Exchange to close at $4.605 per thousand cubic feet. Home heating oil rose by 5.26 cents to close at 95.61 per thousand cubic feet in futures trading.

Clinton also expressed concerns Wednesday about high electricity prices in Southern California, caused by strong demand and tight supplies.

"Many families and small businesses in San Diego have seen their electric bills more than double," the president said. "I've heard reports of senior citizens on fixed incomes being forced to choose between medicine and air conditioning."

To try to help alleviate the problem, the White House is funneling $2.6 million from the Low-Income Home Energy Assistance Program to Southern California to help families there.

The administration also has called on the Federal Energy Regulatory Commission to speed up its investigation of the wholesale power markets "so we can better understand what is happening in California and provide policy-makers with the information they need to protect consumers in a timely fashion," Clinton said.

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http://cnniw.yellowbrix.com/pages/cnniw/Story.nsp?story_id=13144050&ID=cnniw&scategory=Energy

-- Cave Man (caves@are.us), August 24, 2000

Answers

Oil price spike no cure for non-OPEC supply collapse

Darius Snieckus OGJ Online STAVANGERSoaring oil prices may have come too late to avert both a collapse in oil supply growth from countries outside the Organization of Petroleum Exporting Countries and a new rig market famine next year, according to Petrodata Research, the forecasting arm of industry data analysts OneOffshore Inc. Though oil companies have been flush with cash for the last year, this new money is being spent not on drilling wells but rather on "defending their balance sheets, buying back shares, and competing with high growth technology stocks," said Petrodata analyst Maarten van Mourik at the Offshore Northern Seas (ONS) 2000 conference in Stavanger yesterday. "Upstream activity has been in the doldrums and is only now picking up," Van Mourik added. "That slow recovery may not have a positive impact on non-OPEC oil supply in the immediate future." The current state of the market and "underlying pressures" are signaling a repeat if the 1995-98 cycle, in Van Mourik's opinion, which ended in the oil price crash and pan-industry recession. "The portfolio of new developments has dried up so much that it is hard to project increases in non-OPEC oil supply for 2001," he suggested, resulting in the burden of supply having to be shouldered by OPEC. As well as its negative influence on oil supply, the spending drop over the last 2 years is also hitting the deepwater rig markets, states Van Mourik. He believes oil company plans for fast-tracking new frontier field developments will likely be "too optimistic" in the light of an imminent rig market squeeze. "Poor day rates have made contractors wary of committing to further building of new rigs," he said. "As a result, we predict that the available fleet will be insufficient again shortly to cope with increasing demand and develop the potential of all those deepwater fields. "The ultradeepwater segment, 5,000 ft water depths and beyond, is the leading indicator here, and that segment is already in physical shortage," Van Mourik added.

http://ogj.pennnet.com/Content/cd_anchor_article/1,1052,OGJ_7_NEWS_SUB _80582_1,00.html

-- Cave Man (caves@are.us), August 24, 2000.

Cave dude,

So, if I read this correctly the only country with any real capacity to increase production in the short term is the Saudi's. Do we know how much more they can turn out?

And we aren't doing a damn thing to look for more and the big oil guys are spending all day on e-trade.

Any predictions from you on spot shortages this winter? Or worse, maybe rationing to corps and the public?

Petro-riots?

Mass-carnage?

TEOTWAWKI!!!!!?!????!?!???????

whew, sorry got a little carried away there.

-- Wood Chopper (stackingwood@woodpile.com), August 24, 2000.

WC,

If you want a crystal ball into the future, follow cpr's predictions. The opposite will happen. He's the perfect contrary indicater.

-- Cave Man (caves@are.us), August 24, 2000.

Try this JERK OFF and then "try your luck". Its your MONEY, FOOL.

THIS IS A PEAK AREA FOR ALL OIL PRICING. Natural Gas follows OIL on a BTU BASIS.

THAT IMPLIES PRICES ***WON"T GO HIGHER** BEFORE THEY FALL SUBSTANTIALLY. AFTER THEY FALL, THEY MIGHT RISE AGAIN. It is possible they "could" rise higher than they are now but NOT BEFORE A TEMPORARY or LONGER...FALL FROM THESE LEVELS.

FEEL LUCKY TODAY, PUNK????

I have been CORRECT IN MARCH, MAY and JUNE. SO

FEEL LUCKY TODAY, PUNK????

-- cpr (buytexas@swbell.net), August 24, 2000.

cpr..

You should really stick to selling houses ad lots. Natural gas WILL be in short supply this winter. As will home heating fuel. That is the sum of it.

I swan! You get more and more out of touch with reality with every passing day..

"As for me.....I shall finish the Game"!

~~~~~~~~~~~~~~~~~~Shakey~~~~~~~~~~~~~~~~~~~~

-- Shakey (in_a_bunker@forty.feet), August 24, 2000.

chillun-chillun--20-years from now it won't matter--what a waste of - prayer-time!!

-- al-d. (dogs@zianet.com), August 24, 2000.

cpr,

You sir, and I use that term loosely, are incredibly rude. You, without a doubt, are the rudest poster on this board. If you were so confident in your predictions why would you be so rude? Just state what you think and let the facts speak for themselves. Or is your rudeness a manifestation of some extreme character flaw?

-- Woodchopper (stackingwood@woodpile.com), August 25, 2000.

Hi Wood,

Um, you must be new here perhaps. Cpr isnt being rude, he is always that way. LOL...

-- consumer (shh@aol.com), August 25, 2000.

"Clinton admits capacity to pump is a problem"

It's the Republicans fault. That was Monica's job, until they made her leave.

-- (intern.wanted@oval.orifice), August 26, 2000.