Australia: Dollar-a-litre petrol here to stay

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Wednesday, September 13, 2000

Dollar-a-litre petrol here to stay despite production boost

By JANE COUNSEL

Oil prices have hit their highest level since the Gulf War despite a commitment by oil producing nations to lift production - with experts saying Australian pump prices for petrol are set to continue climbing beyond $1 a litre.

The expected rise in local petrol prices comes amid fears the world is headed for an oil crisis as producers battle to keep up with a surge in demand - particularly in the United States.

"The world is facing a possible energy crisis, and OPEC alone simply doesn't have the power to control it," OPEC's president, Mr Ali Rodriguez, said after the group's weekend emergency meeting.

The benchmark Western Texas intermediate crude oil price pushed past $US35 a barrel, a rise of $US1.52 a barrel, on Monday night, as the market predicted the OPEC commitment would do little to appease surging demand. Mr Rodriguez said there was a risk that oil prices would soar past $US40 a barrel in coming months if there was a cold northern winter. Oil analysts warned that the oil price could even reach that mark within days if weekly US oil inventory numbers, due out in the next 24 hours, showed another stockpile decline.

"This could easily get oil prices to $40 a barrel," a Commonwealth Bank commodity analyst, Mr David Thurtell, said, adding that this would translate to a petrol price of well over $1 a litre in the next few weeks. Analysts said the higher prices in Australia could stay in place until at least Christmas, even with a promised new review by OPEC in November.

Average capital city fuel prices in Australia fell to about 94.5" a litre in the past week according to figures from Shell, due to a short-term price war.

OPEC has agreed to lift its daily production quota by 800,000 barrels to 26.2 million barrels from October 1 and has committed to again boost output if the oil price is still at current levels when the new quota deadline passes. But the additional 800,000 barrels is expected to do little to fill the demand in the US.

http://www.smh.com.au/news/0009/13/national/national10.html

-- Martin Thompson (mthom1927@aol.com), September 12, 2000


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