Saudi King Suddenly Hopeful For $75 Oil; Us, Too
By Michelle Krebs December 1, 2008By Bill Visnic
At a meeting of the Organization of Petroleum Exporting Countries (OPEC) over the weekend, Saudi Arabia's King Abdullah reportedly said the "fair price" for petroleum is $75 per barrel.
The figure is demonstrably more than the sub-$50/barrel price oil plunged to this week as OPEC members squabble about the need for production cuts to bolster the price of petroleum. But King Addullah's newly announced fair price also is almost half the peak of $147 per barrel oil reached this summer - a figure none in the petroleum industry indicated was excessive or unreasonable as giant oil refiners defended $4-per-gallon gasoline and $5 diesel fuel in the U.S.
The Associated Press reports Saudi Arabia's oil minister as saying OPEC will "do what needs to be done" at a scheduled meeting on Dec. 17 to strengthen world oil prices. This seems to indicate the cartel will adopt a production cut in addition to the 1.5-million-barrel-per-day curtailment already enacted in late October.
Saudi Arabia is the world's largest single producer of petroleum, and OPEC states generate about 40 percent of total worldwide oil output. Many OPEC members say prices must rise in order to guarantee continuing investment in the sector.
Nigeria's oil minister was quoted as saying his country would be "very happy" with an oil price of $75 per barrel. Considering this summer's stratospheric gasoline and diesel-fuel prices, most consumers would be content with OPEC's target price, too.
OPEC's price-drop "dilemma" comes as the economies in many nations and regions are reeling and individuals and businesses, after this year's shocking fuel-price peaks, have taken measures to reduce fuel consumption. The Energy Information Agency reported U.S. average gasoline prices fell last week to $1.89 for regular unleaded - a full $1.20 less than gasoline's price at the same time last year. Diesel fuel, at a U.S. average of $2.66 per gallon, was off some 78 cents from last year and dropped 14 cents from just the prior week.
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I am so relieved a Saudi King has determined what the fair price of oil is. Now we can all relax. I hope the price stays high enough for as long as necessary for the American market to irrevocably change. It is clear the slump in oil demand resulting from high gas prices ( and admittedly many other factors such as a recession) have hurt some oil producers. The gall to say $75 a barrel is 'fair' rather than respect the laws of supply and demand is almost too hard to believe. I hope the authors of this article who agree with the Saudi King are proven wrong in the end.
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