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Chavez Says Attack by the U.S. Would Cause $500 Oil
Steven Bodzin, Bloomberg
Venezuelan President Hugo Chavez said crude oil would rise to ``$400 or $500'' a barrel in the event of a U.S. attack on his country, the biggest petroleum exporter in the Americas.

The reactivation of the U.S. Fourth Fleet in the Caribbean on July 1 and what he said is a possible U.S. base on the Guajira Peninsula, shared by Venezuela and Colombia, are both threats, Chavez said in a speech broadcast last night from the military academy. Colombian Defense Minister Juan Manuel Santos said his country doesn't plan to give the U.S. a base on the Guajira, EFE newswire reported yesterday.

Chavez, who has long criticized the U.S. role in Latin America and warned that oil could rise to $200 a barrel in the case of an attack on Venezuela or Iran, said that given recent price increases in the crude market, his previous estimate was too low.
(15 May 2008)

Don't hope for gas prices to drop, says oil economist
Ángel González, Seattle Times
... don't expect [oil] prices to fall anytime soon despite slackening domestic demand, American Petroleum Institute chief economist John Felmy said Wednesday. The API, based in Washington, D.C., represents the U.S. oil and gas industry.

Gasoline prices are driven by the high cost of crude oil, which surpassed $125 a barrel on Wednesday. That's in large part because the slowdown in U.S. oil demand is being offset by growing consumption in China, India and the Middle East, said Felmy, who came here for a speech to the Seattle Economics Council.

"You have 2 billion people who want cars," he said.
(15 May 2008)

No peak: Why oil prices will fall again
Ronald Bailey, The Hook
Oil prices have climbed to their highest level ever, flirting with $120 per barrel. And consumers are feeling this price spike at the pump, with gasoline averaging $3.61 per gallon in the United States. An analysis released by the investment firm Goldman Sachs suggested that oil prices might soar to $200 per barrel. Does this make sense?

... Whenever market gurus start to babble that "this time it's different," as they did during the dot-com and the housing bubbles, that's a sure sign of danger in the market. Naturally, proponents of the peak oil theory claim that the recent run-up in prices is evidence that the end is nigh.

Evans responds, "Fears of peak oil are what this market has in common with the 1980s, not what is different." Recall that during the "oil crisis" of the 1970s when oil prices were as high as they are today, U.S. oil consumption declined by 13 percent between 1973 and 1983. The higher prices of the 1970s led eventually to an oil glut and prices fell to about $10 a barrel by 1986.

So what will happen to oil prices over the next few years? No one is predicting $10 per barrel oil. However, once the current bubble bursts, both Evans and Lynch believe that the price of crude will settle at around $60 to $70 per barrel in the next couple of years. "It's very hard to pinpoint just how long a bubble can expand before it breaks. Getting the timing right is not an easy matter," says Evans. But he adds, "I think this is the riskiest time since 1980 to be long in crude oil."

Downtown Charlottesville resident Ron Bailey is the science correspondent for Reason, America's magazine of libertarian thinking.
(15 May 2008)
Bailey really doesn't address the long-term issue of peak oil here (although he has in other columns). I think he's right that after a run-up there is a good possibility of a drop - that's how markets work. Long-term, that's a different story. -BA

Who Really Controls the Oil Market?
Syed Rashid Husain, Arab News
As President George W. Bush arrives in Saudi Arabia today, his second to the Kingdom within the year, to formally commemorate the 75th anniversary of the establishment of the deep rooted, multifaceted Saudi-US relations, oil is reported to be very much up on his radar. Indeed with oil prices hovering around historic heights and talks of economic recession and stagflation in virtually every one’s dictionary, it would be naive to expect that when the leader of world’s largest oil consumer and the leader of the world’s largest exporter sit down for a face to face meeting, the issue would not be on agenda.

... And indeed one cannot forget the role of speculation here. F. William Engdahl strongly says in a recent write up that the oil markets are controlled by an elaborate financial market system as well as by the four major Anglo-American oil companies. As much as 60 percent of today’s crude oil price is pure speculation driven by large trader banks and hedge funds.

It has nothing to do with the convenient myths of Peak Oil. It has to do with control of oil and its price.

Let’s be realistic Mr. Bush!

We are living in an era where any thing bullish could push prices up and you have more of a power to control those extraneous factors than indeed the Saudis. Before starting talks in Riyadh and before making political rhetoric, Sir, you need to go over the facts, closely and coolly and it would be very clear, who really controls the markets. Short & Simple: It’s not Saudis, or for that matter the OPEC. Welcome to Riyadh, Sir.
(16 May 2008)

Naimi Blames Oil Price on Financial Market Turmoil
Shinhye Kang and Ayesha Daya, Bloomberg.
Turmoil in financial markets is to blame for record oil prices, rather than a shortage of supply in a world that's seen the doubling of crude oil reserves since 1980, Saudi Arabian Oil Minister Ali al-Naimi said.

``Oil and other commodity markets are becoming increasingly more interconnected with the financial markets where rapid developments in the latter have intensified oil price volatility,'' he said in a speech today in South Korea, where he received an honorary doctorate from Seoul National University.
(15 May 2008)

Shell: Crude shortfalls will boost renewables
Bloomberg News via Houston Chronicle
Royal Dutch Shell said the failure of crude suppliers to keep pace with accelerating demand may prompt the expansion of renewable energy.

There's "plenty of oil in the world," Shell's Scenario Team said today on a Webcast led by Global Business Environment Vice President Jeremy Bentham. "The important moment is actually not a possible peak of oil production;" it's when demand exceeds supply, which may "come well before a peak" in output.
(15 May 2008)