Tuesday, September 20, 2005

Chancellor Brown sees Black

UK Chancellor Gordon Brown says “rising prices are an international issue.” True but tell it to the consumers in the UK. High prices are good for oil companies, read BP, good for speculators, and also good for Brown. Instead of doing something in order not to pass all the increase to the customers, Brown rules out cutting fuel duty and claims that a global response is to stabilize oil markets.

To stabilize the market Brown has accused OPEC of failing to match supplies with demand as oil consumption increases (see BBC article). George Bush also urged OPEC to boost supply to keep petrol prices down as the US struggles with the after-effects of Hurricane Katrina. (see Guardian article).

“But the US president's appeals to the oil cartel were falling on deaf ears as Opec ministers, meeting in Vienna, expressed reluctance to take immediate action to increase oil production.” (see Guardian article) comments Guardian. However, it is not OPEC but B&B who have deaf ears.

Brown took it a step further: “The chancellor, Gordon Brown, representing the EU, last week called on Opec to release an extra 500,000” (see Guardian article).

The Energy Commissioner of the EC, Andris Piebalgs, on the other hand, stresses the importance of ensuring that sufficient oil is being supplied to the market. "I highly value the positive actions and commitment undertaken by the OPEC so far in order to stabilize the international oil market and to increase the supply," said Piebalgs after discussion with Sheikh Ahmad (see Kuwait News Agency article)
Doesn’t it sound that the EU’s position falls in sharp contrast with Brown's statement?

Maybe Brown should change his name from Brown to Black. It seems that he cannot see what is happening and why it is happening.

Whatever! It is clear that B&B really believe there is not enough crude in the market. This contradicts first of all with the world oil supply demand balance which shows that there is excess supply as told thousand times by OPEC and latest by Sheikh Ahmad, who is also Kuwait's oil minister.

Sheikh Ahmad says that "There are fears in the oil markets of the continued supplying of markets with crude oil although there's a big surplus; there are quantities that the market cannot absorb, there is no buyer," (see the BBC article).

It is clear that somebody is lying!

French Finance Minister Thierry Breton seems to be a clever person. He understands some of the things on how the market works I guess. He says "all those who contribute to varying degrees to the volatility of the markets, deliberately or otherwise, take their responsibilities so that this volatility is reduced." (see Business Week article)
YES. “Deliberately” or “otherwise.”
Do you really want to reduce the volatility? There is one very simple WAY. Just close down NYMEX and IPE oil futures. That’s it!


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