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Home Front Economy
Oil prices fall below $66 a barrel
2006-09-12
NEW YORK — Oil prices dropped below $66 a barrel Monday, after Iran said it would consider halting its enrichment of uranium and OPEC ministers said they would maintain their 28 million barrel-a-day production target.

These developments supported the view that supplies will outpace demand _ a market sentiment that has pushed crude oil prices down about 16 percent from their all-time record reached in mid-July. "When supply exceeds demand, commodities have one way to go, and that's down," said Oppenheimer & Co. analyst Fadel Gheit. "Barring a global crisis, or a major supply disruption, I think the trend will continue."

Light, sweet crude for October delivery fell 64 cents to settle at $65.61 a barrel Monday on the New York Mercantile Exchange _ the lowest closing price for front-month crude since finishing at $64.16 a barrel on March 27. It dropped as low as $64.85 earlier Monday.

Still, the magnitude of Monday's price decline shrank as traders digested the statement by OPEC that it would monitor market conditions and consider an output cut later this year. Some OPEC members, including Iranian Oil Minister Kazem Vaziri Hamaneh, suggested that prices shouldn't be allowed to fall below $60 a barrel.

According to Oppenheimer's Gheit, crude prices would have to fall below about $55 a barrel before OPEC would start worrying about members' revenue. "Oil prices are still higher than a year ago, double where they were three years ago, and three times the support level OPEC established for itself five years ago," Gheit said. "OPEC is in no hurry to cut production, because they still think, why panic? We never thought we'd have $60 oil ... They are likely to overstay their welcome, if you will, and saturate the market with excess crude."
Posted by:Steve White

#16  I saw it for $2.29 in Cypress, TX. I heard ot was $2.05 in IA today (farkin' IOWA??).
Posted by: Brett   2006-09-12 23:31  

#15  Easy on the windsurfer cracks there Bobby. We are a small but passionate community. Where there are wind farms there is wind. Windsurfers have no problem with this. Besides, the windmills are about 70 feet in the air. No disturbance to those of us on the surface.

Kerry, while he does windsurf and kiteboard, is a maroon. His senior senator, fat ass Teddy, does neither as it is difficult to pour the scotch into the glass while ripping at 20 knots. Anyway, the whine from the high and mighties was about how the view would be disrupted, not that it would affect the windsurfing.
Posted by: remoteman   2006-09-12 17:29  

#14  I'm much less concerned about the stability of 70 years of history than the next 15 years of conflict. And the question is not price alone, but availability. Why did the Japanese decide to attack America instead of Russia?

I seriously doubt increased drilling and coal liquifaction are greenie wet dreams.
Posted by: Nimble Spemble   2006-09-12 17:02  

#13  That's a problem easily addressed by adjusting income tax rates or providing per capita rebates. Reducing the volatility of petroleum prices will change the way markets act.

If you look at oil prices over the last 70 years you will find to be one of the most stable of commodities and as a commodity reacts to market conditions as well as anything.

Oil prices have historically been very low, and there is zero reason to think that will change anytime in the next 20 years.

Thus, creating another tax simple feeds a monster that doesn't need to be fed and imposes unneccesary costs on everyone else.

If "alternative energy" was viable the market would have moved over to those sources already. But leftists continue to insist that government subsidy is just the thing that will makes these fuels viable. But the only thing a government sponsored subsidy does really well is to keep itself going in the face of every indication the money is better spent elsewhere. ( like more dead terrorists )

We complain about wanting to get off the "oil tit" but subsidizing a greenie wet dream ain't gonna do it. The only thing that will do it is the market and I ain't seeing anything to indicate there will be a change in how we obtain enery.
Posted by: badanov   2006-09-12 16:54  

#12  But, Nimble ... petroleum is energy.

Yeah, I know. It goes into plastics, too.

But the point was, there are a lot of possibilities out there, none of them cheap, easy, quick or environmentally benign.

Therefore, the Dems don't like them. They're in search of the silver bullet, and only conservation is cheap, easy, quick and environmentally benign.

But I like my S.U.V.
Posted by: Bobby   2006-09-12 14:51  

#11  Bobby, Petroleum is the problem, not energy. Yes we should open up domestic drilling. The rest of the electrical stuff, nukes, hydrogen, wind mills may or may not be good ideas, but they don't produce or displace imported petroleum.
Posted by: Nimble Spemble   2006-09-12 13:41  

#10  Oil shale.

US has as much reserves in Oil shale as the whole world current oil reserves, combined. Factoring in the increases of consumptionbased on population growth estimates, this reserve would last ~ 300 years.
Posted by: twobyfour   2006-09-12 13:14  

#9  Yes, Nimble. and all those voting for energy independence should vote for more drilling (ANWR, Florida, California) and more wind farms - the best location on the east coast, by far, is Cape Cod. Hear that Johnny? (Oh, but Kerry knew that - he's a windsurfer-guy).

Oh, and fast-breeder nukes, which put out much less waste than conventional nukes. And more hydropower, with dams across wild and scenic rivers.

Oh, wait - we can't do any of those things. It must be Bush's fault!

I almost forgot hydrogen, which costs more energy to make than it provides, and for which there is no infrastructure to make, distribute, or deliver.

Oil shale? Tar sands? See hydrogen, plus a lot messier to produce, what with strip mining, and all.

I guess we gotta conserve, and whine. And blame Bush.
Posted by: Bobby   2006-09-12 13:05  

#8  Feeding the government more should be the very last option.

That's a problem easily addressed by adjusting income tax rates or providing per capita rebates. Reducing the volatility of petroleum prices will change the way markets act.

Excuse me sir, may I wash your windscreen, have a look at your oil, and check the air in your tires?

Oh, we found excess refinery capacity too?

I don't like roller coaster gas price rides at the cost of $500 billion in excess defense spending to protect Europe, India, China and Japan's access to Middle Eastern oil paid for by hocking our future to the Chinese.

The way to political independence is petroleum independence. The only way off imported petroleum is domestic alternatives. The only way to get them in meaningful volume is to assure return on investment. The market will take care of the rest. Let's start now.
Posted by: Nimble Spemble   2006-09-12 10:08  

#7  Coming soon!

Excuse me sir, may I wash your windscreen, have a look at your oil, and check the air in your tires?

Posted by: Besoeker   2006-09-12 09:54  

#6  Let's hope the speculators enjoy eating their bills at $70+ a barrel.

If we're willing to live through another couple of these bumps within a short period of time, enough of the speculators will be burned enough to calm down for a good while. Like a backfire to burn out the fuel for further advances by a major forest fire.
Posted by: Slineting Gleretle7500   2006-09-12 09:22  

#5  Time to install an inflation adjusted minimum cost oil import fee at, say, $55.

Feeding the government more should be the very last option. Raising everyone's taxes only benefits government, it will not change the market, and it will not affect our enemies.
Posted by: badanov   2006-09-12 08:33  

#4  Let's burn theirs first.
Posted by: 6   2006-09-12 07:38  

#3  According to Oppenheimer's Gheit, crude prices would have to fall below about $55 a barrel before OPEC would start worrying about members' revenue.

The price that assures a profit to lot's of alternative petroleum sources. They're into dangerous territory now. Time to install an inflation adjusted minimum cost oil import fee at, say, $55.
Posted by: Nimble Spemble   2006-09-12 06:45  

#2  "... They are likely to overstay their welcome, if you will, and saturate the market with excess crude."

Apparently, Allah never studied economics...heh, heh, heh...

Mike
Posted by: Mike Kozlowski   2006-09-12 06:36  

#1  Wasn't too long ago OPEC was worried about putting too much pressure on the world economy. Now we know why: It would have slowed down their revenue stream! So much for the "humanitarian phase" there at OPEC.
Posted by: gorb   2006-09-12 02:10  

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