‘Danger, Will Robinson, Danger.’
After bickering like a bunch of rich, spoiled brats — which they are — members of OPEC, the scary, big oil producing cartel,Â busted up its meeting yesterday so out-of-line with each other they couldn’t decide on anything.
Ali Ibrahim Naimi, oil minister for Saudi Arabia, OPEC’s biggest producer, called it “one of our worst meetings ever,” marked by so much discord that the cartel couldn’t even agree on when to meet again.
The reaction on oil prices, as was expected, made a leap upward.
(Illustration found here).
As if on cue — fromÂ liveoilprices this morning:
In London, Brent crude oil futures for July 2011 delivery was trading at $118.11, 07.50 GMT this morning on the ICE Futures Exchange after jumping one percent in trading on Wednesday.
In America, domestic crude oil stocks fell by 4.8 million barrels, according to the US EIA (Energy Information Administration) surpassing analystsâ€™ expectations for a modist 300,000 barrel decline.
â€œWhat this means is that there will be less spare capacity to handle another unforeseen outage. The market will price in this risk premium, and the way they do that is by speculators coming in and buying it up.â€ said Tony Nunan, a risk manager with Tokyo based Mitsubishi Corp.
Meanwhile,Â WTI also rose: US Light crude oil futures for July 2011 delivery was trading at $101.36 a barrel, 07.45 GMT this morning in electronic trading on the NYMEX.
The break-up of OPEC won’t help US people much as the biggest beneficiaries of this may well prove to be Russia and Kazakhstan — a couple of big, big oil producers themselves.
More money somewhere else.
And more of the hard-to-come-by cash of US gas consumers will go toward the pump, as these rising basic crude prices will most readily strike hard, but in a non-real-quick way.
From the LA Times:
Amy Myers Jaffe, senior energy analyst at Rice University’s Baker Institute for Public Policy, warned that rising demand could push U.S. oil futures to between $110 and $120 a barrel.
That would equate to pump prices of $3.93 to $4.25 a gallon across the U.S., just as gasoline prices seemed to be headed for a sustained decline.
“We can expect gasoline prices to creep up if it stays in this range,” Jaffe said.
The average price of a gallon of gasoline in California was $3.97 on Wednesday, down sharply from $4.264 a month earlier.
Nationally, the average reached $3.748 a gallon, down from $3.960 a month earlier.
Here on California’s northern coast the pump prices have remained fairly stable at $4.29 a gallon for regular.
However, we on the Left Coast pay a big chunk of that cost in gas taxes, both for regular and diesel making us the most heavily taxed among all U.S. residents when it comes to fuel.
According to data gathered by the American Petroleum Institute, Californians pay nearly 70 cents in state and federal excise and other local taxes per gallon of gas.
API says it’s the fourth highest overall gasoline tax rate in the nation and nearly 20 cents more per gallon than the national average.
Diesel is even worse.
California tops that chart at more than 85 cents per gallon.
This situation further amplifies peak oil, which some say is already here or is so-close on the horizon that there’s no breathing room, no time to come up with an alternative energy source to power this oil-based civilization.
Add to climate change, stir and consume quickly.