Once again, another $20 worth of gas in my Jeep yesterday, the pump price now at $4.09 a gallon for regular, down a whole dime sinceÂ the last visit 10 days ago.
Gas prices are dropping, which in the short run for consumers is great news, but the look of the whole oil process makes one wonder what the shit is going on here — after dipping nearly $20 a barrel the last week or so, the surge is back.
From liveoilprices: In London, Brent crude oil futures for August 2011 delivery was trading at $112.63 a barrel on the ICE Futures Exchange. The contract closed off yesterdayâ€™s trading session up 3.3 percent.
(Illustration found here).
Despite the drop this past week, oil is back — and it didn’t seem to take long.
The big move, of course, was the International Energy Agency (IEA) decision June 23 to release 60 million barrels of oil in the coming month from each of the 28-member nations’ Strategic Petroleum Reserves — about half of that, about 30 million barrels of oil, came from the US reserves.
The OPEC boys, however, were pissed.
From The Financial Times and a possible blow-up between East and West:
If you pay attention to the rhetoric, the answer could be yes.
Abdullah al-Badri, Opec secretary-general, has made strong comments against the International Energy Agency.
â€œI hope this practice will be stopped and stopped immediately,â€ he said. â€œWe donâ€™t see a good reason to release this quantity and I hope the IEA will refrain from using this practice.â€
The release has not altered the supply and demand gap in the third quarter and the fourth quarter either. The global economy will need extra oil from July to December.
The IEA has clearly explained that its release is a stop-gap measure until the oil from the Gulf arrives.
Saudi Arabia, Kuwait and the United Arab Emirates will still find a market for their extra oil.
In private, Gulf countries are not making any retaliatory noises.
Nor they are particularly happy about the whole affair.
True, the hawkish side of Opec, which include countries such as Iran, Algeria and Venezuela, would scream against it.
But what really matters is Saudi Arabia and its allies.
And they are not complaining.
Maybe the oil markets will be quiet for awhile.
Or maybe not — what’s gonna happen?
Scientific American asked Jim Burkhard, the managing director of IHS Cambridge Energy Research Associates’ Global Oil Group to make a guess:
Oil prices were already on a downward trend in mid-June, but they did fall further following the IEA’s June 23 announcement.
But keep in mind the oil market is influenced by a vast array of factors — power shortages in China, agricultural policy in India, the weather in northern Europe — many factors shape the price of oil, so attributing too much importance on any single factor can be a bit misleading.
What we can say is that, at least immediately following the announcement, it did lower prices.
But whether that’s sustained is a big question mark.
Dude, we’re looking for something more definite here.
Well, we’ll just have to wait and see — the one thing I’m extremely-sure of is that my Jeep will need fuel again, no matter what pressure is put on the pump.
Hope for the best, expect far worse.