Oil price increases of 2004 and 2005

Oil price in 2003-2005 Average US retail price of regular unleaded gasoline Oil prices from 1860-1999 in 1999 dollars. Source: [1]

The price of standard crude oil on NYMEX was under $25/barrel in September 2003. By August 11, 2005, the price had been above $60/barrel for over a week and a half. A record price of $70.85 per barrel was reached on August 29, 2005.[2] While oil prices are considerably higher than a year ago, they are still roughly 25$ from exceeding the inflation-adjusted "peak of the 1980 shock, when prices were over $90 a barrel in today’s prices" [3].

In the United States gasoline prices reached an all time high during the first week of September 2005 in the aftermath of Hurricane Katrina. The average retail price was nearly $3.04 per gallon. The previous high was $2.38 per gallon in March 1981, which would be $3.03 per gallon after adjusted for inflation.[4][5]

Demand

High demand is led by the U.S. market, the source of an increasing percentage of the world's demand for petroleum. The U.S. economy currently accounts for one-quarter of all demand. New demand is also coming from emerging industry in third world nations, including India and especially China which is developing a western-style car culture and whose manufacturing bases have grown very rapidly in recent years.

Sources of the world-consumption-increase in 2004 compared to 2003 (total increase of 3.4%), according to U.S. Department of Energy Energy Information Administration estimates: [6]

  • China: 38.9%
  • US: 19.4%
  • Asia outside Japan and China: 13.8%
  • Canada: 4%
  • UK: 3.5%
  • combined other non-OECD: 21%

Note: the total percentage exceeds 100 because the overall demand from all other countries decreased during the same period..

Supply


There are a number of reasons why oil traders feel that oil supplies might be reduced. One of the most important is growing turbulence in the Middle East, the world's largest oil producing region. The war in Iraq, Iran's nuclear program, and questions about Saudi Arabia's internal stability all could in the future lead to a dramatic fall in the supply of oil. Outside the Middle East other oil producers have worried investors such as the strikes political problems in Venezuela and potential instability in West Africa.

In late August, 2005, Hurricane Katrina crippled the supply-flow from off-shore rigs in the Gulf Coast, the largest source of oil for the domestic U.S. market. Short-term shutdowns because of power outages knocked out two major on-shore pipelines, and at least 10% of the nation's refining capacity was not operating in the wake of the storm. Gas prices in the region, normally 70 cents below the national average, were at $3.12 on August 30.[7]

World supply (specification) came in at 83 million barrels a day during 2004 in department of energy EIA calculations ([8]). This rate of increase is faster than that of any other date in the past. Despite this there is increasing discussion of peak oil and the possibility that the future may see a reduced supply of oil. Even if oil supplies themselves are not reduced, some experts feel the easily accessible sources of light sweet crude are almost exhausted and in the future the world will depend on more expensive sources of oil.

The short term price of oil is partially controlled by the OPEC cartel and the oligopoly of major oil companies. One other important cause is the United States dollar's slump against the Euro. Since oil is traded in dollars, the price must increase for OPEC to maintain buying power in Europe.

Causes

Some people and news agencies argue that labor strikes, hurricane threats to oil platforms, fires and terrorist threats at refineries, and other general problems are responsible for the higher gas prices. Critics argue that these problems periodically push price higher, but that they are not fundamental or long term enough to cause the large jump in gas price. A more fundamental problem that some believe is causing the price to rise is the probability of peak oil already or soon to be reached. Not only is there a limited amount of fossil fuels which have been burnt as fuel, but however much remains will be used faster by a growing industrialized world population and what remains will be more dificult to get since the easiest wells have been tapped and the remaining sources will be fought over in resource wars.

Others believe that the price of oil is almost entirely speculative, and that the increase in price is due to oil speculation extending into the long term. These people argue that speculators foresee increasing demand, decreasing supply, or both, leading to a long term increase in the price of oil. If these speculators are wrong, current prices may actually be a price bubble, and the price could thus collapse. A July 14, 2005 Morgan Stanley report[9] suggests that opinions of the oil market could burst just like a bubble if indications of declining Asian demand continue.

Still others suggest that the main issue is a lack of energy efficiency in industry. These analysts believe the problem would be solved by increasing the efficiency of factories, homes and transportation and easing the demand crunch by using less energy and more renewable energy.

Spring & Summer 2005 increase

Overnight gas price hike shown at a Chicago area bp station (background). The Shell station (foreground) has not yet posted the 12 cent price hike.

After retreating for several months during the winter of 2004/2005, prices rose to new highs in March 2005. The price of light, sweet crude oil on NYMEX has been above $50/barrel since March 5, 2005. On March 16, 2005, the price surpassed the October 2004 high of $55.17 to close at $56.46. In April 2005 the price began to fall, reaching $53.32 on April 9. It then reversed course and headed to an all time high of $58.28, driven mainly by lingering concerns of a prolonged weak dollar. In June 2005 crude oil prices surged to record highs eventually breaking the psychological barrier of $60.

Saudi Arabian King Fahd's death on August 1, 2005, meant a new regime that may be less amicable to U.S. influence. During mid-August, with a string of refinery snags (fires/other deterrents to oil refining), shrinking gasoline inventories, and a growing thirst for oil by American consumers, New York Mercantile Exchange traded crude oil futures surged past the $66 mark and briefly touched $67/barrel. Over the course of three weeks leading up to August 10, crude oil prices had risen by 13%.

While the street price of gasoline usually corresponds to the price of crude oil, refinery capacity can become the governing factor, particularly during periods of high demand. In addition, there are different grades of oil and each refinery is typically configured to process a narrow range of grades. As a result, shortage of a particular grade of oil can keep street prices high, even when overall supply exceeds demand.

Winter 2006 increase

On January 17, sweet crude oil for February delivery rose by $2.38 (3.7%) to $66.30 a barrel. This was the highest increase since early October 2005. Observers believe that violence in Nigeria, and Iran's friction with the West are responsible for this price increase. Continued concerns about Iran raised the price to $68.38 on January 31.[10]

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Hurricane Katrina

Gas price hike shown at a Shell station.

Hurricane Katrina had a major impact on oil and gas prices, especially within the United States. The Gulf Coast is home to a major portion of America's refining capacity. The port of Louisiana is one of its most important inlet for oil imports, and the gulf itself is a major oil producer. Port Fourchon has also suffered long term damage. Louisiana Offshore Oil Port has not. [11]

Gas prices soared after the closing down of the major pipelines connecting the gas of the Louisiana region to the entire East Coast. In Stockbridge, Georgia, regular gas prices came to $5.87 at a BP station. Shortages were feared or experienced in several states including Tennessee [12], Alabama [13], and South Carolina. [14] Many of these were blamed on panic buying. Airports began to report shortages in aviation fuel on 2 September.[15] A shortage could lead to a decrease in food production.[16] Higher prices for heating oil and natural gas were expected as the winter heating season set in.[17]

On 5:10 p.m. EDT, on 31 August, President Bush announced the Energy Department was approving loans from the Strategic Petroleum Reserve and that EPA announced nationwide waver on fuel blends. Bush stated, "This storm has disrupted the ability to make gasoline and deliver gasoline," and "This is going to be a difficult road."[18] Many people have observed however that stores of crude oil do little to address inadequate refinery and distribution capacity.

In order to stabilize world energy supplies, the International Energy Agency offered to sell two million barrels of crude oil and other refined products from national supplies. These supplies would begin entering the US markets within two weeks of 2 September. [19] [20] The press release from the IEA states, "... the implications for the oil market are global."[21]

Effects

There is controversy regarding the potential effects of oil-price shocks. Some see these increases in the price of oil leading to a recession comparable to those that followed the 1973 and 1979 energy crises or a potentially worse situation such as a global oil crash. Most economists see this as unlikely, partly because all developed countries have high fuel taxes that decrease as oil prices increase and can be eliminated in the event of a dramatic price spike. Nevertheless, that loss of revenue would put a strain on government balance sheets. The American Strategic Petroleum Reserve could on its own supply current U.S. demand for about a month in the event of an emergency, unless it is also destroyed in the emergency. This could well be the case if a major storm were to hit the gulf, where the reserve is located. While total consumption has increased [22], the western economies are less reliant on oil than they were twenty-five years ago, due to substantial growths in productivity. In the United States, for instance, each $1000 dollars in GDP required 2.4 barrels of oil in 1973 when adjusted for inflation this number had fallen to 1.15 by 2001. But oil's historically high ratio of Energy Returned on Energy Invested continues a significant decline. Despite the rapid increase in the price of oil, neither the stock markets nor the growth of the global economy have been noticeably affected. Inflation has increased. In the United States, the Consumer Price Index rose by 0.6% compared to 0.2% for September. This was driven by a 4.2% increase in energy costs. As a result during this period the Federal Reserve has rapidly been increasing interest rates to curb inflation.

Economists say that the substitution effect will spur demand for alternate energy sources, such as coal or liquified natural gas. For example, China and India are currently heavily investing in natural gas facilities. Nigeria is working on burning natural gas to produce electricity instead of simply flaring the gas. Outside the US, more than 50% of oil is consumed for stationary, non-transportation purposes such as electricity production where it is relatively easy to substitute natural gas for oil.

The increased price of oil also makes previously impractical sources of oil attractive to businesses. The most prominent example of this are the massive reserves of the Canadian tar sands. They are a far less cost efficient source of oil than crude, but at 60 dollars a barrel, the tar have recently become very attractive to businesses. Recent months have seen billions of dollars invested in the oil sands.

The increased price of oil might also encourage greater fuel efficiency. Recent years have seen a move towards more fuel-thirsty sport utility vehicles in the United States and Canada, and this may be stopped by the high price of gas. The September 2005 sales data for all the vehicles vendor indicated SUV sales dropped while small cars sales increased compared with 2004 sales. There is also an ever increasing market for hybrid vehicles since they are more fuel efficient; since the 1973 energy crisis, the front-wheel drive passenger car has replaced rear-wheel drive as the preferred layout for energy efficient cars. There is an increasing demand of crossover sport utilities which are more fuel efficient - especially for those based on passenger car platforms.

USA Stock markets

Three-year performance of the oil industry... ...and one-month performance.

The increase in oil prices over two years was mirrored by an increase in stock values in the energy sector. The value of the stock in companies such as Apache[23] and Conoco-Phillips [24] rose sharply during this period. These prices increased more rapidly toward the end of August, particularly after Hurricane Katrina. [25]

Wal-Mart shares continued their decrease in value that began with the increase in the oil prices. Over two years, stock in Wal-Mart dropped in value by 25% from $60 per share to under $45 per share. [26] Earlier in August, Wal-Mart announced that higher than expected oil prices cut into the corporation's profits for the 2nd quarter of 2005. Since oil prices after the end of the 2nd quarter continued to rise, 3rd quarter profits from Wal-Mart are expected to be small. Because Wal-Mart's distribution system relies on the customer to drive to a large discount big-box store, increases in the price of fuel might discourage some customers from making the trip as often. Wal-Mart, like all retailers, will also face higher shipping costs to get goods from the factory to the stores. This will likely cause inflationary pressures.

Asia Pacific Region (excludes Australasia)

The Pacific rim had been experiencing this crisis on an ongoing basis prior to Hurricane Katrina.

  • In the Philippines, the oil crisis caused its public to call for immediate government assistance. [27] New sources of energy were sought to deal with the crisis.[28]
  • A senior minister of Singapore expressed concern at the oil crisis in Indonesia.[29]
  • The Indonesian president had instituted subsidies to control the price of gasoline.[30]


Sub-Saharan Africa

High oil prices are hurting many countries in Africa, including Zimbabwe, Eritrea and Tanzania. High oil prices have created an oil supply instability, per barrel price instability or both. In some cases this has led to fuel rationing being enacted.

  • Many countries in Sub-Saharan Africa lack the foreign exchange reserves (ie, Dollars) to purchase enough oil products at the ever increasingly higher prices. These nations must resort to limiting imports or rationing their existing supplies.

Latin America & Caribbean

Venezuela's president, Hugo Chávez, came under increasing scrutiny as he began selling oil at lower-than-market prices to island nations in the Caribbean. [31]

  • At the same time, Cuba has experienced electricity shortages.

Gulf States & Eurasian Arab-Islamic Regions

Iran came under increasing pressure from the European Union in regard to their program to build nuclear power plants.[32]


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Iran came under increasing pressure from the European Union in regard to their program to build nuclear power plants.[32]. April 25, 2006. [31]. Its message is: The Arabs are nothing, not even self-motivated terrorists, but mere puppets manipulated by us in the omnipotent US!"[2] Richard Cohen calls its portrayals of terrorists, the CIA, oil companies, and the US government "crude cliches"[3]. Venezuela's president, Hugo Chávez, came under increasing scrutiny as he began selling oil at lower-than-market prices to island nations in the Caribbean. Amir Taheri called it "ethno-centrism gone wild. In some cases this has led to fuel rationing being enacted. Syriana has been criticised because it is based on the story of a spy (falsely) accused of attempting to assassinate Saddam Hussein, but in the movie the Hussein figure who Clooney is to assassinate is a benevolent, liberal prince.

High oil prices have created an oil supply instability, per barrel price instability or both. From the movie's website [1]: "'Syriana' is a very real term used by Washington think-tanks to describe a hypothetical reshaping of the Middle East...". High oil prices are hurting many countries in Africa, including Zimbabwe, Eritrea and Tanzania. access to crude oil.
. In a December 2005 interview, Baer told NPR that the title is a metaphor for foreign intervention in the Middle East, referring to post-World War II think tank strategic studies for the creation of an artificial state (such as Iraq, created from the elements of the former Ottoman Empire) that would ensure continued U.S. The Pacific rim had been experiencing this crisis on an ongoing basis prior to Hurricane Katrina. as it relates to the oil business.

This will likely cause inflationary pressures. Some have suggested that it comes from Pax Syriana, as an allusion to the necessary state of peace between Syria and the U.S. Wal-Mart, like all retailers, will also face higher shipping costs to get goods from the factory to the stores. The movie's title is somewhat ambiguous. Because Wal-Mart's distribution system relies on the customer to drive to a large discount big-box store, increases in the price of fuel might discourage some customers from making the trip as often. is willing to kill reformists to ensure chaos in the middleast and control of the oil. Since oil prices after the end of the 2nd quarter continued to rise, 3rd quarter profits from Wal-Mart are expected to be small. The U.S.

[26] Earlier in August, Wal-Mart announced that higher than expected oil prices cut into the corporation's profits for the 2nd quarter of 2005. There are many apparent conflicts in the movie between personal family lives and politics, mainly in terms of morality. Over two years, stock in Wal-Mart dropped in value by 25% from $60 per share to under $45 per share. Syriana revolves around a subtext of father-son relationships: Bryan Woodman and his two sons, the eldest of whom is killed in the emir's swimming pool; the emir and his pair of sons competing for succession; Saleem Ahmed Khan and his son Wasim, who comes to embrace Islamic fundamentalism; the lawyer Bennett Holiday and his alcoholic father; and Robert Barnes and his high school son who wants a "normal" life. Wal-Mart shares continued their decrease in value that began with the increase in the oil prices. Some aspects of this problem are described in Peak Oil. [25]. on oil.

These prices increased more rapidly toward the end of August, particularly after Hurricane Katrina. The central theme is the dependence of the U.S. The value of the stock in companies such as Apache[23] and Conoco-Phillips [24] rose sharply during this period. The explosive device used in the attack appears to be the shaped-charge explosive from the missile that Robert Barnes lost in Iran. The increase in oil prices over two years was mirrored by an increase in stock values in the energy sector. Cole attack). There is an increasing demand of crossover sport utilities which are more fuel efficient - especially for those based on passenger car platforms. During a soccer match, Wasim meets a charismatic Muslim fundamentalist cleric and starts down a path that will eventually leads him into making a suicide attack on a Connex-Killen LNG tanker (similar to the U.S.S.

There is also an ever increasing market for hybrid vehicles since they are more fuel efficient; since the 1973 energy crisis, the front-wheel drive passenger car has replaced rear-wheel drive as the preferred layout for energy efficient cars. An elderly man complains about the heat, and when Ahmed tries to warn him not to talk, it is Ahmed and Wasim who are beaten with truncheons by the guards. The September 2005 sales data for all the vehicles vendor indicated SUV sales dropped while small cars sales increased compared with 2004 sales. A public address system warns those waiting to keep silent. Recent years have seen a move towards more fuel-thirsty sport utility vehicles in the United States and Canada, and this may be stopped by the high price of gas. The migrant workers are ordered to report to the immigration bureau or face deportation and Saleem and Wasim wait in a long line, which is overseen by heavily armed guards. The increased price of oil might also encourage greater fuel efficiency. His son Wasim desperately searches for work.

Recent months have seen billions of dollars invested in the oil sands. Saleem, the father, appears to be rooted in the past and cannot bring himself to deal with the situation. They are a far less cost efficient source of oil than crude, but at 60 dollars a barrel, the tar have recently become very attractive to businesses. Since the company has provided food and lodging, the workers face the threat of poverty and deportation due to their unemployed status. The most prominent example of this are the massive reserves of the Canadian tar sands. When they arrive, they find out that they have been laid off due to the new Chinese company which has outbid Connex. The increased price of oil also makes previously impractical sources of oil attractive to businesses. Connex migrant workers Saleem Ahmed Khan (Shahid Ahmed) and his son Wasim (Mazhar Munir) are seen boarding a bus to go to work at a Connex refinery.

Outside the US, more than 50% of oil is consumed for stationary, non-transportation purposes such as electricity production where it is relatively easy to substitute natural gas for oil. Barnes eventually learns what is behind his mistreatment, and attempts to warn Prince Nasir before he is assassinated. Nigeria is working on burning natural gas to produce electricity instead of simply flaring the gas. The CIA scapegoats Barnes on his return to headquarters, despite his record as a loyal and dedicated agent. For example, China and India are currently heavily investing in natural gas facilities. With Barnes's execution seeming certain, he is saved by the Hezbollah imam, who interrupts Mussawi and frees Barnes. Economists say that the substitution effect will spur demand for alternate energy sources, such as coal or liquified natural gas. Mussawi tortures Barnes, seeking information about the Tehran assassination.

As a result during this period the Federal Reserve has rapidly been increasing interest rates to curb inflation. But Barnes's contact turns out to be an Iranian agent, who has Barnes kidnapped. This was driven by a 4.2% increase in energy costs. Barnes hires Mussawi to murder Nasir. In the United States, the Consumer Price Index rose by 0.6% compared to 0.2% for September. Barnes then contacts a mercenary with whom he has worked before, named Mussawi, whom Barnes addresses as "Jimmy," to his annoyance. Inflation has increased. Barnes travels to Lebanon and seeks safe passage from a Hezbollah imam, who is apparently unaware of his CIA role.

Despite the rapid increase in the price of oil, neither the stock markets nor the growth of the global economy have been noticeably affected. After Barnes makes his superiors nervous by writing memos drawing attention to the theft of the second missile, Barnes is proposed for a desk job, but as a field agent he is unaccustomed to the political discretion required, quickly embarrasses the wrong person by speaking his mind, and is sent back to field work — specifically arranging the assassination of Prince Nasir. But oil's historically high ratio of Energy Returned on Energy Invested continues a significant decline. While on an assignment in Tehran to assassinate two arms dealers, Barnes notes that one of two Stinger missiles that were supposed to have been destroyed in the explosion that killed the two Iranian traffickers was given to an Arab who did not speak Farsi. In the United States, for instance, each $1000 dollars in GDP required 2.4 barrels of oil in 1973 when adjusted for inflation this number had fallen to 1.15 by 2001. Robert Barnes (George Clooney) is a veteran CIA field operative who is being used by the CIA to stop Middle Eastern illegal arms trafficking. While total consumption has increased [22], the western economies are less reliant on oil than they were twenty-five years ago, due to substantial growths in productivity. Nasir arranges a military coup, but on the verge of its execution, American officials arrange an attack on his vehicle by a Predator-drone-style weapon system.

This could well be the case if a major storm were to hit the gulf, where the reserve is located. Nasir hopes to succeed his father the emir, but his younger brother, happy with his playboy lifestyle and happy to continue the status quo, is chosen. demand for about a month in the event of an emergency, unless it is also destroyed in the emergency. Woodman learns of Nasir's plans for democratic reform, which correspond to his assessment of the country's interests. The American Strategic Petroleum Reserve could on its own supply current U.S. stands in the way. Nevertheless, that loss of revenue would put a strain on government balance sheets. He informs Woodman that he wants to improve the lives of his people, advance the status of women, and create a parliamentary system on western lines — but the U.S.

Most economists see this as unlikely, partly because all developed countries have high fuel taxes that decrease as oil prices increase and can be eliminated in the event of a dramatic price spike. In contrast to the reactionary, fundamentalist, status quo of his father's government (which has been supported by American interests), Prince Nasir is dedicated to the idea of progressive reform. Some see these increases in the price of oil leading to a recession comparable to those that followed the 1973 and 1979 energy crises or a potentially worse situation such as a global oil crash. As it turns out, the Prince desires to break away from American dependence and utilize his nation's oil profits to introduce democratic reforms to his country. There is controversy regarding the potential effects of oil-price shocks. Prince Nasir confides in Woodman that all is not as it appears. the implications for the oil market are global."[21]. In reparation and out of sympathy for the loss of his son, Prince Nasir grants Woodman's company key oil interests worth USD 75 million and invites Woodman to become his energy advisor.

[19] [20] The press release from the IEA states, ".. The electrical problem results in the boy's electrocution and death. These supplies would begin entering the US markets within two weeks of 2 September. Meanwhile, Woodman's elder son, who seems slightly ill-at-ease with the other children at the party, is encouraged to jump into the pool to play a game. In order to stabilize world energy supplies, the International Energy Agency offered to sell two million barrels of crude oil and other refined products from national supplies. Two of the emir's men ask Woodman to explain his proposal while standing in the hallway, in front of other guests, which makes Woodman very uncomfortable. Bush stated, "This storm has disrupted the ability to make gasoline and deliver gasoline," and "This is going to be a difficult road."[18] Many people have observed however that stores of crude oil do little to address inadequate refinery and distribution capacity. They try to control the swimming pool's lighting system, but it's not working properly.

EDT, on 31 August, President Bush announced the Energy Department was approving loans from the Strategic Petroleum Reserve and that EPA announced nationwide waver on fuel blends. At the party, Woodman is prevented from speaking directly with the emir, who is busy showing off the estate's remotely controlled electronic systems to the Chinese oil executives. On 5:10 p.m. Woodman is unwilling, because it will be his son's birthday, but he is told to take his family with him to enjoy the party. Airports began to report shortages in aviation fuel on 2 September.[15] A shortage could lead to a decrease in food production.[16] Higher prices for heating oil and natural gas were expected as the winter heating season set in.[17]. Woodman's supervisor directs him to attend a private party hosted by the emir at his estate in Marbella, Spain, to offer his company's analytical services. [14] Many of these were blamed on panic buying. Bryan Woodman (Matt Damon) is an energy analyst based in Switzerland.

Shortages were feared or experienced in several states including Tennessee [12], Alabama [13], and South Carolina. It is clear, however, that Whiting expects that Holiday will make sure that no reasons are found to block the merger. In Stockbridge, Georgia, regular gas prices came to $5.87 at a BP station. Whiting explains that suspicions of bribing foreign officials must be confronted, satisfying the DOJ that the parties in the merger have exercised due diligence in investigating any past crimes. Gas prices soared after the closing down of the major pipelines connecting the gas of the Louisiana region to the entire East Coast. The Washington law firm headed by Dean Whiting (Christopher Plummer) is hired to smooth the way, and the taciturn Bennett Holiday (Jeffrey Wright) is assigned. [11]. American anti-trust regulators at the Department of Justice (DOJ) have some misgivings about the deal.

Louisiana Offshore Oil Port has not. Following a historic but shadowy merger, Connex-Killen becomes the fifth largest oil company in the world. Port Fourchon has also suffered long term damage. Connex has lost production capacity and needs the Kazakh oil field to make up for it; to that end, they initiate a merger with Killen. The port of Louisiana is one of its most important inlet for oil imports, and the gulf itself is a major oil producer. Meanwhile Killen, a smaller oil company, has won the drilling rights to key oil fields in Kazakhstan. The Gulf Coast is home to a major portion of America's refining capacity. Nasir's move greatly upsets the American oil industry and government.

Hurricane Katrina had a major impact on oil and gas prices, especially within the United States. However, the country's foreign minister, Prince Nasir (Alexander Siddig) has granted natural-gas drilling rights to a Chinese company. Continued concerns about Iran raised the price to $68.38 on January 31.[10]. Energy giant Connex once had control of key Mideast oil fields in an unnamed country ruled by the al-Subaai family. Observers believe that violence in Nigeria, and Iran's friction with the West are responsible for this price increase. . This was the highest increase since early October 2005. Tagline: Everything is connected..

On January 17, sweet crude oil for February delivery rose by $2.38 (3.7%) to $66.30 a barrel. George Clooney was one of the film's executive producers. As a result, shortage of a particular grade of oil can keep street prices high, even when overall supply exceeds demand. Gaghan's screenplay is loosely adapted from Robert Baer's memoir, See No Evil. In addition, there are different grades of oil and each refinery is typically configured to process a narrow range of grades. Syriana focuses on the influence of the oil industry, whose political, economic, legal, and social effects are experienced by a CIA operative (George Clooney), an energy analyst (Matt Damon), an attorney (Jeffrey Wright), and a young unemployed Pakistani immigrant in an unnamed Persian Gulf emirate (Mazhar Munir). While the street price of gasoline usually corresponds to the price of crude oil, refinery capacity can become the governing factor, particularly during periods of high demand. Like Gaghan's screenplay for Traffic, Syriana uses multiple storylines to portray a global epidemic.

Over the course of three weeks leading up to August 10, crude oil prices had risen by 13%. Syriana is a 2005 geopolitical thriller film written and directed by Stephen Gaghan. During mid-August, with a string of refinery snags (fires/other deterrents to oil refining), shrinking gasoline inventories, and a growing thirst for oil by American consumers, New York Mercantile Exchange traded crude oil futures surged past the $66 mark and briefly touched $67/barrel. "He's barely qualified to run a brothel, much less a country!" - Prince Nasir speaking about his brother, to his father. influence. is why we win." - Danny D to Bennett. Saudi Arabian King Fahd's death on August 1, 2005, meant a new regime that may be less amicable to U.S. Corruption..

In June 2005 crude oil prices surged to record highs eventually breaking the psychological barrier of $60. Corruption is why you and I are here in the white-hot centre of things instead of fighting each other for scraps of meat out there in the streets. It then reversed course and headed to an all time high of $58.28, driven mainly by lingering concerns of a prolonged weak dollar. Corruption is what keeps us safe and warm. In April 2005 the price began to fall, reaching $53.32 on April 9. Corruption is our protection. On March 16, 2005, the price surpassed the October 2004 high of $55.17 to close at $56.46. We have laws against it precisely so we can get away with it.

The price of light, sweet crude oil on NYMEX has been above $50/barrel since March 5, 2005. He got a goddam Nobel Prize. After retreating for several months during the winter of 2004/2005, prices rose to new highs in March 2005. That's Milton Friedman. These analysts believe the problem would be solved by increasing the efficiency of factories, homes and transportation and easing the demand crunch by using less energy and more renewable energy. Corruption? Corruption ain't nothing more than government intrusion into market efficiencies in the form of regulation. Still others suggest that the main issue is a lack of energy efficiency in industry. "Corruption charges.

A July 14, 2005 Morgan Stanley report[9] suggests that opinions of the oil market could burst just like a bubble if indications of declining Asian demand continue. So, yes, on behalf of my firm I accept your money." - Bryan Woodman to Prince Nasir. If these speculators are wrong, current prices may actually be a price bubble, and the price could thus collapse. "You want to know what the business world thinks of you? We think 100 years ago you were living out here in tents in the desert chopping each others heads off and that’s exactly where you are going to be in another hundred. These people argue that speculators foresee increasing demand, decreasing supply, or both, leading to a long term increase in the price of oil. Others believe that the price of oil is almost entirely speculative, and that the increase in price is due to oil speculation extending into the long term.

Not only is there a limited amount of fossil fuels which have been burnt as fuel, but however much remains will be used faster by a growing industrialized world population and what remains will be more dificult to get since the easiest wells have been tapped and the remaining sources will be fought over in resource wars. A more fundamental problem that some believe is causing the price to rise is the probability of peak oil already or soon to be reached. Critics argue that these problems periodically push price higher, but that they are not fundamental or long term enough to cause the large jump in gas price. Some people and news agencies argue that labor strikes, hurricane threats to oil platforms, fires and terrorist threats at refineries, and other general problems are responsible for the higher gas prices.

Since oil is traded in dollars, the price must increase for OPEC to maintain buying power in Europe. One other important cause is the United States dollar's slump against the Euro. The short term price of oil is partially controlled by the OPEC cartel and the oligopoly of major oil companies. Even if oil supplies themselves are not reduced, some experts feel the easily accessible sources of light sweet crude are almost exhausted and in the future the world will depend on more expensive sources of oil.

Despite this there is increasing discussion of peak oil and the possibility that the future may see a reduced supply of oil. This rate of increase is faster than that of any other date in the past. World supply (specification) came in at 83 million barrels a day during 2004 in department of energy EIA calculations ([8]). Gas prices in the region, normally 70 cents below the national average, were at $3.12 on August 30.[7].

Short-term shutdowns because of power outages knocked out two major on-shore pipelines, and at least 10% of the nation's refining capacity was not operating in the wake of the storm. market. In late August, 2005, Hurricane Katrina crippled the supply-flow from off-shore rigs in the Gulf Coast, the largest source of oil for the domestic U.S. Outside the Middle East other oil producers have worried investors such as the strikes political problems in Venezuela and potential instability in West Africa.

The war in Iraq, Iran's nuclear program, and questions about Saudi Arabia's internal stability all could in the future lead to a dramatic fall in the supply of oil. One of the most important is growing turbulence in the Middle East, the world's largest oil producing region.
There are a number of reasons why oil traders feel that oil supplies might be reduced. Note: the total percentage exceeds 100 because the overall demand from all other countries decreased during the same period..

Department of Energy Energy Information Administration estimates: [6]. Sources of the world-consumption-increase in 2004 compared to 2003 (total increase of 3.4%), according to U.S. New demand is also coming from emerging industry in third world nations, including India and especially China which is developing a western-style car culture and whose manufacturing bases have grown very rapidly in recent years. economy currently accounts for one-quarter of all demand.

The U.S. market, the source of an increasing percentage of the world's demand for petroleum. High demand is led by the U.S. .

The previous high was $2.38 per gallon in March 1981, which would be $3.03 per gallon after adjusted for inflation.[4][5]. The average retail price was nearly $3.04 per gallon. In the United States gasoline prices reached an all time high during the first week of September 2005 in the aftermath of Hurricane Katrina. A record price of $70.85 per barrel was reached on August 29, 2005.[2] While oil prices are considerably higher than a year ago, they are still roughly 25$ from exceeding the inflation-adjusted "peak of the 1980 shock, when prices were over $90 a barrel in today’s prices" [3].

By August 11, 2005, the price had been above $60/barrel for over a week and a half. The price of standard crude oil on NYMEX was under $25/barrel in September 2003. At the same time, Cuba has experienced electricity shortages. These nations must resort to limiting imports or rationing their existing supplies.

Many countries in Sub-Saharan Africa lack the foreign exchange reserves (ie, Dollars) to purchase enough oil products at the ever increasingly higher prices. The Indonesian president had instituted subsidies to control the price of gasoline.[30]. A senior minister of Singapore expressed concern at the oil crisis in Indonesia.[29]. [27] New sources of energy were sought to deal with the crisis.[28].

In the Philippines, the oil crisis caused its public to call for immediate government assistance. combined other non-OECD: 21%. UK: 3.5%. Canada: 4%.

Asia outside Japan and China: 13.8%. US: 19.4%. China: 38.9%.

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