Something must be done, and it must be done very soon before it is too late


JF-Expert Member
Feb 11, 2007
Oil to hit $250 a barrel, says Gazprom chief· Opec calls for calm and denies any shortages

· Shell tanker drivers to strike this weekend
Terry Macalister The Guardian,
Wednesday June 11 2008

The Russians undermined Opec's attempts to talk down the oil market yesterday by warning that crude prices could almost double to $250 a barrel within 18 months.

The prediction from Alexey Miller, chairman of Gazprom, came as the price of oil leaped $2.75 to $137.10 a barrel even though Opec insisted everyone was already "panicking" unnecessarily and stressed there were no shortages.

The soaring value of crude yesterday pushed British wholesale gas prices to new record highs of 100.75p per therm for next winter deliveries. This will put pressure on domestic heating bills, while the current price of motor diesel has already reached £1.30 a litre.

Gazprom said the higher crude prices it expected would drag gas values up too. "We think it [oil] will reach $250 a barrel in the foreseeable future," said Miller, insisting that high demand rather than financial speculation was the primary factor, an argument that runs counter to that put forward by Opec.

The comments came 24 hours after Tony Hayward, the BP chief executive, said supply constraints were partly responsible for the very high crude prices so far.

A spokesman for Gazprom, which is also one of Russia's largest crude producers, expected the price to hit $250 some time in 2009. The company exports gas to Europe at prices linked to oil products for historic reasons and Miller said the current gas price was $410 per 1,000 cubic metres.

Analysts said the latest Russian energy estimates were hard to support and noted they were not backed up with specified research data. "It's crazy... maybe they know something we don't," said one. Abdullah al-Badri, the secretary general of Opec, had earlier appealed for calm. "Really we need some calm. We are panicking too much," Badri told a global energy summit. "The situation is unbearable as far as we are concerned. I want to say, there is no shortage now and in the future."

Saudi Arabia said on Monday it would soon call for a meeting to discuss what it called unjustified rises in prices.

Badri supported holding such a meeting, which he said might happen before the next scheduled Opec gathering on September 9. He hoped that measures could be taken to curb speculation in the oil market, a factor Opec believes is inflating prices to levels not justified by supply and demand.

"We are not happy with the current level of price for one reason. It has nothing to do with the fundamentals," he said.

"Speculators are playing a big role in high oil prices. Also there are other considerations, the value of the dollar and the geopolitical situation."

Opec, which pumps about two in every five barrels of oil, was willing to raise production if needed, although there was no demand for extra barrels. "Nobody is asking for oil at this time. We are checking with our member countries. There is no queue for oil," he said.

But there could be queues at British service stations this weekend as tanker drivers who deliver to the one in ten forecourts controlled by Shell are threatening to go on a four day strike starting this Friday as part of a pay dispute.

Gordon Brown told the public not to panic-buy fuel but the department of business admits that there is likely to be "stock-outs" at some facilities.

"If the strike were to affect other retailers, it would have a more significant impact. The government is working with the wider fuel industry on measures to reduce any disruption to the public and business," said the department which is hoping an Acas arbitration meeting between the Unite union and the haulage firms will break the deadlock.

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Wenye magari kazi kwenu
What suprises me most is diesel imekuwa aghali kuliko Petrol!! Kitu gani kimebadilika kwenye oil industry?
At this point I think the Goverment should seriously consider reducing their tax structure of almost 602/= per litre as reported by Chadema last week.

Agree that one of the biggest 'sources' of income is taxes on petroleum products but at this point,some concessions have to be made.
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