June 23rd, 2008
08:49 AM GMT
LONDON, England – Never have so many come for so little. For many, the outcome of the Saudi oil gathering at Jeddah is a huge disappointment.The Saudis announced they would raise daily production by 200,000 barrels a day to 9.7 million barrels.
But let's put this in perspective. It's doesn't even make up for the 300,000 barrels of lost production suffered by Royal Dutch Shell and Chevron in the past week due to militant attacks in Nigeria.
The Jeddah gathering had a huge build-up and came at a time when governments and consumers are feeling the double burden of record high oil prices and food prices. Some had hoped that Saudis would increase production by as much as 500,000 barrels a day.
The world is crying out for more oil. World oil demand is expected to rise by 800,000 barrels a day, according to the International Energy Agency.
So where does this leave all of us? With high oil prices continuing. As I've written prveviously, don't blame the speculators. What's going on in the oil market right now isn't a short-term problem but a structural shift, based on increased demand, and not enough production.
At close to $140 a barrel oil is trading at five times the average six years ago.
And there are predictions that it could even higher, possibly to $200 a barrels in less than two years.
The Saudis along with others attending the summit had to look like they are concerned. They touched on several issues surrounding the oil market, but with the exception of the Saudi production announcement, there's no real outcome.
Given how little the summit produced, it probably would have been better for everyone to stay home, at least that would have saved some jet fuel.
Tell me what you think.
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