Someone I know at Chevron...

[Gilgamel]

is calling around to friends and family telling them to stock up on gas today. Apparently one of the higher ups was going around today telling regional managers Chavez is possibly pulling out of OPEC tomorrow.

This is not a prediction on my part, I'm just passing along something I've been told.

[Eomer]

Why would Chavez be pulling out of OPEC? And why would that have a negative (upward) effect on gas prices? If anything he'd be pulling from OPEC so he can ignore production quotas, which would put more oil on the market, not less.

[Taivek]

This was on MSN.com today but I think it is saying oil prices are going to go down.

The death of OPEC - Top Stocks Blog - MSN Money

"The death of OPEC
Posted Sep 11 2008, 07:01 AM by Douglas McIntyre Rating: Saudi Arabia walked out on OPEC yesterday, saying it would not honor the cartel's production cut. It was tired of rants from Hugo Chavez of Venezuela and the well-dressed oil minister from Iran.

As the world's largest crude exporter, the kingdom in the desert took its ball and went home.

As the Saudis left the building, the message was shockingly clear. “Saudi Arabia will meet the market’s demand,” a senior OPEC delegate told the New York Times. “We will see what the market requires and we will not leave a customer without oil."

OPEC will still have lavish meetings and a nifty headquarters in Vienna, Austria, but the Saudis have made certain the the organization has lost its teeth. Even though the cartel argued that the sudden drop in crude was due to "oversupply", OPEC's most powerful member knows that the drop may only be temporary. Cold weather later this year could put pressure on prices. So could a decision by Russia that it wants to "punish" the U.S. and European Union for a time. That political battle is only at its beginning.

The downward pressure on oil got a second hand. Brazil has confirmed another huge oil deposit to add to one it discovered off-shore earlier this year. The first field uncovered by Petrobras has the promise of being one of the largest in the world. The breadth of that deposit has now expanded.

OPEC needs the Saudis to have any credibility in terms of pricing, supply, and the ongoing success of its bully pulpit. By failing to keep its most critical member, it forfeits its leverage.

OPEC has made no announcement about any possibility of dissolving, but the process is already over."

[homsar]

Hey Taivek Check your messages and answer your phone sometime.

[AladainAF]

Originally Posted by Taivek

The downward pressure on oil got a second hand. Brazil has confirmed another huge oil deposit to add to one it discovered off-shore earlier this year. The first field uncovered by Petrobras has the promise of being one of the largest in the world. The breadth of that deposit has now expanded.

Amazing what we find off-shore! Too bad we didn't get to it first. I wonder why.

[Zhaun's_Shade]

Originally Posted by AladainAF

Amazing what we find off-shore! Too bad we didn't get to it first. I wonder why.

Because the coast of Brazil is far away?

[GrobbeeTrull2.0]

Because it's off Brazil's shores, not ours?

[AladainAF]

Originally Posted by GrobbeeTrull2.0

Because it's off Brazil's shores, not ours?

If I recall, it was in international waters. If it was not, I completely stand corrected and retract my above comment.

[Gilgamel]

Like I said, take it for what you will. All I know is this guy is a serious individual and if he takes time out of his day to call me, my parents, and half my cellphone contacts and tell us all to go buy gas he must think there is some reason for it.

[Zhaun's_Shade]

Originally Posted by Gilgamel

Like I said, take it for what you will. All I know is this guy is a serious individual and if he takes time out of his day to call me, my parents, and half my cellphone contacts and tell us all to go buy gas he must think there is some reason for it.

Saudi Arabia leaving OPEC is, in fact, serious business. I'll admit I'm not knowledgeable to be sure how, but I know enough to know it is.

[mylek]

Pretty sure that those particular finds are in Brazilian waters. I believe it is among the areas the Brazilian government auctioned for exploration and development a while back. Lots of international oil companies participated in these auctions including exxon-mobil. That particular field seems to have been won by Petrobras which the Brazilian government has a 55% stake in.

[Northerner]

Originally Posted by AladainAF

If I recall, it was in international waters. If it was not, I completely stand corrected and retract my above comment.

Rights extend up to the edge of the continental shelf for the coastal nation in most cases. That said, I don't know how far out the field is but it's likely within the 200 knots commonly used. Ah, CNN does:

"The company drilled test wells that lie under 2,166 meters (7,100 feet) of water, 286 kilometers (177 miles) south of Rio de Janeiro."

Good enough and well within that economic zone which calculates from the coastline of course. Not that it would matter anyhow as exploiting a find in international waters would only be viable from the closest country anyhow in all but the most extreme circumstances.

And even that doesn't matter for the moment. Finding oil isn't hard. Finding oil that is (relatively) cheap to exploit does.

[rinthea]

No one gives a fuck what Chavez does. They cant produce at its market value (not price) anyway.

OPEC and cartels in general are overrated. Theres some game theory that they teach that shows its in the countries best interest to agree to policy and then cheat (and make excess profits). Thats what happens in the real world, so much so that the cartels dont have much power. Apart from to bump around markets in the short term when they say stuff like 'oooh oil supply is so tight, we cant produce anymore!!11 buy it now!!' because int he short term markets trade on moron pyschology.

Chavez and Iran are just shitting themselves because their production is so inefficient they are losing mega dollars as oil reverts back down. Kinda what you get when you run business in tinpot commy dreamland.

So to wrapup. Whatever chavez does, doenst matter. The Saudis pulling out could have some psychological effect downwards on price. Long term it doesnt matter at all.

[rinthea]

Originally Posted by Gilgamel

Like I said, take it for what you will. All I know is this guy is a serious individual and if he takes time out of his day to call me, my parents, and half my cellphone contacts and tell us all to go buy gas he must think there is some reason for it.

out of interest, what does he do?

I know quite a few petroleum engineers, and guys that work for oil companies... and they make the worst traders... smart guys when it comes to drilling holes and stuff, but geez not so bright trading it.

[Astrocreep]

i blame Bush