05.07.2009

Natural gas and oil prices are influenced by a number of issues, partially psychological in nature (speculative investments, perceived risks, government interference in oil and gas markets in the form of subsidies) and partially due to economic, political or technical factors (higher demand, tight capacity along the whole chain of supply – transport – storage – refining and the threat of interruptions). Issues on the supply and demand side that influence pricing also include weather (hurricanes that reduce supply, summer that increases road transport and the use of air-conditioning), geopolitical events in energy exporting countries, higher GDP in energy consuming countries and a host of other factors. In 2000, as natural gas was first made available in Israel at approximately $2.5 mmbtu, the price in Europe and the US averaged $3.2 and $4.2 mmbtu respectively. By 2007, the price of natural gas had increased to between $7 – $9 in the US and EU respectively, having peaked shortly to $15 mmbtu after the devastating hurricane season hit the Gulf coast of the US in the summer of 2005. During the same time period LNG costs have also shown a fourfold increase, from $2 billion to $8 billion a train. Brent crude oil which was $28.5 a barrel in 2000 hurtled past the $100 psychological barrier for the first time ever at the beginning of 2008 peaking on 11th July 2008 to $147.27 a barrel and decreasing after that to just above $100 a barrel by September 2008 and down 50% from its peak to below $70 in October of the same year. Russian Urals [crude] historically trades at a few dollars discount to [North Sea] Brent; in July 2008 the spread widened down [by] $6/bbl…. In July 2009 Urals traded almost at par to Brent. >

Theory postulated by Luciani Giacomo according to which countries in which there is a steady and significant income from oil, there is no struggle for human rights. The political and social tranquility attained by regimes with a steady income from oil is a result of their ability to fulfill the needs of their citizens, generally free of charge (the citizens pay no taxes). Conversely, a severe drop in oil prices could bring about social and political unrest

A special tool to treat marine oil leaks

OPEC often debates whether to cut its oil quotas in order to increase prices. >OPEC President Chakib Khelil acknowledged the cartel has little control over prices at the moment because of the slumping world economy, which has considerably reduced demand for oil. He pointed out that cartel countries only produce 40 per cent of the world’s oil. >

The oilfield services segment covers firms that provide the products and services that are used in drilling, evaluating and completing oil and gas wells. Customers include oil and gas producers and drilling companies

The cause of the decline in prices is partly due to the economic crisis and subsequent drop in energy demand, but other structural factors were already at work softening oil markets. the main reasons for the change in prices can be attributed to 4 factors: (1) spare capacity for a few years; (2) short term market forces that predict bearish market for a few years (supply, demand, inventory, weather and level of economic growth); (3) milder politics and geopolitics perceived for next few years; (4) Flow of funds out of commodity investments. Revenue losses due to lower oil prices from the end of 2008 create major challenges to the domestic and foreign policies of Iran, Russia and Venezuela where lower income impedes the achievement of fundamental foreign policy objectives that require use of funds; while lower prices present opportunities for the US, Europe, China, Japan and others which may be difficult to recognize and achieve.