3 forces causing price swings, Saudi oil minister says

0
180

 

By ELIZABETH SOUDER / The Dallas Morning News 

HOUSTON – Three new, little understood forces are causing wild swings in oil prices, Saudi Arabia’s petroleum minister said Tuesday: the globalization of capital markets, increased investment in commodities by financial companies, and climate change.

“There is no doubt in my mind that increased speculative interest in oil contributed to the extreme price volatility of the past few years,” Minister of Petroleum Ali al-Naimi told the Cambridge Energy Research Associates conference.

He also said climate change “will have an even more profound impact on redefining the role of governments and government intervention in energy markets.”

Saudi Arabia will boost its spare production capacity to 4.5 million barrels a day by midyear to help stabilize markets, al-Naimi said.

He called alternative fuels important and said Saudi Arabia would like to be the largest exporter of solar electricity.

Still, he said, fossil fuels will be the dominant energy for 30 to 50 years. And the push for alternatives risks causing an energy shortage if oil companies cut production and alternative energy producers cannot make up the difference.

“We must also be mindful that efforts to rapidly promote alternatives could have a chilling effect on investment in the oil sector,” he said.

Also at the conference, Exxon Mobil Corp. senior vice president Michael Dolan said company officials prefer that the U.S. regulate greenhouse gas emissions by taxing carbon dioxide. “A carbon tax can provide transparency, administrative simplicity. A carbon tax reduces policy risk for business and investors in a way that cap-and-trade schemes do not.”

Most energy executives prefer that Congress set a cap for carbon dioxide emissions, then issue tradable certificates representing those emissions. Dolan said that system would allow carbon dioxide emissions prices to fluctuate, making it difficult to predict energy costs.

 

www.dallasnews.com

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.