The question is, “What is up with OPEC?”
The New York Times reports from Vienna, where Saudi negotiators both publicly stated support for an agreement to reduce production and privately spread word that they would not be bound by the production targets.
In June, King Abdullah pledged that his country would pump at full tilt to bring prices down. In August, the kingdom increased its production to 9.7 million barrels a day, the highest in three decades. Saudi Arabia is now producing around 9.5 million barrels a day, 600,000 barrels a day more than its quota.
“This seems to set Saudi Arabia up as the unilateral decision-maker on output for the fall,” said Greg Priddy, an energy analyst at Eurasia Group, in a research note. “Clearly, other OPEC members are not going to trim their own production without Saudi Arabia returning to its quota. Saudi Arabia also seems to be eager to avoid headlines about it cutting production in advance of the U.S. elections.”
And that concludes today’s episode of “Energy Jeopardy.”
Boone Picken’s new book, The First Billion is the Hardest, reviewed in the Wall Street Journal. From the review, after a summary of Pickens’s business success with Mesa Petroleum:
Such accomplishments are the core of Mr. Pickens’s 1987 autobiography, “Boone,” which was updated 13 years later and retitled “The Luckiest Guy in the World.” In those books, Mr. Pickens’s political philosophy rang loud and clear. “I believe,” he stated, “the greatest opportunity lies in a free marketplace.” He warned: “There are powerful forces afoot trying to restrict that freedom in the interests of the vested and already wealthy. I am talking about a relatively small collection of corporate executives who would use the engine of American commerce for their own narrow ends.”
And he was as good as his word, rebuffing oil-tariff proposals when crude prices plunged in 1986. In “Boone,” he bragged that a U.S. senator once remarked: “Boone Pickens is the only businessman I know that if Congress would leave him alone he would never come to Washington.” Alas, “The First Billion Is the Hardest” brings us a new T. Boone Pickens — one a bit more roughed up by experience and a lot more inclined to travel to Washington.
Maybe next time Boone is making nice with members of Congress he could help explain the role played in energy markets by financial interests. As the review notes, his company BP Capital “has earned roughly $8 billion in commodity speculation” in the past eight years.
I thought it was a reasonable review, though I’m not so sure that wind is as uneconomic as the reviewer thinks, at least at current natural gas prices. Only after I read the review did I notice that the reviewer was my old pal Robert Bradley, Jr. Good job, Rob!
(I wonder if Boone concluded that “the first billion was the hardest” because that was the billion made without a lot of help from Washington, D.C.)