Make your own free website on Tripod.com

"Dedicated to exposing the lies and impeachable offenses of George W. Bush"


Oil Prices End 2005 40 Percent Higher
Yahoo News/AP
By BRAD FOSS, AP Business Writer
December 30, 2005

NEW YORK - Oil futures settled above $61 a barrel Friday and finished 40 percent higher than they started in 2005, capping a tough year for energy consumers but a great one for the petroleum industry as prices soared amid strong demand and tight supplies.

For similar reasons, there was an even sharper advance in 2005 in the price of natural gas, which surged more than 80 percent, making it extra expensive to produce electricity, manufacture goods and heat homes.

Many analysts believe the average price of oil will be below $60 in 2006, but not by much as U.S. and Chinese economic growth continues and OPEC members express growing interest in a production cut, perhaps as early as the first quarter.

"Because of China, oil is never going to go to the $18 to $22 level again in our lifetime," said Mike Fitzpatrick, a broker at Fimat USA in New York. "But it certainly doesn't have to be $60."

Fitzpatrick believes average oil prices will be closer to $50 a barrel in 2006, an outlook predicated on a slowdown in economic growth in the second half of the year — because of high energy prices. "At some point, this has to have a deleterious economic effect," said Fitzpatrick, whose price outlook is more bearish than many of his peers.

While unthinkable just a few years ago, a price near $50 a barrel would actually be welcome news to energy-intensive industries such as airlines and trucking companies, who have retooled their operations to use fuel more efficiently.

There are signs that some homeowners and motorists are also making small changes to keep their energy consumption in check, though analysts say demand is still on the rise and that the tight supply of refining capacity in the U.S. is likely to boost the country's dependence on imports and keep pump prices high.

Average retail gasoline prices in the U.S. surged to record territory above $3 a gallon after Hurricane Katrina, which knocked out refineries and caused power outages that disabled pipelines that carry motor fuel from the Gulf Coast to the Northeast and Midwest. Now, the average retail price of gasoline nationwide is $2.19 a gallon, or 41 cents higher than a year ago, but analysts say the $3 level could be within reach again by summer.

The high price of fuel was a boon to major oil companies such as Exxon Mobil Corp. and BP Plc. Their rising profits and stock prices caught the attention of Congress, which held hearings to implore the industry to boost production.

But oil analysts agree that the world's largest petroleum producers are pumping as much as they can to take advantage of the high price, leaving little excess production capacity available if there is a prolonged supply disruption. The mere threat of lost output, whether because of geopolitical strife in Nigeria or Iraq, or a hurricane in the Gulf of Mexico, will be enough to keep the market on edge in 2006.

"It won't take much to up the price again next year," said London-based oil analyst John Hall of John Hall Associates.

"My guess is that OPEC is quote committed to holding up the price" at present levels, Hall said.

Hall also focused on Iraq, Iran and Nigeria as potential problem countries, saying output snags and increasing political tensions could drive prices upward.

Oil analyst Jamal Qureshi of PFC Energy in Washington said "next year's average price is going to be pretty close to this year's."

In 2005, Nymex oil futures averaged $56.70, an increase of 37 percent from 2004, when they averaged $41.47.

On Friday, light sweet crude for February delivery rose 72 cents to settle at $61.04 a barrel on the New York Mercantile Exchange, which closed at 1 p.m. in a shortened session ahead of the New Year's holiday weekend. Nymex trading will resume Jan. 3.

With the Northern Hemisphere winter only a week old, traders remain focused on the weather in the United States, the world's largest energy market.

Natural gas, which briefly topped $15 per 1,000 cubic feet earlier this month, has been under pressure lately amid forecasts of mild weather in much of the United States.

On Friday, natural gas futures inched 0.2 cent higher to settle at $11.225, up 83 percent on the year. On Thursday, the Energy Department said domestic storage of natural gas stood at 2.64 trillion cubic feet on Dec. 23. That is 8 percent below year-ago levels and 1 percent above the five-year average for this time of year.

Heating oil futures rose 2.51 cents to $1.728 per gallon (3.8 liters), while gasoline futures gained 5.76 cents to $1.71 a gallon.

On the ICE Futures exchange in London, Brent crude rose 90 cents to settle at $58.97 a barrel.

The price of Nymex crude is about 14 percent below its Aug. 30 high of $70.85. Oil prices remained above $60 a barrel for months after Katrina disrupted Gulf of Mexico oil and natural-gas output. About one-quarter of the region's daily oil production, and one-fifth of its natural gas production, remains offline, because of damage to offshore platforms, underwater pipelines and onshore processing plants.

Associated Press Writer George Jahn in Vienna contributed to this report.

Commentary:
Before Bush started his war in Iraq, a country with the third largest known oil reserves in the world, OPEC was begging for $25 a barrel of oil. Today, OPEC is getting $60 a barrel and it didn't have to break a sweat to get it. All they needed was Bush in the White House.

Some people still maintain the real reason for war was so Bush could get his hands on Iraqi oil. Nonsense. He wanted gas and oil prices to soar so he and his oil buddies would make a fortune off of higher prices and lower supply caused by his war. Wall Street loves (loved?) Bush because of his socialistic policies - tax cuts which came from borrowed money, even though the Dow has been stuck in neutral for five years in a row. Wall Street hated Clinton, who raised taxes, gave us record surpluses and the Dow rose 1000 points a year. When Wall Street says something is good (IE: tax cuts), know the opposite is true.