From The Economist Global Agenda
Oil prices rose to within a whisker [觸鬚;毫釐之差]of all-time highs this week, before falling back on profit-taking. If OPEC wants to keep its grip on the market, it will have to widen the gap between the amount it pumps and the amount it can
IN SAMUEL JOHNSON’S novel “Rasselas”, a reclusive[隱居的] meteorologist[氣象學家], unnerved [身心交疲]by the accuracy of his forecasts, becomes convinced that he controls the weather. The oil-market forecasters at America’s Department of Energy could be forgiven for the same delusion. On Tuesday March 8th, they released their latest monthly predictions for energy prices, warning that “imbalances” in the market for light, sweet crude could drive the price “well above $50 per barrel”. Their prophecy promptly fulfilled itself. By Wednesday, the price of a barrel of West Texas Intermediate oil rose to within two cents of the all-time record of $55.67 set last October.
It did not take long, however, for the oil market to wrong-foot[手忙腳亂] analysts once again. After reaching its peak on Wednesday, the price fell by more than three dollars in less than two days, as speculative buyers decided to quit while they were ahead. Contrary to popular belief, speculation, as Milton Friedman observed, can be a stabilising force: by selling high and buying low, speculators help to flatten the sharpest peaks and deepest troughs[谷] of the market.
If predicting the oil price is like forecasting the weather, it might be because the former often depends on the latter. A relatively mild winter in America and Europe has recently turned bitter, which is raising demand for the oil distillates that heat people’s homes. Last winter, the average household in America's north-east spent $953 on heating oil, according to the Department of Energy. This winter, it is expected to spend 29% more.
When the winter passes and spring arrives, Americans leave their hearthside [爐邊]and take to the roads for the so-called “driving season”, which stretches from April to September. This year, however, filling the tank may empty the wallet rather faster than usual. Drivers will have to fork out $2.15 per gallon this spring, predicts the Department of Energy. Last April, they paid no more than $1.80. Air passengers may suffer as much as road travellers. The airline industry is struggling to cope with higher fuel prices. British Airways expects its fuel costs to jump by £300m ($577m) to almost £1.5 billion in the next financial year, and the high oil price has prompted Delta Air Lines once again to raise the spectre[幽靈] of bankruptcy.
America’s drivers and frequent fliers are used to being the undisputed[無可爭辯的] kings of oil consumption. But they must now share increasing amounts of space with the Chinese, who have accounted for a third of the rise in global oil consumption since 2001. China’s investment boom is energy-intensive, and the country’s coal-fired power stations are overstretched[過分伸張]. The International Energy Agency, which monitors the oil market on behalf of rich oil-consuming nations, reckons the growth in China’s demand should slow this year, but not by as much as it originally thought. On Friday, it said that China, which consumed about 6.4m barrels per day (bpd) last year, would add another 500,000 bpd to this total in 2005. Last month, it thought China would add only 400,000 bpd.
The people who really aim to govern the winds and rains of the oil market are of course the 11 members of the Organisation of the Petroleum Exporting Countries (OPEC), the cartel of oil producers which next meets on March 16th in the Iranian city of Isfahan. OPEC’s members can shore up[vt.支撐] flagging oil prices by agreeing to cap their production; in theory, they can also restrain soaring prices by tapping into[接進] the extra pumping capacity they hold in reserve. But this margin of spare capacity dwindled to historically low levels last year. With oil demand outstripping[超過] expectations, and supply struggling to catch up, there was little the cartel could do to stop prices rising past $50 per barrel.
OPEC maintained that fears of a supply shortage were “unwarranted[沒有根據的]”. As Simon Hayley of Capital Economics, a London research firm, argues, the oil producers always find a way to increase supply “if the price is right”. Sure enough, Saudi Arabia went to great lengths to bring new oilfields onstream and delay the retirement of old ones. Kuwait, among others, also stretched itself to increase supply. By the end of 2004, Mr Hayley says, OPEC had reasserted control. Supply caught up with demand, prices fell back sharply, and OPEC even saw fit to cut its official production quotas by 1m bpd in December.
The cartel is unlikely to bring much calm to the markets at its meeting in Isfahan. It has learnt that oil prices above $40, or even above $50, are painful, but not debilitating[使衰弱], for the world economy. Indeed, it can justly argue that the high oil price is a natural consequence of the global economy’s strength, not a cause of economic weakness. Besides, America’s stocks of oil are now rising healthily, and its currency is falling, meaning that the dollars OPEC members earn from their oil exports do not go as far as they once did.
OPEC will no doubt decide that it is pumping enough oil. But does it have enough oil wells? That may be the more interesting question broached[打眼使流出,提出] this year, if not next week. According to some estimates, the cartel is currently using all but 1.5m bpd of its full capacity. It will need a cushion at least twice that size, analysts reckon, if it is to insulate[絕緣;孤立] the oil market from the shocks felt last October and in the past week. According to reports in the Financial Times, the International Monetary Fund’s next World Economic Outlook, due next month, will urge OPEC to raise its margin[邊際] of spare capacity to as much as 5m bpd. Without more slack, the cartel’s grip on the oil price may prove as illusory[幻覺的] as that of Johnson’s meteorologist.