BU Now » OPEC

Gulf spill and global oil production

Dick Taffe — Thu, 10 Jun 2010 16:47:11 +0000

The International Energy Agency, in its monthly Oil Market Report, says the Gulf of Mexico spill is a potential “game changer” for oil supply, possibly restricting figure sub-sea oil development and limiting supply. But Professor Cutler Cleveland, director of the BU Center for Energy and Environmental Studies and editor-in-chief of the Encyclopedia of Earth, see it differently — noting that loss production from the Gulf of Mexico would be at best point-4-percent of global oil production or “dust in the wind.”

“As important as the GOM is to U.S. oil production and to Gulf state economies, it is a pittance in the world market. U.S. production decisions have negligible impacts on world oil markets, and Middle East producers could easily offset the projected shortfall.”

Contact Cutler Cleveland, 617-353-3083, cutler@bu.edu

OPEC faces dilemma

Dick Taffe — Fri, 22 May 2009 15:43:03 +0000

Organizaton of the Petroleum Exporting Countries (OPEC) members meeting in Vienna next week face a dilemma. If they vote to force oil prices up through production cuts, they risk slowing the global economic recovery. But if they don’t cut supply, reserves will overflow worldwide. Mark T. Williams, an energy risk management expert who teaches finance at the School of Management, can comment on the high-stakes OPEC meeting.

Contact Mark T. Williams, 617-358-2789, williams@bu.edu

Global recession, not OPEC, setting oil prices

Dick Taffe — Fri, 13 Mar 2009 15:12:04 +0000

School of Management finance Professor Mark T. Williams, an expert on energy risk management, says the global recession has overtaken the ability of the Organization of Petroleum Exporting Countries to set oil prices, which will be reflected in next week’s OPEC meeting in Vienna.

“The global recession has put significant downward pressure on oil demand, forcing OPEC to be a price taker instead of a price setter. Complicating this is the fact that OPEC countries continue to rely heavily on oil revenue to support national budgets, so the recent free-fall in prices has pushed them into recessions themselves.

“OPEC countries have to jump-start their home economies and need more revenue to implement stimulus-type programs. When OPEC meets in Vienna on March 15, it is clear that these countries will make further cuts in daily oil-production targets. Equally clear is that this time the recession-driven market, not OPEC, is firmly in charge.

“Middle East OPEC countries influenced the last three major recessions – starting in 1973, in 1983, and today. Given the significance of oil in the global economy, it is nice to see that market forces – not OPEC – are finally determining this commodity’s appropriate price.”

Contact Mark T. Williams, 617-358-2789, williams@bu.edu