Oil-price prediction

Press, Volume CXIV, Issue 33426, 7 January 1974, Page 11

Oil-price prediction

f.V.Z. Press Assn.—copyright) GENEVA, January 6. Leading oil - industry analysts now in Geneva say that crude oil prices, which have quadrupled in less than three months, may be stabilised. and may even come down again, in the long term. This opinion comes as members of the Organisatior of Petroleum Exporting Countries prepare for an extraordinary meeting in Geneva tomorrow to discuss theii prices. At the present crude prices, alternative energy sources, such as solar plants nuclear power, and coa j cleansed of impurities, become economic possibilities and one senior O.P.E.C. offi cial is quoted as saying al his headquarters in Vienna “We must look at the long term. If nuclear energy be- „ comes cheap and plentiful

land ecologically acceptable, jwho will want our oil? We| must plan our price action! with great sophistication.” What the O.P.E.C. mem-1 ■ ber-States are seeking is a-j a general formula to tie their! i,iprices for crude oil exports' J to the costs of their imports: this, they say in private, is. e the only way they can preI- serve the buying-power of; e their revenue over the Jong „■ term. Clash of opinion is O.P.E.C. is not conn nected officially with the ’•’Arab oil embargo, and tries i- to keep itself strictly nona i political. Nonetheless, there it’have been some sharp and I angry exchanges behind e ! closed doors between Arab yiand non-Arab members. s, 1 The Arabs accused the! 11 (others, especially Nigeria,’ >.’lran, and Venezuela, of taks, ing advantage of the oil; i’ shortage to make windfall; (t profits. For example, Iran re-i i: cently auctioned some high-! g quality crude at more than! SUSI 7 a barrel. , ’ 1, A barrel of oil —42 United States gallons—costs as little as USIOc to bring out [of the ground, whether in !Gabonese jungles or in East Texas. To this must be; added transport and refining costs, and company profits, which vary widely. But by; far the greatest costs are the taxes paid to the local gov-j ernments where the oil is! drilled, and where the refined product is sold. 1 The Persian Gulf States,, [ e for example, recently set: their posted price for a stand- )! ard grade at 8U511.65 a bar-! i-lrel. This is an artificial! :s.figure on which a 60 per cent; ;t ,tax-rate is charged, meaning' ithat the governments receive. ie SUS 7 in taxes for each bar-1 e rel. »j Taxes on petrol in)

America might add another. ;SUSS a barrel, and in Europe ’consumer taxes are far’ higher. Thus, in. rough terms, for) .every dollar more on the. (posted price, the real cost I ’of crude oil goes up US6Oc a barrel, or aboutUSHc per | United States gallon. In recent weeks, the} posted price in the Persian 1 Gulf has gone up SUSB a[ barrel, adding USl2c to the j gallon, assuming that all the; .other intermediary costs’ remain stable. The members of O.P.E.C, include seven Arab nations — Algeria, Libya, Iran, Indonesia, Venezuela. Abu Dhabi, and Qatar — and seven non-Arab countries — Iran, Indonesia, Venezuela, Ecuador, Nigeria, and Gabon, and Trinidad and Tobago as lan observer. Venezuelan move It was announced in Cara[cas yesterday that Venezuela wanted the oil-exporting countries to meet, with their customers, to try to reach an agreement on some way of stabilising the export prices of petroleum and manufactured goods. The Minister for Petroleum (Mr Hugo Perez la Salva) said before leaving for, Geneva, where he will sub-’ mit this proposal, that he ’believed there would be general support for such a move. “A price stabilisation (agreement between the petroleum-producing count’ries and the developed, ‘nations is the only way to; .break the vicious circle I whereby higher fuel costs! mean higher prices for; manufactured goods, making, .it necessary for the 0.P.E.C.! countries to raise their prices; (again and again.” he said. I