Who's to Blame for Record Oil Prices

June 30, 2008
The oil price blame game is heating up. Members of OPEC, during an emergency meeting in Saudi Arabia earlier this month, blamed "speculators" for running up prices, an alarm more than a few industry analysts have also sounded.

But petroleum industry leaders, holding their largest get-together in three years, insisted speculators and greedy oil barons aren't at fault. Rather, they argued, blame belongs to the fact that there's been a dearth of new supplies found to feed an increasingly oil-hungry globe.

BP's CEO Tony Hayward said the argument that financial investors buying oil futures were behind a four-year rally that pushed oil prices to new records above $143 per barrel on Monday was a "myth."

"Supply is not responding adequately to rising demand," BP's CEO Tony Hayward told thousands of delegates at the World Petroleum Congress, adding that reports that cite speculators are merely "myth."

That position was echoed by speaker after speaker, including Antonio Brufau, CEO of Spain's Repsol, who said, "The fundamentals in the industry are the significant reasons for having these prices."

Jeroen Van der Veer, head of the Dutch giant Shell, acknowledged that his firm, the world's third-largest oil company by market value, did use energy derivatives. But he insisted Shell didn't speculate on oil prices.

There's been growing concerns about just how much oil is left in the world, particularly in terms of undiscovered petroleum fields. But speakers at the industry conference expressed concern that their exploration efforts are being limited by governments that restrict access to possible deposits, particularly by foreign oil companies, like Shell, BP, and Exxon.

"The problems (with limited growth) are above ground not below it," said BP's Hayward.

Who is actually to blame could prove academic, though there's growing pressure to reign in the rise in the price of a barrel of crude, which has nudged past $140 and which some insiders now expect to reach $200 before the run-up winds down.

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