UAE Oil Minister Says Oil Prices Are Not a Threat to Global Economy

Published May 27, 2013 – Fox Business

Crude oil prices are at a fair level and aren’t posing a risk to the global economy, United Arab Emirates’ new energy minister said in remarks published Monday, signaling a consensus among OPEC members over prices.

“From the producers” point of view, the current price level continues to be an incentive for the ongoing investments that are necessary to increase oil production capacity,” Suhail Al Mazrouei told the state-run news agency Wam. “As for consumers, this level does not adversely affect economic recovery and the prospects of growth in the future.”

However, OPEC kingpin Saudi Arabia may have to persuade other members of the group to cut output to keep oil prices above $100 a barrel for the rest of the year, the kingdom largest unlisted lender National Commercial Bank said in a note.

Read more: http://www.foxbusiness.com/news/2013/05/27/uae-oil-minister-says-oil-prices-are-not-threat-to-global-economy/#ixzz2UbL2x4wa

So if the UAE oil minister claims prices have no ill-effect on economies, and gas and oil prices are in line, then why do so many Arab countries subsidize their domestic energy? Why don’t they follow their talk and allow market prices on their domestic energy? Let’s see if that has any negative effects on their economy?

Research paper:
“Arab Human Development Report”- by Bassam Fattouh and Laura El-Katiri

The policy of maintaining tight control of domestic energy prices has characterized the political and economic environment in most Arab countries, together with many other parts of the world, for decades. The objectives behind such a policy range from overall welfare objectives such as expanding energy access and protecting poor households’ incomes; to economic development objectives such as fostering industrial growth and smoothing domestic consumption; and to political considerations, including the distribution of oil and natural gas rents in resource-rich countries.

Energy subsidies distort price signals, with serious implications on efficiency and the optimal allocation of resources. Energy subsidies also tend to be regressive, with high-income households and industries benefiting proportionately most from low energy prices. However, despite such adverse effects, energy subsidies constitute an important social safety net for the poor in many parts of the Arab world, and any attempts to reduce or eliminate them in the absence of compensatory programmes would lead to a decline in households’ welfare and erode the competitiveness of certain industries.

Anyone want to take bets on what effects it would have on their economies and growth?

12 comments on “UAE Oil Minister Says Oil Prices Are Not a Threat to Global Economy

  1. Davetherave says:

    Great post Bull! Hmm…the towel heads subsidize gas for their folks and the sumbitch subsidizes bullshit, lousy ass NONalternative energy for us. OK…towel heads one, the sumbitch zero!

    When the sumbitch honkered down in the White Mosque (Jan. 2008) Light Crude was trading right around $100 a barrel. We were paying around $1.90 a gallon (KY) at the pump. Today Light Crude is trading right around $100 a barrel and we are paying around $3.60 a gallon (KY) at the pump. So that takes care of the asshole liars that blame world supply and demand. If demand was running over top of supply the outcome would be Light Crude would be trading at a much higher price now…economics 101. So where in the hell did the real problem come from with today’s high pump prices?

    The world’s demand for oil was 86 million barrels per day in 2007. As of know the world’s demand is 89.7 million barrels per day. When you consider just OPEC produces around 30 billion barrels per day you can see the supply demand argument is a big O’ crock of shit. That’s just barely over two extra days of OPEC running their pumps.

    In my ignorant ass, redneck honest opinion the problem with prices at the pump these days is right here in the good ole USA: taxes, stupid ass regulations made at the individual state level and lastly, BUT mostly….the sumbitch trying to bust our economies ass down to nothing.

    I’m a 100% believer in free market trading (that is good ole capitalism at it’s finest IMO). As shown above hardly nothing has changed from 2007 to 2013 on the OPEC or Trading side, but is sure in the hell has changed at our gas pumps. This is where I believe we ask King Sumbitch to step up and take a bow….

    Sorry for the long dissertation Bull, but this subject does hit one of my raw nerves.

    Like

    • Davetherave says:

      Oh…sorry…I forget our massive shortage of refineries as a major problem as well.

      Like

    • bullright says:

      Great comments, Dave. Right o, something doesn’t “add up” right. And pay no attention to the red tape for refineries either. And the King and his cronies are the only people who aren’t complaining. (..except when Markey decides on cue to call for releasing the SPRO.) Great data there. They always keep telliing us it is only a matter of math. So what is the problem then? It seems to bother everyone but the Marxists.

      Like

      • Davetherave says:

        They love playing the numbers/data game Bull apparently thinking the whole time no one will look up the real numbers themselves. The commie critters love blowing our money. The sumbitch would take all our money and bet on green on the roulette table!

        Like

  2. clyde says:

    IF we had a COHERENT energy policy, such as developing OUR resources, AND getting the goddamned Keystone XL pipeline built, instead of the rigamarole we’re getting, oil prices would SINK. Overnight. Unfortunately, for us, we have an absolute asshole kowtowing to BIGGER assholes over oil. And, those who attempt to eliminate it’s usage.

    Like

  3. tannngl (@tannngl) says:

    I think Saudi Arabia and the cartel are looking to the future. The future begins with f for fracturing. The value of Arabs to the world in 20 years will be zilch. And it’s going to happen regardless of this president. (I think)

    Did you hear? GE is getting into the technology of fracking!
    http://www.foxnews.com/us/2013/05/28/ge-says-it-is-investing-billions-to-improve-fracking-oil-drilling/#ixzz2UhpJyXvc

    I remember when the news was when oil got to $100/b the economies would collapse. Well what will be the price of oil when oil and gas are 3 times more plentiful?

    Did you hear Israel also has their own supply of oil and gas?
    http://www.bbc.co.uk/news/magazine-15037533
    http://www.oilinisrael.net/top-stories/israel-discovers-huge-natural-gas-field

    Energy is in for some big changes.

    Like

    • bullright says:

      Thanks for the comment, good links. A particularly good quote from that fox article was:

      “We like the oil and gas base because we see the need for resources for a long time to come,” said Mark Little, a senior vice president. He said GE did “almost nothing” in oil and gas just over a decade ago but has invested more than $15 billion in the past few years.” -GE

      That’s telling. I can see Immelt trying to explain that and its called: getting your foot firmly in the door so you don’t have to use a battering ram later. 🙂

      Like

    • bullright says:

      I haven’t been very optimistic under Obama. Though I wonder how long their train can run on fumes. All the smoke and mirrors has to come to an end sometime. This is probably the one thing a lot bigger than Obama. He has oppposed XL but even that is running out of fuel.

      So maybe. “Former Shell Oil President John Hofmeister says the Obama administration will eventually approve the Keystone XL pipeline but politics has held up a decision.” WP reports. To put it mildly!….they politicized it and held it hostage. They are counting on using it thru ’14 season. After 5 years they analyzed it to death. Considering this is a regime that hadn’t given that much energy and thought into ObamaCare effects, its ludicrous. (we have to pass it before we find out what’s in it)

      All of it sure will change the paradigm.

      Like

      • tannngl (@tannngl) says:

        I’m still bullish on America. These people in the federal govt today are doing their level best to change us from capitalism to social/marxism. For capitalism we really need cheaper fuel. And it’s on the way!
        I also agree that O will eventually approve the XL.
        By the way, thanks.

        Like

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