On the wishlist - Bush wants 25 $ oil price

Thursday, May 12, 2005

Allen Hubbard, director of the White House's National Economic Council, is quoted in a Reuters dispatch that the US president wants to see oil prices fall to 25 dollars or half their current level. An administration official said later that Hubbard was speaking "theoretically about a goal, but the White House is well aware that markets set the price for oil."
The US administration itself has been a factor in rising oil prices by filling up the Strategic Petroleum Reserve (SPR) to its highest level. The SPR will be topped up to total capacity of 700 million barrels by July and the Bush administration is preparing legislation to expand its capacity to one billion barrels. A 25 dollar crude oil price was last seen in September 2003, at point of time when the trade deficit stood at 41.2 billion dollars, 25 percent less than last March. It is a bit early in the year to write a wishlist.
Lower oil prices would benefit the whole world though and certainly be an impetus to stronger growth in the industrialized countries. The International Energy Agency said that a rise in stockpiles would not necessarily lower oil prices as a lack of spare production and refinery capacity meant supplies were still strained. The slowdown could mean the outlook for fourth-quarter world demand is as likely to stretch oil producer countries as it did in the same period last year, the IEA said. Crude oil prices got hammered down 3 percent to below 50 dollars on the NYMEX on reports of rising inventories. The move is likely to be short-lived as it could be seen in the period since the last inventories report.


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