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Energy group puts a barrel of crude at $80 in worst-case Iraq scenario (fwd)



Here is an interesting one on projected oil prices....and who knows, maybe
it could be worse! --CH
---------- Forwarded message ----------
Date: Wed, 13 Nov 2002 09:03:04 -0500
From: Murray Kahl <kahl1@gate.net>
Reply-To: eretz-yisrael@shamash.org
To: Middle East discussion group & Zionist news releases
<eretz-yisrael@shamash.org>
Subject: Energy group puts a barrel of crude at $80 in worst-case Iraq
scenario


Energy group puts a barrel of crude at $80 in worst-case Iraq scenario
By Reuters, 11/13/2002

WASHINGTON - Crude oil prices could triple to $80 a barrel during the first
quarter of next year and strangle the world economy under the worst case
scenario of a US attack Iraq, energy specialists said yesterday.

Crude prices are likely to spike that high if Iraq destroys its oil
facilities while retreating from US forces, Iraq uses weapons of mass
destruction, and key oil facilities in next door Saudi Arabia and Kuwait
are damaged by Iraqi missiles.

That is the conclusion of energy specialists who met at the Center for
Strategic and International Studies think tank to discuss the impact of a
US war against Iraq on the oil market.

Such a huge jump in oil prices would devastate the global economy, which is
already struggling.

''All you need is $40 oil to bring the economy to a complete standstill. If
we have $80 oil we're going to be in the hole,'' said Adam Sieminski,
global oil strategist at Deutsche Bank.

Consumers would be hit with skyrocketing gasoline prices. The price of
crude oil accounts for about 44 percent of cost for a gallon of gasoline.

Commercial jet fuel prices might not take as bad a hit, because the US
military has been planning for an attack on Iraq and has stockpiled fuel
for its fighter aircraft, the experts said.

Under the worst case war scenario, after oil hit $80 a barrel in the first
quarter prices would eventually decline to $60 in the second quarter, and
then fall to $50 in the third and fourth quarters, according to CSIS analysis.

Currently, a barrel of crude trades for about $26 at the New York
Mercantile Exchange.

The Bush administration could help calm the energy markets by announcing
ahead of an attack on Iraq that it planned to release oil from the US
Strategic Petroleum Reserve.

The reserve, which was created by Congress in the mid-1970s after the Arab
oil embargo, holds 589 million barrels of oil in deep underground salt
caverns located at four sites in Texas and Louisiana.

''You have to be prepared to make an early release of the reserve,'' said
Larry Goldstein, president of the Petroleum Industry Research Foundation.

Goldstein said President Bush would not have to draw down the emergency oil
stockpile, because just the prospect of putting more crude in the market
could stabilize prices.

This story ran on page D6 of the Boston Globe on 11/13/2002.


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