Expert advocates release of oil stocks
A visiting oil expert says the interests of consumers are not aligned with the interests of oil companies who are resisting using strategic stocks to reduce the oil price.
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A visiting oil expert says the interests of consumers are not aligned with the interests of oil companies who are resisting using strategic stocks to reduce the oil price.
Crude oil prices rose to 2 1/2 year highs on Monday on worries about supply disruption from unrest in Libya. ICE Brent Crude for April was trading at US$117.28 a barrel.
Visiting oil economist Phil Verleger said the situation in Libya posed a real threat to the rate of economic growth globally even though production from Libya was small.
Libya produced a light crude oil with low sulphur levels used to produce diesel fuel, which was not easily replaced by oil from Saudi Arabia.
He said New Zealanders could face fuel price rises of as much as 50 NZ cents a litre if the current situation in international oil markets is not resolved. But "there is no reason why it has to happen," he said.
Consuming countries, including New Zealand, hold oil stocks that should be released to avoid "yet another oil price induced recession".
"We have a lot of strategic stocks which could be used," Dr Verleger said.
He said strategic oil stocks tended not to be used to resolve situations in the market because such a move would reduce the profits of oil companies.
Dr Verleger was brought to New Zealand by Greenstone Energy, which purchased the downstream assets of Shell in New Zealand last year.
NZPA
Tue, 08 Mar 2011
Tue, 08 Mar 2011
© All content copyright NBR. Do not reproduce in any form without permission, even if you have a paid subscription.
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Expert advocates release of oil stocks
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