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1. Production and Prices

2. U.S. Politics

3. Nigeria

4. Iraq

5. Energy Briefs

1. Production and Prices

Oil prices hit an all-time high of $119.93 last Monday and then subsided on the prospects that oil-worker strikes in Scotland and Nigeria were about to end. By Tuesday oil prices were dropping rapidly on speculation that US interest rate cutting would be over soon. A larger than expected increase in the crude stockpiles reported on Wednesday sent oil down to a low of nearly $110 on Thursday. On Friday, however, fresh US economic data led many to believe that US economic problems were decreasing so oil rose by nearly $4 a barrel to close the week at $116.37.

The rapid drop in crude prices led to a 0.1 cent drop in the average retail cost of US gasoline to $3.622, the first decline in more than two weeks. This, of course, led to speculation that the surge in gasoline prices was running out of steam and that $4 a gallon for the national average retail price is no longer in the cards.

Discussion of oil prices now centers on the strength or weakness of the dollar and moves by speculators rather than supply and demand for oil. Although some still maintain that oil prices still contain $40 or $50 worth of speculation, most recognize that the $8 to $10 drop followed by a quick rebound probably is a more accurate measure of the speculative component of oil prices.

2. U.S. Politics

With 44 percent of Americans now saying that gasoline prices are a serious problem, food prices continuing to climb, and Detroit’s sales plummeting, politicians of all stripes are speaking out in a effort to exploit the situation.

President Bush attacked the Democrats in Congress for blocking his proposals to drill in ANWR and off the coasts, and to increase refining. Presidential candidate McCain joined 22 Republican senators in urging the EPA to lower corn-based ethanol rules that are now perceived as running up food prices. The US Federal Trade Commission said it will yet again investigate possible market manipulation of gasoline prices and Senate Republicans have filed another bill to authorize drilling in Alaska’s ANWR and on the Outer Continental Shelf.

The most controversial proposal of the week was the one put forward by John McCain, endorsed by Hillary Clinton, and opposed by Barack Obama to suspend the 18.4 cent federal gasoline tax during the coming summer. This proposal raised a storm of adverse commentary ranging from " gas taxes should be raised not lowered" through "the oil companies will keep the money," to "what will pay for road maintenance."