The Demonic Circle

by Eko Prasetyo @ 8:26 AM According to a chart on this site, everytime there's a war in Iraq, Oil price rises to above US$ 60. Hmmm..I wonder whether Dubya and Bald Semit has read this before they decided to trample on Iraq. Has Saddam Hussein become a part of this drama all along? He was there when Iraq waged war to Iran and caused oil price to rise to above US$ 60, and he was there when dubya trampled on his land and caused oil price to shoot above US$60 once again. The fact remains, we are in a world where oil price has been rocketing to US$60. The effects? One is the rising of petroleum based fuel types all over the world or the rise of amount of subsidies needed to maintain consumer level fuel prices at "safe civil psychological level", two is the rising of spending done by oil companies to rise productions or simply to experiments with things, three is the rise of economic risks and uncertainties, and four is the forming of demonic circle by those who aren't willing to let oil price down (i.e dubya and the bald semit). Five is the lessening of purchasing powers of those whose income is below acceptable standard of living. The rise of petroleum based fuels is very inevitable and a mandatory. Petroleum is the only raw material for this industry, thus the rise of its price dictates the rise of the final products : gasoline, diesel fuel, aviation fuel, asphalts, waxes, LPGs, LNGs and so on. General consumers, you and me, feel various kind of effects. For those who don't have their fuel prices subsidied by their governments, the effects can be felt right away. For people like me, whose fuel prices are subsidied by their governments, the effects may be less than what it should be. World real economic industries - the non-real economic industries are things like stock markets, insurances, bankings, anything that related to intangible assests- costs are dominated by fuel based costs, directly or indirectly which includes raw material transportations, power generations, product transportations, staff transportations, and even foodstuffs costs are effected by the price rise. These costs alone are enough to put burden and adding chaos factors to companies budgets. No matter which policy governments enact regarding fuel prices, they will have headaches. The rise of oil prices will give surge to industrial costs, will be forcing the governments to somehow lower taxes or let the industry rise the price of their products. If that's not the case, it will add significants impacts on government's spending budgets regarding subsidies. Reducing the subsidies will make the people react negatively. Maintaining the subsidies will make the government somewhat crippled. Balance must be thought carefully or otherwise both government and its people will go down to oblivion. We don't want that to happen, do we? Next, The rising of spending done by oil companies to rise productions. Well, being a (Petroleum) production engineer in an oil companies, I have been concocting elements to make people do "acidizing" on some of our wells. We have never done this before, so imagine the headache I have been gone through since FEBRUARY (!!!) to make things possible (or rather to force things to become possible). If the oil price has not been this levitating, I may ended up still doing heat exchangers and vessels and stuffs or helping others doing pump uprates and those downhole tools stuffs..but the oil price rose, and my boss seems confidence enough to make our company bleed some money to do this new stuff (somehow I got the feeling I am the guy who must do new stuffs...first heat exchangers, then condensate stabilizers..then that AFE thing...). Other divisions are adding more wells, putting more holes on the wells casings (or "REPERFORATING"), or have been trying to crack open the wells formations (that is called "FRACTURING"..big stuff, big money...scary risks). Well..this is turning into some personal diary..let's get serious again ! Based on my own personal experiences, petroleum industries service companies have been very busy lately fulfilling oil companies need to do stimulations to their wells hoping to increase oil productions. They said they have never been this busy before and all basically said the same thing when asked why: "Oil price has never been this high, Sir !!" It's a good enough reason. One question has been plaguing my mind though : will this good reason be good enough to justify any efforts to keep oil price high? Oil well stimulation service is an industry, and with every industries, there will always be need to increase profits each year. When the oil price goes down, so will their profits. They have reasons to maintain the orbital level of oil price. Halliburton has dubya on strings, wonder who Schlumberger has, france's leaders? As for risks and uncertainties, it is quite obvious enough. Oil price has been ascending and descending quite unpredictable lately. Unpredictability is mother of uncertainties and uncertainties mean higher risks for industries. That means higher insurance costs, higher hedging funds, wider range of risks calculations, and generally higher level of overall prices. With the growing percentage of intangible assets owned by a company, uncertainties bring more unconfidences and thus grow more threats to industries. Intangible assets are sometimes enough to become the decisive factors of a collapse of a company (Enron anyone? What about A.C Nielsen?). As for the demonic circle..who want to lower their profits? There even rumor that the reason why Arab countries not doing enough to prevent dubya from molesting Iraq is because they have foreseen the rise of oil price. There may not be enough efforts done by many oil exporting countries to convince dubya to leave Iraq alone because they are enjoying the high oil price. Dubya and bald semit may even try to organize efforts to keep oil price high. 2 oil refineries have been burnt in USA alone. The paranoid in me whispers : dubya. Add that with that hypothesis on oil service companies, we may see oil price on top of the world for long. Five is the lessening of purchasing powers of those whose income is below acceptable standard of living. It is unavoidable, with the increase of oil prices, many have been hit considerably in their pockets. Many are losing jobs or have to lower energy consumptions drastically. Due to this high price, many have their souls deteriorated, many are losing their livings, and many have ended their lives. Some will say high oil price is good, some will say high oil price is a curse. Let us all pray that good will come out of this chaos eventually. tags: oil price, random thoughts, dubya | My Alter Ego | Blogroll Me! | |