The Oil Outlook for 2002
A T H E N S, Greece, Jan. 2 -- The world entered 2002 amid renewed uncertainty about oil supplies, prices and the possible impact of a threatened new Middle East conflict over global energy supplies.
Oil markets posted lower prices ahead of the New Year, as traders and analysts studied the OPEC oil cartel's decision Dec. 28 to cut its members' output by 1.5 million barrels per day in an effort to prop up sinking prices.
At a time when Americans' demand for heating oil usually rises, while gasoline and other refined product demands tend to remain steady, the price of crude oil dropped by between 40 and 50 cents a barrel, to about $20.
European oil analysts say the market has now factored in the Organization of Petroleum Exporting Countries' Dec. 28 cuts. "What we are checking out now," said one, "is how toughly members like Nigeria will enforce the cuts.
One European oil brokerage firm, GNI in London, predicted that poor compliance might mean actual cuts of as little as 1 million bpd, based on past experience.
Some analysts believe that Middle East political turmoil, including possible U.S. military action against Iraq, could threaten new supply and price crises.
For American consumers and motorists, past Middle East political shocks have translated into sharp hikes and dips in gasoline, kerosene, diesel and heating oil prices.
The Bush administration and Congress are struggling to meet the challenges of 2002 with new energy legislation, as the authoritative oil journal Middle East Economic Survey reported before Christmas.
Last August, the House of Representatives passed a bill authorizing drilling in Alaska's Arctic National Wildlife Refuge and granting $33 billion in tax breaks for the U.S. energy industry over 10 years.
However, Senate Democrats, with their one-vote edge, have in mind a bill calling for energy-saving measures and development of renewable energy sources.
The Bush administration and congressional Republicans prefer further reliance on oil, gas, coal and nuclear power. They want authorization to drill in the Alaska refuge, still opposed by Democrats.
Related Stories
ABC News Live