Nick Snow
Washington Correspondent
WASHINGTON, DC, Mar. 3 -- The Organization of Petroleum Exporting Countries sees 2 million b/d of spare production capacity that the market does not seem to recognize, OPEC Pres. Edmund M. Daukoru said in Washington, DC.
"OPEC will discuss extensively how much prices reflect true supply and how much they reflect speculation," when its members meet Mar. 8 in Vienna, he said.
Daukoru was wrapping up a 3-day visit to Washington, where he met with US government officials, oil company representatives, and potential investors in oil projects.
He called for greater cooperation and dialog between producing and consuming nations.
"It's the short-term micromanagement that leads to volatility. More reliable information is needed. We have it for supply. We don't have it for demand," he said at a luncheon sponsored by the US Energy Association.
Daukoru said more downstream oil capacity needs to be developed. He noted that some of the integrated oil companies that once absorbed downstream shocks with more-profitable upstream operations have sold refining and marketing holdings to independent companies less able to absorb the jolts.
Daukoru suggested that some downstream consolidation may be necessary to create independent refiner-marketers capable of increasing capacity.
Noting that current oil prices are still lower in real terms than those of the early 1980s, he said OPEC tries to stabilize the market but has little influence over downstream bottlenecks, intense speculation, geopolitical events, and natural disasters.
"The market is well-supplied with crude oil today, and gasoline inventories are at 5-year highs," he said. "There is no reason consumers can't receive oil on a steady, reliable basis well into this century. But it will require substantial planning and major investments."
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