War could cause significant oil and gas supply troubles

The impact of the war in Iraq on oil prices and supply remains to be seen, but the key to its affect is not about winning the war, but about winning the peace, according to Amy Jaffe a Wallace Wilson Fellow for Energy Studies from the James A. Baker III Institute for Public Policy at Rice University. J

The impact of the war in Iraq on oil prices and supply remains to be seen, but the key to its affect is not about winning the war, but about winning the peace, according to Amy Jaffe a Wallace Wilson Fellow for Energy Studies from the James A. Baker III Institute for Public Policy at Rice University. Jaffe was a speaker at the 17th Oilfield Breakfast Forum in Houston.

"We haven't seen the impact of war yet," Jaffe said, adding that "a change in government often brings a drop in production, not an increase."

She questioned what rights the US will have under the new Iraqi government and what the impact might be on world oil supply if Iraq should choose to pull out of OPEC.

Jaffe discussed the possibility of oil prices falling below $15/bbl, as some market analysts have predicted, considering other factors, such as:
• War in Iraq
• Iraqi oil well fires
• OPEC currently producing at capacity
• North American natural gas producing at capacity
• OECD commercial inventories at a 25-year low
• Venezuela's damaged reservoirs and infrastructure
• Political unrest in Nigeria that is causing production disruptions.

She said she finds it hard to imagine that oil prices will fall.

04/04/03

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