Oil Trouble

In the past some people have pointed to limits in U.S. refining capacity as contributing to rising prices. Is that the case today?
It's tightness in the global refining market. It's a global issue, not just a U.S. issue.

Could OPEC bring prices down if it wanted to? Is Saudi Arabia still regarded as a swing producer with enough oil to turn the taps on or off at will, or is it pumping almost at capacity these days?
No single country or even group of countries can determine the oil price. Some OPEC countries are comfortable with prices at current levels; others, such as Saudi Arabia, would like to see prices weaken. Saudi Arabia is increasing oil production right now, and that could help to offset some of the supply anxiety that has been the driver of high prices.

What did you take as the headline from the recent meeting of OPEC heads of state?
One thing to take away is that OPEC is concerned about the impact of policies to fight against global warming. OPEC is taking that seriously, and they want to be part of the solution as opposed to part of the problem. That represents a change from the past.

They agreed to devote $750 million to projects to reduce carbon emissions and protect the environment. Where will that money actually go?
I don't know.

Is it a public relations measure—that they want to be seen as combating climate change? Clearly, their whole industry depends on people using oil, and doing so for the foreseeable future.
It's a recognition of the new global reality. A growing number of voices are saying that something needs to be done to curtail the rate of growth in CO2 emissions.

But how do they benefit from these changes? These changes are not good for you if you're producing oil, right?
Well, if the world develops ways—such as carbon-captured sequestration [storing carbon instead of releasing it into the atmosphere]—to use carbon-based energy in a more efficient way than in the past, then that could prolong the use of oil and coal.