Dan McTeague holds a magical solution to reduce oil prices
July 11, 2008 · By Charles Anthony
Dan McTeague seems pretty clever when it comes to predicting oil prices a day in advance. He has his own calculation. Now, he has a magical solution to actually lower the prices!
Recent media reports indicated that the European Union has agreed to publish weekly reports on how much oil they have in reserve in order to reassure market traders and potentially cool rocketing oil prices. Currently, most EU countries publish information on their oil reserves on a monthly basis. As the French finance minister stated: more transparency on actual oil stocks means we can have a consistent and coherent picture of what is happening in the oil market.
So, let me see if I get the “picture” here. Publishing oil reserves on a monthly basis will reduce panic and then reduce prices. Right. Well, that certainly sounds bizarre. If an MP for Pickering-Scarborough East can calculate the prices on his blackberry, what more should be done? The market seems transparent enough.
Maybe Dan McTeague can offer an explanation about how publishing these monthly figures is going to make a difference. Let me guess, this is just preparation for a future legacy project if — God forbid — the Liberals ever become the government again.
The market for oil/gasoline/distillates/fuel oil is continental. The futures are based on new york merc and avilable on trading days. As well U.S. gov’t each Wed publishes the inventory figures - applicable to North America. Dan displays his stupid card again!
I’m not sure why he cares? McTeague claims is the self-professed MP for watching the oil companies so that the public doesn’t get gouged at the pumps. Now how does his Liberal party proposed carbon tax help with that plan?
While it’s true that the US publishes reserve estimates weekly, it’s not certain tha the term ‘reserves’ means the same thing for the EU, US and Canada.
For example, when you say ‘reserves’, you are applying a definition to oil, and that definition is not the same across countries, nor is it the same across companies. Since an oil company’s share value is derived from the number of reserves it has, multiplied by the price of oil, the future expectation of oil prices drives share value. Thus, an oil company would want to use a broader definition of oil reserves, to give the impression of more capacity. LINK
More (pdf): John Ritter on Reserves
“In the absence of a comprehensive and current code, individual countries and companies are using their own reserves evaluation systems, making global comparisons difficult.”
More transparency is definitely needed, and better information reduces the risk premium in any commodity.
Typical socialist response….
Lets create a Ministry of (watching gasoline prices)…hire a shit load of family and friends to jobs for life…increase said Ministries budget annually…line Liberal pockets with stolen taxpayers cash…dream up new Ministry for next year…
Wake up people and start TELLING politicians what their JOB is…
and FIRE those that are TELLING us what their JOB is…!
Aaron,
You are comparing apples to oranges. IE an oil company’s evaluation may be based on its ‘reserves’, that is the amount of ‘recoverable oil’ reserves that it has in total ‘in the ground’ in the various oil fields that it has an interest in. This ‘definition’ of ‘reserves’ if you like, IS the same virtually all over the world.
“Anonymous” is correct.
Aaron, you are confused with the publication of crude oil (and gasoline too)inventories, every week by both the Energy Information Administration of the US government (the EIA); and the American Petroleum Institute (API). The publication of these inventories does have an effect on both crude oil and gasoline prices, in both directions. Mcteague is partly correct in that the publication of EU inventories would no doubt also have an effect albeit perhaps a smaller one. But if Mr. McTeague thinks that the effect would only be downward, he is sadly mistaken. IE a relatively low inventory can have the effect of causing an increase in price.
I have followed and communicated with Mr. McTeague for several years on oil and gasoline pricing. Most of the time he is not very well informed. He has much to learn about energy pricing, one would be wise to not put much faith in his pronouncements. Mr. Dion knows even less.
As to transparency, in terms of pricing; crude oil and gasoline are the two most transparent commodities in the world.
Lewis
No, I’m not confused. I am talking about reserves and not monthly inventories. It’s the Liberal MP in question who’s got it confused. Look into it - reserves are not calculated the same way across every company, and it requires a background in petroleum engineering, geology and knowledge of available technology to make sense of any company’s estimate.
Ultimately, though, the easiest way to drop oil prices is to eliminate the war risk premium that flares up whenever there’s strife in the middle east, or to open up the Alaskan oil fields and increase domestic supply.
Looks like McTeague was onto something. A week after you posted your attack on McTeague - inventory levels coupled with Bernake and Paulson’s reiteration that the US was in trouble, finally put a dent into the speculator’s gambit. Crude fell 13 bucks a barrel.
Maybe some of the pretenders who’ve posted here would like to declare their conflicts of interest and start revealing their real jobs rather than passing yourself off as experts.You’re hedge funders and day traders, who’ve been making making a quick buck off looholes created for real crooks like Enron.
Frankly, most Canadians will support anyone who isnt screwing them. McTeague is putting a spotlight on you and you dont like it.
Good on him.
Pat