Bi ismillahi rahmani raheem
Today on the National Press Club Address
the speaker was Graeme Samuel, Chairman, ACCC
some of the questions directed at him where asked becouse of this interview so i thought id post it since its very interesting and insightfull.
World oil prices have hit record highs and people are
beginning to feel the pinch. Protests have already broke out India,
Spain and Portugal as consumers struggle to pay up at the bowser.
But who's behind the hike in petrol prices?
Have Your Say: Who is responsible for soaring oil prices - producers or speculators?
week former Saudi Arabian oil minister Sheikh Ahmed Zaki Yamani tells
George Negus it's the futures market and speculators who are to blame.
Yamani, who was responsible for Saudi Arabia's most lucrative portfolio
from 1962 to 1986, has now headed up London's Center for Global Energy
Studies (CGES) for 18 years.
He tells Dateline that market
rumours are a major factor behind rising oil prices, and not the
decisions of the Organization of the Petroleum Exporting Countries
(OPEC). Prime Minister Kevin Rudd recently called for OPEC's
disbandment as the price of oil reached an unprecedented $140 per
The Sheikh discusses the impending 'end of the oil era',
saying he intends to warn oil industry decision-makers they must do
what they can to reduce its price at a conference in Jedda this weekend.
this week, oil hit a new record high, at nearly US$140 a barrel. And if
all the panic's starting to remind you of the 70s oil crisis, you're
not alone. One man who's been there and done that where oil is
concerned is Sheikh Zaki Yamani. Saudi Arabia's Oil Minister for 25
years, the Sheikh led OPEC right through that turbulent time. Viewers
among you with long memories will remember how world leaders waited
with bated breath for his every word about the price of oil. Now, with
OPEC, as we speak, under fire again, I caught up with the Sheikh from
his home in the French Alps. Interview Producer/Researcher
GEORGE NEGUS: Your
Excellency, thank you very much for your time. As we speak the world is
almost hyper-ventilating - it's gone into a spin over the price of oil,
our PM Kevin Rudd has said that it is time to take a blowtorch - his
words - to the OPEC organisation. Do you think that's really the answer
or is he possibly targeting the wrong people?
ZAKI YAMANI, FORMER OPEC SECRETARY GENERAL: Well I think the main
problem we have is the pricing of oil as it is now. I think it's wrong.
It does not reflect the fundamentals of supply/demand.
NEGUS: That's what people are struggling to understand? Why is it that
at the moment that the price of oil seems to be out of control and is
causing great difficulty for most people in government, in corporations
SHEIKH ZAKI YAMANI: Well, a
combination of reasons. One of them - speculations. So many people,
they go into this future market as if they go to a casino and they
gamble. And the people all over the world must pay the price for what
they are doing. This is number one. Number two - there is definitely a
shortage of supply.
GEORGE NEGUS: So what you
seem to be saying is that it's a combination of problems - there is a
shortage of oil - that's true - but also the speculation in the market
SHEIKH ZAKI YAMANI: Yeah well in the
market, in this future market, you have two kinds of groups. One is the
oil companies and the others are the non-commercials like hedge funds,
insurance companies and normal people. They inject billions of dollars
every day in order to make profits. Sometimes they make it and
sometimes they don't and then they spread some rumours about the
possibility of invading Iran and problems in Nigeria and so on. And so
the market is subject to rumours, not realities. They use any excuse,
to push the price upward and they make money.
GEORGE NEGUS: Is this situation resolvable?
ZAKI YAMANI: When you have enough supply of oil then probably this will
help. But in my opinion we have to change the pricing system that we
have right now. This is a very wrong system. A small group of people,
they raise the price of oil and the whole world will suffer from this.
GEORGE NEGUS: So what can be done to rectify that system to make oil affordable?
ZAKI YAMANI: Well I think if we can change this system. As a matter of
fact, we've lived so long with wrong systems. We have to have a system
far away from speculation which reflects the real supply/demand
GEORGE NEGUS: In reality though, your Excellency, is it possible to control something like Wall Street.
ZAKI YAMANI: Well the future market is a major problem. I said there
are different reasons, different kinds of problems. This is a major
problem in my opinion.
GEORGE NEGUS: Excellency,
people like Goldman Sachs are predicting that prices could go as high
as $200 a barrel. That's a frightening figure.
SHEIKH ZAKI YAMANI: Well, when you are in a casino you can say anything.
GEORGE NEGUS: So you think that's possible?
ZAKI YAMANI: Well it depends on what will happen. When you have a very
unstable situation in the Gulf and the expectation that there will be
an attack on Iran and Iran will respond and if they do respond - it's
$200, $300 per barrel, could be the result of that. But this is a big
GEORGE NEGUS: Yes, it certainly is. That would be a worst of all scenarios, wouldn't it?
SHEIKH ZAKI YAMANI: One of them, but how about the situation in Iraq? In Iraq we don't know what will happen to that country.
NEGUS: You in fact predicted that an invasion of Iraq would prompt a
price of about $100 a barrel. That prediction has certainly reached
reality. Is the war in Iraq partly to blame for the situation we find
ourselves in now?
SHEIKH ZAKI YAMANI: Well, I
think the invasion of Iraq was a major reason and a major cause of what
is happening right now and I don't know what will happen. Of course, we
will have to wait and see who will be the incoming president in the
United States and what will be his policy, so to speak
NEGUS: There are people in America of course who believe the
speculators are not really responsible of any significant degree of the
price movement, including people like the US Treasury Secretary Henry
Paulson. So not a lot of people, in America at least, agree with your
explanation for what's gone wrong.
YAMANI: Well I don't know whether they believe or don't believe. I'm an
objective person. I look at this situation objectively. I don't
represent any side. Politics, when it comes, can change your mind and
can make you think of one thing and another.
NEGUS: Your Excellency, this weekend in Jeddah, the Saudis are hosting
a gathering of the world's biggest petroleum producers and consumers to
address this crisis. What if anything can a meeting like that do?
ZAKI YAMANI: Well I know the oil companies are really making a very
lucrative amount of profit from the high price of oil. I don't that
they're very keen to reduce the price of oil. The consumers are those
who are the victims so I think that the producers, the governments,
some of them, they're enjoying the high revenue that they get. They
don't know that the price of this high revenue will be disastrous on
them because it's encouraging the alternative sources of energy which
is coming sometime in the future. How soon I don't know, but when it
comes, the age of oil will come to an end.
NEGUS: So you don't necessarily disagree with those who say that we
might be seeing the beginning of the end of the era of oil as a source
SHEIKH ZAKI YAMANI: Of course when you
have a very high price of oil - see what's happening - and every day we
hear about a new invention here and there and they are reducing
considerably their consumption of oil. But the day they use hydrogen
for transportation, this is the day that oil disappears.
NEGUS: Your Excellency, you've been in the oil game, for a number of
decades now. If you were still in the position of authority, what would
your advice be to the people gathering in Jeddah this weekend? In fact
what's your advice generally for how the heck we get out of this awful
SHEIKH ZAKI YAMANI: Well, I will definitely
change the pricing system prevailing right now and number two, I will
do my best to reduce the price of oil to expand the life span of oil at
least for two decades or three decades.
NEGUS: Your Excellency, we can only hope that somebody is listening to
your advice and they take it this weekend and in the future. But thank
you very much for talking to us, we appreciate it.
SHEIKH ZAKI YAMANI: Thank you very much. It's a pleasure.
NEGUS: Hope you were paying attention, Kevin, and Brendan, for that
matter. Sheikh Yamani was the guy, by the way, who came up with that
memorable one-liner - 'the Stone Age did not end for lack of stone,
'and the oil age will end long before the world runs out of oil'.
JANE WORTHINGTON Editor