Rising Oil Prices Falsely Inflated - KCBD NewsChannel 11 Lubbock

2/25/03

Rising Oil Prices Falsely Inflated

"West Texas Sour is selling for $30 a barrel," said Dick Milam. He's been an oil and gas man for 50 years. With fuel prices soaring as the nation endures a brutal winter and creeps closer to war, local suppliers are reaping the profits. "I'm doing very well. I'm enjoying as good a profit as I have in several years," said Milam.

Worldwide, 76 million barrels of oil are consumed every day. Over the past year the price per barrel has jumped over $7, the price of natural gas has doubled. While that's good news for local producers, many say they'd rather see lower prices that are steady and stable, driven solely by supply and demand, and not labor strikes in South America and the threat of war with Iraq.

"I make money out of it temporarily, but it is a very temporary thing. I'd just as soon that it stayed more stable," said Milam.

As it is now, says Milam, prices at the pump are inflated out of fear, not out of an actual drop in supply. A situation that could rapidly change if war begins.

"If Saddam has got those wells geared to where, we pull the trigger, he pulls the trigger, and those wells go up, and you shut that oil field completely down, then demand will be much higher than supply. If that should happen, and we need 76 million barrels a day, and we got 75 million barrels a day, how much is a barrel of oil worth? What'll you pay for a gallon of gas?" asked Milam.

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