Oregon daily emerald., October 26, 2004, Page 12, Image 12

Oil prices jump
in United States,
profits go abroad
Worldwide oil spending is expected to grow
$295 billion as prices and demand rise
BY BRAD FOSS
THE ASSOCIATED PRESS
While Americans wince as they fill
up their SUVs with $2-per-gallon gaso
line, market forces are smiling on the
Saudi Arabias and Exxon Mobils of the
world.
A transfer of wealth of historic pro
portions is taking place as worldwide
spending on oil is expected to grow
this year by about $295 billion, or 27
percent, compared with 2003, accord
ing to government data. Consumers
and businesses are paying substantial
ly more for gasoline, heating oil, diesel
and other products derived from crude
as demand and prices surge.
While the corresponding windfall of
profits for oil exporting nations and pe
troleum companies is sapping strength
from the international economic recov
ery, it’s not causing the kind of finan
cial shock that followed the oil crises
of the 1970s.
Still, experts warn that the market
constraints underlying high and
volatile energy prices suggest that
higher oil price could be here to stay.
“There’s not a consensus out there,
but the question is being asked more
now than it has been at any time in the
last 20 years,” said Jim Burkhard, di
rector of global oil at Cambridge Ener
gy Research Associates.
Rising oil costs are linked as much
to America’s drive-at-any-price car cul
ture and China’s raging industrial ex
pansion, as they are to the world’s un
usually thin supply cushion, a
condition that has magnified anxieties
about potential supply disruptions in
Venezuela, Russia and Nigeria.
Consumption continues to rise in
spite of higher prices that are expected
to slow global economic growth by
about 0.5 percent in 2005. Much
sharper financial pain will be felt in
poor, developing countries that are net
oil importers.
“As with most things, the global im
pact is not spread evenly around the
world,” said Jeffrey D. Lewis, manager
of international finance research at The
World Bank. Lewis predicted that,
without emergency funding, much of
the organization’s $2.5 billion aid to
struggling nations this year will have
to be reallocated to fuel purchases by
local governments, leaving health and
education programs grossly under
funded or scrapped altogether.
With oil futures marching to the $55
a barrel level this month — up from
about $30 a year ago — the list of win
ners is topped by Saudi Arabia, Russia,
Norway, Iran, Venezuela and other
leading exporting nations. Saudi Ara
bia alone supplies about 12 percent of
the world’s daily oil fix.
Exxon Mobil Corp., Royal
Dutch/Shell Group and the rest of the
private petroleum giants are also flush
with cash as profits and stock prices
soar. The same goes for oilfield servic
es firms such as Schlumberger Ltd.
and Baker Hughes Inc., as well as the
countless smaller providers of the
equipment, ships and workers needed
to produce and transport some 82 mil
lion barrels per day.
With oil above $50, who stands to gain?
THE WEALTH TRANSFER: Worldwide spending on oil is expected to
grow this year by about $295 billion, or 27 percent, from 2003.
WHO GAINS?: Oil exporters such as Saudi Arabia and Russia, and private
oil giants such as Exxon Mobil and Royal Dutch/Shell Group.
WHERE’S THE PAIN?: While American motorists grumble about $2 per
gallon gasoline, the real damage will be done to poor, developing countries,
which tend to be more dependent on imports and are less energy efficient.
IS $50-A-RARREL OIL A BIG DEAL?: Not in inflation-adjusted terms. Soar
ing oil prices are slowing global economic growth, but not causing the kind of
financial shock that followed the oil crises of the 1970s.
— The Associated Press
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AP
IN BRIEF: OREGON
Damascus may become
new urban growth site
DAMASCUS — The view from his
farmhouse takes Roy Ledbury back
almost 80 years, to where he picked
strawberries as a boy on land his fam
ily has farmed since 1881.
The farm and 12,000 acres
around it may become the state’s
biggest experiment in urban
growth and Oregon’s first new
town in 20 years.
He and his wife Barbara told The
Oregonian they can accept the 60,000
neighbors expected to move there if
they bring good jobs, open space and
walkable neighborhoods with them.
On Nov. 2, voters in this unin
corporated community in Clacka
mas County will decide whether to
incorporate.
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UNIVERSITY OF OREGON
If they vote in favor their own
leaders will help design the new
neighborhoods. If not, its shape
will be up to planners from the
county and neighboring cities.
If things go as the Ledburys hope,
Damascus could be a model commu
nity friendly to salmon and pedestri
ans alike. Or it could wind up as just
another suburb adding to Portland’s
rush-hour bedlam.
Meanwhile, Barbara Ledbury is
hoping to make the switch from farm
wife to city councilwoman.
Metro, Portland’s regional gov
ernment, got thing started two
years ago by redrawing the urban
growth boundary that controls de
velopment on farmland. It was a
given that Damascus would grow.
The question was, how much and
in which direction.
Damascus today is a community
of about 12,000 residents, a patch
work of grazing animals, nursery
farms, a few subdivisions and a
small commercial area. Salmon
bearing streams and fir trees share
the landscape.
Planners hope to save all that
and create a suburban utopia along
the lines of Orenco near Hillsboro.
If voters approve the idea the
new city council would take office
in January, but developers likely
would not start building for a year.
If incorporation fails, Gresham
and Happy Valley could annex
parts of the area and gain control
over growth.
To make it all work the country
roads that crisscross the area will
have to give way to better roads and
perhaps light rail, said Michael Jor
dan, Metro’s chief operating officer.
A 2003 study concludes that fa
cilities such as roads and sewers
could cost $1.6 billion.
— The Associated Press
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