Price isn’t right for Opec, or BP | FT Alphaville

Price isn’t right for Opec, or BP

We’ve all become accustomed to hearing what Opec may or may not think is a fair price for oil (even though officially they do not comment). But, when it comes to the oil majors – traditionally – they have skirted the question. Most likely this is because they recognise it is just not good PR, sitting as they do on the price taking side of the equation.

Considering the above we noted with interest the following Bloomberg headline on Thursday:

BP, EDF Chiefs Say Oil at $60-$80 Is Appropriate

What, what? BP, EDF saying what they think is an appropriate price for oil. Err, could they be thinking of joining the cartel themselves?

Well, not quite. What BP’s Tony Hayward actually said (when you read on) was that for OPEC, $60 to $80 was appropriate to sustain the cartel’s social programmes and future investments. That’s very different.

Either way, we much prefer Shell CEO Jeroen Van der Veer’s consistently more discreet responses on the subject of oil prices. His latest on Thursday certainly doesn’t disappoint. As Bloomberg reports:

Speaking at Shell’s earnings press conference in The Hague today, Van der Veer said Shell was more “humble” in its assessments because “we see ourselves as price takers.” “It is not for us to say what is appropriate,” Van der Veer said, adding that the views of oil producers would be different to “those that have to fill up their fuel tank.”

Quite right.

Plus, when it comes to marginal oil barrel costs Mr Van der Veer should know. Shell is sinking in more Canada quick oil-sand than most peers, and is still clinging to its not-so-sweet water Pearl GTL project in Qatar.