Oil prices and a global view of hydrocarbon supply, demand and marketplace took center stage for the Division of Professional Affairs in New Orleans.
Dennis J. O'Brien, director of the Sarkeys Energy Center's Institute for Energy Economics and Policy, Norman, Okla., spoke at the annual DPA luncheon on "World Oil and Gas Markets: Myth and Reality," then joined a panel of other speakers for a DPA Forum on "World Oil and Gas Supply and Demand."
"Volatile and uncertain oil markets need to be understood in order to plan for the future," O'Brien said in his luncheon address. "The recent market is a classic case in which the media has created a misunderstanding of those markets.
"We need to look back over the last few years and, in particular, the last few months to understand the next few months, years and decade."
O'Brien said one of the biggest myths held by people within the industry is that "producers should and do determine the price of oil.
"This view often exaggerates the role of OPEC and uses over-simplified economics as justification," he said. "The keystone in the market is the refiner -- he determines the price daily and is mainly influenced by upward or downward movement, since this impacts his margin."
O'Brien also talked about:
The weather's role in price fluctuations.
How Asian demand for oil and gas has returned to pre-crisis levels.
His conclusion that "oil prices are the collective notion of an elite group of midstream refiners, traders (and) trade journalists ? Oil prices have little physical relationship with the substance of oil and are simply an electronic value in financial transactions."
In the forum that followed O'Brien's talk, he, Bob Esser (Cambridge Energy Research Associates), William Fisher (Bureau of Economic Geology) and Pete McCabe (U.S. Geological Survey) offered their views of global oil and gas supply and demand.
Among their opinions, Fisher observed that global resources and their long-term outlook "will be constrained by demand rather than supply.
"We have adequate resources and we have the technology available," Fisher said. "(But) There is a precise balance between supply and demand. The question is, what will be the demand?"