Over the summer, the OPEC cartel could not prevent oil prices from surging to record levels even when its members pumped full out. Now, the producers seem equally unable to stop prices from collapsing as the global economy cools down.
Members of the Organization of Petroleum Exporting Countries left an informal meeting in Cairo this weekend without an agreement to reduce production, but with rising doubts about fraying discipline and tensions within the group that accounts for 40 percent of the world’s oil exports.
So great uncertainty still looms over the market. Have producers managed to draw a line in the sand, or will oil prices keep falling in coming months?
“Whatever the market will bear” has been their mantra so far, and it still applies……but only just so far. Right now, the market simply will not bear their demand for dollars, and OPEC is going to have to accept that and live with it. It has quickly become a buyer’s market, and the buyers can’t…..and won’t…..pay what they’ve been asking for their oil!
[i] With oil prices in retreat, OPEC struggles to maintain unity [/i]
I wish them ill.
I think the $160/barrel thing has done ’em in. People are now focused on finding alternatives. Actually it is quite simple. Just mandate that by a certain future date, say January 2012, you cannot use oil to generate electricity. Not counting new nuclear power, we have vast resources in wind, natural gas and coal. That would take the pressure off oil even more. Venezuela, Saudi Arabia and OPEC can go fly a kite. They have been supporting terrorism and shafting the West for decades.
#3. Charles,
No mandate is needed. Production of electricity in the US is essentially oil-free already. As of the end of 2007 less than 2% of our electricity was generated with oil — about 1.6% to be more precise. Coal provides 49% and nuclear about 20%. Too bad that is not the other way around. Coal pollutes and releases radioactive matter (radon). Nuclear has been clean in this country.
There is one thing we need to make clear to Saudi Arabia, and it is this: They need our crops in order to eat. Our dependence on their oil is shrinking, and so is their oil revenue. Their land is not particularly well-suited for agriculture except for a narrow strip of land on their west coast, and it isn’t enought to supprt their population. Therefore, they must import about 90% of their food, and guess where it comes from? Some from Africa……and they have problems feeding their own people. Some from Europe, but a huge amount from us. We could have them over their own oil barrels, if we chose, but we don’t. The time has come, however, when they need to be told…..ALL of OPEC…..that their freebooting days of oil price-gouging are coming to an end, and they’re going to have to accept that we’re only going to pay what the market will bear. And the market is no longer willing to bear the high prices; we are the market!