PDA

View Full Version : Economics OPEC Issues?


HonestChieffan
09-11-2008, 10:56 AM
http://blogs.moneycentral.msn.com/topstocks/archive/2008/09/11/the-death-of-opec.aspx

The death of OPEC


Saudi Arabia walked out on OPEC yesterday. It said it would not honor the cartel's production cut. It was tired of rants from Hugo Chavez of Venezuela and the well-dressed oil minister from Iran.

As the world's largest crude exporter, the kingdom in the desert took its ball and went home.

As the Saudis left the building the message was shockingly clear. According to The New York Times, “Saudi Arabia will meet the market’s demand,” a senior OPEC delegate said. “We will see what the market requires and we will not leave a customer without oil."

OPEC will still have lavish meetings and a nifty headquarters in Vienna, Austria, but the Saudis have made certain the the organization has lost its teeth. Even though the cartel argued that the sudden drop in crude as due to "over-supply", OPEC's most powerful member knows that the drop may only be temporary. Cold weather later this year could put pressure on prices. So could a decision by Russia that it wants to "punish" the US and EU for a time. That political battle is only at its beginning.

The downward pressure on oil got a second hand. Brazil has confirmed another huge oil deposit to add to one it discovered off-shore earlier this year. The first field uncovered by Petrobras has the promise of being one of the largest in the world. That breadth of that deposit has now expanded.

OPEC needs that Saudis to have any credibility in terms of pricing, supply, and the ongoing success of its bully pulpit. By failing to keep its most critical member it forfeits its leverage.

OPEC has made no announcement to the effect that it is dissolving, but the process is already over

Top Stocks blogger Douglas A. McIntyre is an editor at 24/7 Wall St.

Goapics1
09-11-2008, 11:02 AM
Does this mean gas will go under $2/gallon?

J Diddy
09-11-2008, 11:04 AM
Does this mean gas will go under $2/gallon?

I think it's a response to Saudi thinking about the future. everybody's fired up to use less oil, eventually the demand will go down. This prolongs that especially if gas drops

mlyonsd
09-11-2008, 11:05 AM
Does this mean gas will go under $2/gallon?

ROFL Dream on brother.

Donger
09-11-2008, 11:07 AM
Does this mean gas will go under $2/gallon?

$2.00 gasoline equates to crude price of about $48/barrel.

irishjayhawk
09-11-2008, 11:09 AM
$2.00 gasoline equates to crude price of about $48/barrel.

Would this mean your head would explode?

Donger
09-11-2008, 11:11 AM
Would this mean your head would explode?

No. Why would it?

Goapics1
09-11-2008, 11:11 AM
$2.00 gasoline equates to crude price of about $48/barrel.

So what are you saying? It ain't gonna happen?

Donger
09-11-2008, 11:13 AM
So what are you saying? It ain't gonna happen?

I think it's highly unlikely. I think we could possibly see ~$70-80 again, but once it drops to those levels, demand will begin to increase again.

Calcountry
09-11-2008, 11:16 AM
I think it's highly unlikely. I think we could possibly see ~$70-80 again, but once it drops to those levels, demand will begin to increase again.Supply and Demand are funny like that.

dirk digler
09-11-2008, 11:17 AM
I am actually proud of what the Saudi's did. Good job!

Goapics1
09-11-2008, 11:19 AM
I think it's highly unlikely. I think we could possibly see ~$70-80 again, but once it drops to those levels, demand will begin to increase again.

So what are you gonna do about it?

Donger
09-11-2008, 11:33 AM
Supply and Demand are funny like that.

ROFL

Donger
09-11-2008, 11:33 AM
So what are you gonna do about it?

I'll continue to use as little gasoline as possible.

BigCatDaddy
09-11-2008, 11:37 AM
I'll continue to use as little gasoline as possible.

Just curious how you became the resident Oil expert? Job in the industry I suppose.

Donger
09-11-2008, 11:41 AM
Just curious how you became the resident Oil expert? Job in the industry I suppose.

Ancillary industry, yes. But, in an earlier life, I was involved directly.

I wouldn't call myself an expert, however.

Goapics1
09-11-2008, 11:41 AM
Just curious how you became the resident Oil expert? Job in the industry I suppose.

He is an attendant at the local QT.