OPEC production cuts send a message to the oil market
With all the talk and rumors over the last month, we expected to see OPEC cut oil production by 1 million barrels per day. However, according to Reuters, Friday's announcement of the deeper than expected cut of 1.2 million barrels seemed to send an intended message to buyers on the oil market: if the price of oil does not stabilize, OPEC would be open to even deeper cuts. Unofficial talk of further production cuts seems to be lurking from many different sources and those cuts may come as soon as December. Qatar energy minister Abdullah bin Hamid Al-Attiyah said that the cartel's members are not excluding further cuts while the Dow Jones Newswire reported that OPEC president Edmund Daukoru said that the possible need of a further half million barrel cut was "in line with my own thinking."
By the end of the day, the price of light sweet crude oil rose 47 cents to 58.97.
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[Source: Reuters via MSNBC]
Reader Comments (Page 1 of 1)
George Krpan 3:00PM (10/22/2006)
Gas prices were down for a few weeks and large SUV sales went up. Americans don't see any farther than the end of their noses. This may be the last time we see a period of declining gas prices. We are not entitled to their oil. They have a perfect right to do what they may. The reason they give for the production cut may have nothing to do with stabilizing prices. It may have something to do with their largest oil field petering out.
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loikll 4:59PM (10/23/2006)
No George, it has nothing to do with peak oil (if that were the case, production would just limit itself, you wouldn't have OPEC policy makers scrambling to try to hecter each other into cutting back). It does have everything to do with OPEC wanting to maximize their profits by limiting production to the point of max profit. Every business would engage in that kind of collusion if it were not geneally illegal.
Americans don't buy SUVs because they are stupid or short-sighted or have bad memories. They buy them because people other than yourself have different values and perferences than you have. Learning that is hard sometimes, but it's part of becoming an adult. Recent weeks have proved beyond any doubt that oil has NOT reached any kind of permanent $70+ a barrel plateau, as once feared; that fact has allayed a lot of peoples' fears, and lots of people just like big vehicles. It's that simple.
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George Krpan 5:57PM (10/25/2006)
Now, how would you know that it is not production that is limiting supply?
The Arabs are very secretive. Type "Ghawar" in Google, the name of the largest oil field in the world.
A quote from the Wikipedia hit, "Relatively little is known about Ghawar because the company and Saudi government closely guard field performance information and per-field production details. Available information is predominantly historical (pre-nationalization), from incidental technical publications, or anecdotal."
The first hit is entitled, "Ghawar is dying." Many of the other hits purport this.
The definition of collusion from Dictionary.com - a secret understanding between two or more persons to gain something illegally, to defraud another of his or her rights...
An essential element of collusion is missing, we have no right to their oil.
The facet of becoming an adult, tolerating other people preferences, is trivial in the context of peak oil.
Since you made a inference about my adulthood, I'll make an inference of my own.
Senility. Losing touch with reality, living in the past. The past where gas was cheap and plentiful and people drove big cars.
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