BREAKING: OPEC issues largest-ever cut in oil production
by Jeremy Korzeniewski on Dec 17th 2008 at 4:44PM 
Getting used to cheap gas prices? Experts have been warning that they are not going to last and the Organization of Petroleum Exporting Countries (OPEC) is doing its part to prop 'em back up. Today, OPEC unleashed a plan to drastically cut oil production by an astounding 2.2 million barrels per day - the largest cut ever - after already dropping oil production by another 2 million barrels per day just a short time ago. This move once again proves that oil is a supply and demand market and is in response to "the repercussions of the financial crisis," said OPEC President Chakib Khelil. Oil prices had hit record highs last June but have since dropped by an amazing 70 percent.Regardless of OPEC's desire to stabilize the falling price for a barrel of oil, the market responded by dropping its value another few dollars shortly after the announcement. OPEC nations produce roughly 40 percent of the world's oil supply. We're not expecting this dramatic roller coaster ride to end anytime soon. Better buckle up.
[Source: CNN Money]
Reader Comments (Page 1 of 1)
jharlan 8:29PM (12/17/2008)
The rape we sufferred last summer has changed our habits permanently. Gasoline is again reasonable, but my driving has been cut back by at least 50% and I am still shopping for a suitable EV. I am just so dam tired of financing global terrorism because the oil companies have our politicians in their pockets. Whatever we end up with let's just make sure it isn't controled by Exxon!
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ale 12:59PM (12/22/2008)
just goes to show to opec, no haha, to the people that oil is not a supply and demand market, market does not reflect supply just whatever the traders demand
Jharlan 1:51PM (12/22/2008)
You are right on, Ale, even the Saudis were telling us there was no supply and demand reason for the price to be that high. There is some justice, however, because many of the egg sucking speculators went bankrupt when the bottom fell out. The Saudis were smart enough to know the bubble was so big the prices had to crash. One other positive note, a hell of a lot of venture capital went into alternative energy source research.
tankd0g 1:11AM (12/28/2008)
What happened last year was the work of speculators, there are still people that will scream till their blue in the face that it was supply and demand but it was not. PROOF is here right now, Largest ever cut in oil production and what happens? Oil slipped $4 a barrel. The bubble burst, those of us that knew it would are still driving the same cars we had 2 years ago, those that panicked have shiny new cars with shiny new car payments which should be fairly easy to afford when you're getting 36 mpg on $2.50/gal gas.
dave 9:12PM (12/17/2008)
You know these OPEC countries are going to cheat anyway.
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Carney 1:19PM (12/30/2008)
Periodically, various OPEC members do try to cheat and produce more oil than the limits they have agreed to among themselves, but the Saudis, who have the world's lowest oil extraction and production costs, can displine them by ramping of production to collapse the price to such a degree that only Saudi oil remains profitable. As a result, the Saudis have effective control over OPEC, and OPEC has a major impact, if not decisive control, over world oil prices.
In the long run, then, OPEC continues to succeed in its stated purpose of being an open consipiracy to collude to restrict production below demand, so as to drive up prices artificially high.
Thus the associated short-term roller coaster rides and the long term fleecing of the productive nations by corrupt petro-tyrannies, will continue as long as we choose to keep our transportation fleet locked in to oil-only rather than opening it up to multiple fuels, as we could do with flex fuel vehicles.
Sean 10:17PM (12/17/2008)
We seriously need to get on with the business of becoming energy independent. While we are doing the happy dance around the pumps with the lower prices OPEC is planning yet more production cuts and will not quit until they achieve their desired price per barrel. The record high prices this past year have done serious damage to our economy and society. It would cost the equivalent of 60 cents per gallon to charge and drive an eelctric car. If all gasoline cars, trucks, and suv's instead had plug-in electric drivetrains, the amount of electricity needed to replace gasoline is about equal to the estimated wind energy potential of the state of North Dakota.WE must move forward with energy independence. We have the knowledge, we have the technology, what America lacks is a plan. Jeff Wilson has a new book out that is beyond awesome. The Manhattan Project of 2009 Energy Independence NOW. He walks you through every aspect of oil, what it is used for besides gas, our depletion of it. The worlds increased need ie 3rd world countries becoming more modernized and consuming more. He explains EVERY alternative energy source and what role they can play to replace oil. His research is backed up with hard data and even includes a time frame and proposed legislative agendas to wean America off oil. www.themanhattanprojectof2009.com
He also has a VERY interesting article posted on the Better Place Blog called How Much Electricity Would It Take To Replace Gasoline you can read it at...http://planet.betterplace.com/profiles/blogs/how-much-electricity-does-it
Better Place is the company that is going to be setting up the infrastructures for supporting electric car use in San Jose, San Fransisco, Oakland as well as Hawaii. On the upper right hand side of their web site you can sign an online petition to bring similar projects to your area.
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tankd0g 1:11AM (12/28/2008)
OPEC does not control enough of the world oil supply anymore to achieve what you fear. Energy independence for a country like america is so far, impossible. Luckily you have plenty of oil Canada.
MW 10:41AM (12/21/2008)
I think OPEC will cheat as well. Their budgets have grown accustomed to the high prices. They need the cash flow.
http://www.chasemotors.net/used_cars_richmond_va.html
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JKal 1:20PM (12/21/2008)
It's not just opec. It's the the major oil companies too. Opec is nothing without them. they raise and lower the price of gas at the pump at will regardless of OPEC or the price they charge for oil. It's like a marriage OPEC may put out but the major oil companies wear the pants in the family. For years they have taken domestically produced oil shipped it outside the US turned it around brought it back and called it imported oil. Of all the billions they reported as profit they did not have to report the billions that they stuck into the remodeling (ripping down and completely building new) state of the art service stations, need it or not. They can take that off the bottom line and say it's maintenance cost. We are the ones that paid that cost thru price fixing we have no choice. Buy keeping the cost of diesel high they are still getting us by causing the price of shipping ti rise that cost is passed on to everyone drive or not. That theft is cloaked to the consumer all he sees is a higher price at the market.. Mr. oilman bush knows all this.
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Mark 7:09PM (12/24/2008)
The nations of OPEC have no honor. They will all cheat on quotas. Of course our oil companies also have no honor. One has only to look at the oil controlled patent that has stopped the Toyota EV battery from being produced anymore, effectively crushing widespread use of EVs. I think one reason for today's cheap gas is that a lot of EV interest has been watered down, obviously a benefit to big oil.
I am avoiding all this nonsense and now drive a ZAP Xebra EV since most of my driving is in the city and less than 20 miles a day, but the Toyota battery would be nice to have in my Xebra which would allow about a 50 mile range.
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Carney 1:25PM (12/30/2008)
We don't need a massive Manhattan Project to wean ourselves off OPEC or oil in general. The solution is surprisingly simple yet devastatingly effective. All that needs to be done is for Congress to pass and the President to sign into law a bill mandating that all new cars sold (not just made, sold) in America be flex fuel as a standard feature, like seat belts.
This change is relatively simple, about $100 per car when part of the original design and installed at the factory with everything else. The cost to the auto companies is about $150 million to make this change, about what we spend on foreign oil in five hours.
But with this change we break through the "you go first" standoff between consumers and fuel station owners. The former don't insist on flex fuel capability because so few gas stations have an alcohol pump. Gas stations don't offer alcohol because only 3% of cars can run on it. But with this mandate in place in 3 years we'd have 50 million alcohol capable cars on the road.
Make sure the flex fuel standard includes methanol (dirt-cheap) and that we drop our tarriffs on Brazilian ethanol and alcohol fuel becomes much cheaper than gasoline. At that point fuel stations will respond to that market and hundreds of billions in wealth per year will be diverted away from Iran, Saudi Arabia, Venezuela, and their free riders like Russia, and toward farmers, trash recyclers, etc.
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