NationStates Jolt Archive

Since gas has dropped to an astounding low of only a pathetic 57$ a barrel (Sacarsm)

OPEC has decided to cut production to artifically raise the price again. Link (http://home.bellsouth.net/s/editorial.dll?pnum=1&bfromind=2219&eeid=5058274&_sitecat=1505&dcatid=0&eetype=article&render=y&ac=-2&ck=&ch=ne&rg=blsadstrgt)


OPEC Cuts Oil Production by 1.2M Barrels
DOHA, Qatar (AP) - Oil cartel OPEC decided to cut production by a greater-than-expected 1.2 million barrels a day on Friday, and some members indicated it was open to further cuts.

United Arab Emirates oil minister Mohammed bin Dhaen al-Hamili made the announcement at a news conference after OPEC's oil ministers held an emergency meeting in the capital of Qatar.

Support for the move by the de facto leader of the cartel, Saudi Arabia oil minister Ali Naimi, shows the group's unity on the issue of price, said one analyst after the announcement.

"If the market doesn't stabilize, they are going to continue to cut production," said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago. "Prices from $57 to $60 is an area they are willing to defend."

Prices have declined more than 25 percent since mid-July. A barrel of light sweet crude rose 85 cents to $58.50 on the New York Mercantile Exchange Thursday before the announcement.

He did not specify the amount of production that each member country would cut, but said the reductions will affect all countries except Iraq. It is to take effect Nov. 1.

The cuts will come from actual production levels, he said, and are more than 1 million barrels a day being called for earlier by cartel members.

The cuts are the first time OPEC has trimmed its output since December 2004, when oil traded slightly above $40 a barrel and the cartel lowered its official production quota by 1 million barrels a day.

However, many observers expect further production cuts in the near future.

Michael Fitzpatrick, a New York-based oil broker at Fimat USA, said "I'm not sure that a million barrels is going to be enough" of a cut to keep oil prices from further declines.

Qatar's Energy Minister Abdullah bin Hamid Al-Attiyah said the cartel's members are not excluding making further cuts.

Asked whether another cut could come in December, he said, "Everything is possible. We are working with the market and it is an open market."

Al-Hamili echoed the possibility, saying "We will monitor the market and review the situation and take a decision accordingly."

OPEC is scheduled to meet again in December in Nigeria and many analysts believe a further cut could be implemented then. "They better act quickly and decisively," Fitzpatrick said.

The organization's president, Edmund Daukoru of Nigeria, said talk of the possible need of a further 500,000-barrel cut was "in line with my own thinking," Dow Jones Newswires reported.

OPEC price hawks such as Nigeria and Venezuela have strongly advocated a cartel-wide production cut since the start of the month.

But without public support from Saudi Arabia, the market took with a grain of salt the likelihood of any cuts.

Open market my ass. It's a monopoly plain and simple.

Since gas has dropped to an astounding low of only a pathetic 57$ a barrel (Sacarsm)

OPEC has decided to cut production to artifically raise the price again. Link (http://home.bellsouth.net/s/editorial.dll?pnum=1&bfromind=2219&eeid=5058274&_sitecat=1505&dcatid=0&eetype=article&render=y&ac=-2&ck=&ch=ne&rg=blsadstrgt)


Open market my ass. It's a monopoly plain and simple.

It's not a monopoly since they only control 40% of world production. They do, however, obviously have enough cpapcity to set market trends. Not for long, though.

Who's going to affect those market trends?

They said they were going to and then they did it. Wow. Big suprise there. Don't like it? Build an electric car that is both affordable and gets 250+miles per charge (mpc). It's harder than you think.

They're afraid they'll run out and want to stretch their supply as much as possible so that they'll keep getting paid as long as possible. Simple as that. They've got a captive audience and if you don't like it then either tough or go find a replacement.

BTW, I don't like it either.

Snub them by not buying crude oil!

They said they were going to and then they did it. Wow. Big suprise there. Don't like it? Build an electric car that is both affordable and gets 250+miles per charge (mpc). It's harder than you think.

They're afraid they'll run out and want to stretch their supply as much as possible so that they'll keep getting paid as long as possible. Simple as that. They've got a captive audience and if you don't like it then either tough or go find a replacement.

BTW, I don't like it either.Give them a couple of years to get the economies of scale down and Tesla motors will be doing just that.

Oil? Cheap? HA! :eek:

Who's going to affect those market trends?

Traditionally they've been able to affect the market in both directions - up and down. Recently they've pretty much last the ability to affect prices on the down side because they don't have enough spare capacity. Soon they will all peak - most already have. When that happens they will be stuck in a cycle where they just have to be pumping as fast as they can all the time if they want to make as much as they possibly can from the resources they have left because if they try to cut production to force the price too high they will lose quantity and they will be unable to raise production because of geology.

Traditionally they've been able to affect the market in both directions - up and down. Recently they've pretty much last the ability to affect prices on the down side because they don't have enough spare capacity. Soon they will all peak - most already have. When that happens they will be stuck in a cycle where they just have to be pumping as fast as they can all the time if they want to make as much as they possibly can from the resources they have left because if they try to cut production to force the price too high they will lose quantity and they will be unable to raise production because of geology.That's what I figured you were getting at, but I wanted to be sure.

Give them a couple of years to get the economies of scale down and Tesla motors will be doing just that.

No they won't. Electricty isn't free and the price of it is set to skyrocket as natural gas production declines.

Oil? Cheap? HA! :eek:
Hence the Sacarsm. Considering a few years ago it was 40$ a barrel I doubt they're suffering.

It's like PsychoticDan said, they are beginning to run out and they are trying to milk it for all it's worth before the wells run dry.

No they won't. Electricty isn't free and the price of it is set to skyrocket as natural gas production declines.

But with electricity, you have more flexibility--it doesn't all have to be from gas-fired plants after all.

Hmm... since they cut off our supply of oil, we should cut off their supply of everything. I think we can starve them out.

But with electricity, you have more flexibility--it doesn't all have to be from gas-fired plants after all.

Several major experimental coal burning plants are being developed in the US. New technology has been developed that has dropped the cost of solar cells.
Wind farms can be put pretty much anywhere.

And for cars, Brazil has shown that ethanol is a viable alternative.

But with electricity, you have more flexibility--it doesn't all have to be from gas-fired plants after all.

It takes a decade to site, permit and build a coal fired power plant. It can take a decade and a half for a nuke. Natural gas supplies tend to dize off a cliff, not roll down hill like oil. There's no way we can build them and the infrastructure needed to support them fast enough to make up for the loss of all that natural gas.

Wish I could stay and debate, but I'm off work.

later.

Hmm... since they cut off our supply of oil, we should cut off their supply of everything. I think we can starve them out.

No, your products are easier to substitute. :(

No, your products are easier to substitute. :(

I'm sure they can substitute hundreds of millions of dollars of US aid.

Hopefully, the prices we've seen in the past month are enough to permanently damage trust in oil. I've seen many news stories about independent inventors operating without gas, but these have yet to hit the market. It makes me think of the Oil companies though, they are very powerful...one might expect danger when they are threatened.

I'm sure they can substitute hundreds of millions of dollars of US aid.

China'll gladly exchange some dollars for oil.

It takes a decade to site, permit and build a coal fired power plant. It can take a decade and a half for a nuke. Natural gas supplies tend to dize off a cliff, not roll down hill like oil. There's no way we can build them and the infrastructure needed to support them fast enough to make up for the loss of all that natural gas.

Wish I could stay and debate, but I'm off work.

later.I was thinking more along the lines of renewables--solar and wind primarily. They might not be able to completely replace fossil fuels, but they could certianly make up the increased demand from electric cars. Plus, we'd need to get serious about public transportation systems on the whole.

Hurrah for capitalism! Hurrah for making the people pay more! Hurrah! :rolleyes:

I was thinking more along the lines of renewables--solar and wind primarily. They might not be able to completely replace fossil fuels, but they could certianly make up the increased demand from electric cars. Plus, we'd need to get serious about public transportation systems on the whole.

Well, there's a bit of a challenge. For example, natural gas plants generated 114,430 MWh of power in July and wind generated 1,734 MWh.

At the current growth rate of 50% per year, it would still take over eight years to catch up to that level of generating capacity; however, no industry can keep up that growth for long, especially considering the fact that the wind industry depends on a particular tax credit that has to be renewed every three years. As a result, this usually causes growth to stagnate every three years or so, which would add 3 years on to this target; add in record demands for wind worldwide and you might push it back another 2-3 years. That's 14-15 years to catch up; that's a long time in the face of an energy crisis.

The main way we will manage energy demand in the immediate term is through conservation and market rationing; renewables are absolutely vital to the health of our energy infrastructure, but significant short term challenges remain. Solar power could take easily 20-30 years; that doesn't mean we should not pursue it, but these are longer term solutions.

In other words, we're going to have to conserve now to keep our lights on and vehicles running later.

Hopefully, the prices we've seen in the past month are enough to permanently damage trust in oil. I've seen many news stories about independent inventors operating without gas, but these have yet to hit the market. It makes me think of the Oil companies though, they are very powerful...one might expect danger when they are threatened.
One rumor...
Everytime someone invents something pratical that would challenge the Oil company... The oil company buys the patent from the inventor by any means. At least that's what I've heard.

Everytime someone invents something pratical that would challenge the Oil company... The oil company buys the patent from the inventor by any means. At least that's what I've heard.

No, because that would make no sense. If there's one thing people need to know about the oil industry, it's that the companies are only producing oil because it's profitable to do so. They have no intrinsic love for oil; if cars ran on water, they'd be producing barrels of water for vehicle fuel or if cars ran on some kind of "gasoline pill" they'd be selling water and gasoline pills. They don't even care about fuel economy or mass transit, since the energy market still has huge growth potential and there are plenty of developing economies around the world hungry for energy.

They've known since the 1950's and even earlier that their reserves will not last forever, and it will peak and decline; if they can't replace their oil revenues with alternative sources, they will go bankrupt and their stock options will be worthless (not to mention they'll have to deal with the hundreds of thousands of very angry laid-off employees).

As a result, you're seeing them either start to diversify away from oil or buy up other companies to support their production; the days of the supergiant finds and open markets in the Middle East are long gone, and most integrated oil companies are either growing their reserves marginally or creating the illusion of growth through M&A rather than actual discoveries. They're literally living on borrowed time, time they borrowed during the discover booms of the 1950's and 1960's. And, as history has shown us, there is typically a 40-year lag between peak discoveries and production; most oil companies' discoveries peaked by the 1970's, so they're running out of time to keep growing.

If someone invented a technology that replaced oil for dirt cheap, they'd buy it and find a way to make a profit off of it. They have absolutely no incentive to suppress it, especially considering the cost of producing oil is rising faster than the cost at the retail level; eventually, oil will simply become unprofitable to produce at any price and they will have to diversify. The oil industry is driven by volume rather than margins on their product currently, but if they find something that can deliver huge margins as well as volume, they're going to love it and build it out as fast as possible.

No, because that would make no sense. If there's one thing people need to know about the oil industry, it's that the companies are only producing oil because it's profitable to do so. They have no intrinsic love for oil; if cars ran on water, they'd be producing barrels of water for vehicle fuel or if cars ran on some kind of "gasoline pill" they'd be selling water and gasoline pills. They don't even care about fuel economy or mass transit, since the energy market still has huge growth potential and there are plenty of developing economies around the world hungry for energy.

They've known since the 1950's and even earlier that their reserves will not last forever, and it will peak and decline; if they can't replace their oil revenues with alternative sources, they will go bankrupt and their stock options will be worthless (not to mention they'll have to deal with the hundreds of thousands of very angry laid-off employees).

As a result, you're seeing them either start to diversify away from oil or buy up other companies to support their production; the days of the supergiant finds and open markets in the Middle East are long gone, and most integrated oil companies are either growing their reserves marginally or creating the illusion of growth through M&A rather than actual discoveries. They're literally living on borrowed time, time they borrowed during the discover booms of the 1950's and 1960's. And, as history has shown us, there is typically a 40-year lag between peak discoveries and production; most oil companies' discoveries peaked by the 1970's, so they're running out of time to keep growing.

If someone invented a technology that replaced oil for dirt cheap, they'd buy it and find a way to make a profit off of it. They have absolutely no incentive to suppress it, especially considering the cost of producing oil is rising faster than the cost at the retail level; eventually, oil will simply become unprofitable to produce at any price and they will have to diversify. The oil industry is driven by volume rather than margins on their product currently, but if they find something that can deliver huge margins as well as volume, they're going to love it and build it out as fast as possible.

There's no way you posted that. :confused:

Wasn't there a time when gas was like....$20 a barrel? Or is that just fiction?

Wasn't there a time when gas was like....$20 a barrel? Or is that just fiction?

It was about $10/barrel in 1998.

Oh noes! American car manufacturers might have to work harder on efficiency!:rolleyes:

Oh noes! American car manufacturers might have to work harder on efficiency!:rolleyes:

No shit. Tell that to GM. In five years I predict GM will be gone and Ford will be the only giant American auto manufacturer.