Good post. My thoughts exactly.

 

I kind of skimmed through that article, but did it ever say exactly WHY they are cutting production?

 

Basically because they think the price is too low.

 

What some of you are not seeing is that this is the last round up for OPEC. If they can't make this 2 million barrels a day cut back work, they are done....as in like the US auto makers- bankrupt. Not the countries in OPEC, just OPEC as an organization will be over. It will be back to free trade and nobody will fare better than us if it happens. And no, the US oil companies don't need oil at 70-80 bucks to make money. But, on the other hand, Mr Chavez from South of the border needs oil at $90.00 just to pay for projects he has going in Venezuela. If oil stays low or goes lower, his country will see a major revolt because their money will be worthless. He's already not the most popular man there and a little push will put him in his grave. And just in case you haven't heard, the largest oil reserve known is no longer in the Arab countries. It's south of the US a few hundred miles, off of Brazil. The extent of the field is not fully known yet but it's huge and getting bigger every day as exploration continues. Once in production, the price of oil will no longer be in control of folks like the Arab countries. So far, the oil that has been found is of the "sweet crude" type which is easy to process and refine unlike the Saudi oil which is full of sulfur.

 

Agreed. You make a great point.

To further touch on that oil rich OPEC countries have very little; if any, other trade goods except for oil. OPEC is just as big a scam as Global Warming... I mean Climate Change. Since they have nothing else to offer, they basically use strong arm tactics to sell oil at inflated prices. Without oil they are done.

I saw an article the other day talking about the decline of the United Arab Emirates. The price of oil is so high because the sand market never really took off!

 

grizzstang, I assume you guys aren't hiring, but anything for summer? PM me cheers

 

Considering oil closed today at $36.22 a barrel which means it fell since OPEC decided to cut production, OPEC may not be in the drivers seat anymore. Oil is now expected to go as low as $25.00. While I love the cheap gas, I also recognize that if it goes that low, it's because our recession has gone into depression. I would prefer it stay around the $35.00-40.00 a barrel number. Everybody can live at those numbers and jobs will start to come back.

 

Summer is too far off to know but I would assume that as oil prices continue to slide that we will be laying people off by then.

 

It's a double edged sword for OPEC in regards to oil production. Yes, the more they cut the higher the price should be, though recent trading hasn't shown that, maybe due to the whole weakness of the economy rather than oil itself.

But by cutting production, OPEC is also cutting revenue they need to run their countries, so its a balance that can hurt them and us if it goes the wrong way.