OPEC Plan to Drop Production and Raise Prices

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http://www.foxnews.com/story/0,2933,442343,00.html

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Just as Americans are finally beginning to reap the benefits of plunging gasoline prices " including more money in their pockets " OPEC is getting ready to squeeze them once again by cutting oil production and driving up prices to refineries.

The 13-nation global oil cartel " which includes Mahmoud Ahmadinejad's Iran and Hugo Chavez's Venezuela " will hold an emergency meeting in Vienna Friday to discuss the steep and rapid decline in oil prices.

"The era of cheap oil is finished," Iran's Oil Minister Gholamhossein Nozari boasted on Tuesday.

When asked what price Iran would want for its oil, Nozari declared, "The more the better."

"A few member nations have voiced their intentions of pushing for a cut in production, including Qatar, Iran, as well as OPEC's president Chekib Khelil, who said that output could be slashed by as much as 2 million barrels a day," analysts for Raymond James & Associates told MarketWatch.com.

When oil peaked at more than $147 a barrel in July, gas prices soared to above $5 a gallon in some parts of the U.S., and Americans were forced to cut back on driving. With the price of oil at about $73 a barrel on Tuesday, pump prices have fallen to as low as $2.30 a gallon.

The price dip in oil " and gasoline " finally is working its way into the beleagured American economy, putting a few extra dollars in the hands of consumers just as the home heating and holiday shopping seasons begin.

Sam Gault, president of Gault Inc., a fifth-generation, family-owned oil business in Westport, Conn., said the drop in oil prices is helping his customers, his business and his community.

"Obviously a down market helps the consumer," Gault said. "When the price of oil is less, it’s a good thing for everyone. It's good for the consumer. It's good for us as an oil company. It just puts more disposable income back into the economy because it's not used for household expenses."

When oil costs more, Gault said, "people need to make different choices. But you have to heat your home."

OPEC, however, wants prices to climb " and quickly.

Khelil on Monday even urged non-OPEC oil producers, such as Russia, Mexico and Norway, to follow the cartel's lead and cut production, Reuters reported.

Such a coordinated move is sure to drive prices back up over $100 a barrel " and hit Americans where it hurts.

"OPEC doesn't care about anybody. They don't care about the United States. They don't care about our consumers," said Ross Dibono, executive director of the Pennsylvania Gasoline Retailers Association.

"They're very small countries that just happen to be sitting on an unlimited wealth of oil and they're going to extract as much out of the ground as they feel comfortable with," he said. "Why sell 200 gallons for $100 a barrel when you can sell 100 gallons for $200 a barrel?"

"Saudi Arabia doesn't care about you or me or anybody else," he said. "They've got a taste of the expensive barrel of oil."

Iran's oil minister told Reuters he would push to cut production by up to 2.5 million barrels per day.

Iran has taken a liking to astronomical oil prices, using its newfound wealth to fuel its nuclear program in defiance of the U.S. and the global community. But the country would need oil prices to stay above $85 per barrel to balance its books, according to a report released in August by the International Monetary Fund, the New York Times reported Wednesday.

Venezuela's capitalism-bashing Chavez has used his country's oil windfall to buy Russian weapons, going as far as to let the Russian navy practice in its waters. Russia reportedly is also helping Venezuela develop nuclear power.

Chavez said on Saturday that oil at $80 to $90 a barrel would be good enough to keep Venezuela going, Reuters reported, but analysts say the country has billions stashed away and will be able to withstand a price drop.

Gault, however, said the key to whether American consumers are once again going to have to worry about heating their homes and how far they drive is going to come down to one country.

"Its really going to come down to whether Saudi Arabia wants to cut production, because they're the ones that can afford to cut production," Gault said. "A lot of times the different members of OPEC wind up cheating on their quotas."

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oil, camels and camel ****. that's what the m.e.s have.

quit buying their oil and what do they have left to sell?

if the powers that be had begun transitioning to alternative and renewable sources 30 years ago instead of yucking it up about "those goofy ecology liberals", we wouldn't be in this position.

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@DontTreadOnMe,

Actually the goofy ecology libs all went to work for the EPA and formulated 550 unique types of gasoline, to keep the air clean.... it didn't work. It just made gas more expensive, causing people to drive less and be less productive, which I think was the goofy ecolibs intention.

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@gungasnake,

gungasnake wrote:

Quote:

The 13-nation global oil cartel " which includes Mahmoud Ahmadinejad's Iran and Hugo Chavez's Venezuela " will hold an emergency meeting in Vienna Friday to discuss the steep and rapid decline in oil prices.

OPRC has 12 member states. Not 13.
Iran is a founding member, since 1960, Venezuela as well.
(1960 ... that must have been before Mahmoud Ahmadinejad and Chavez, isn't it?)

They produce, btw, less than 40% of the world's oil production.

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@gungasnake,

Quote:

"OPEC doesn't care about anybody. They don't care about the United States. They don't care about our consumers," said Ross Dibono, executive director of the Pennsylvania Gasoline Retailers Association.

"They're very small countries that just happen to be sitting on an unlimited wealth of oil and they're going to extract as much out of the ground as they feel comfortable with," he said. "Why sell 200 gallons for $100 a barrel when you can sell 100 gallons for $200 a barrel?"

"Saudi Arabia doesn't care about you or me or anybody else," he said. "They've got a taste of the expensive barrel of oil."

...

Venezuela's capitalism-bashing Chavez has used his country's oil windfall to buy Russian weapons, going as far as to let the Russian navy practice in its waters. Russia reportedly is also helping Venezuela develop nuclear power.

Imagine that, the temerity of these OPEC countries, actually expecting that they should receive the market price for their product. They're nothing but god damn capitalistic pigs!

And this Chavez guy, buying Russian weapons and letting the Russian Navy practice in its waters. Jesus Christ on a scooter. That's what it's gonna come down to, ya know. Look, already Americans, let me quote it so I don't get it wrong, "Americans were forced to cut back on driving". That is just so phucking sad; they've had to cut back on their driving.

1 Reply

@JTT,

Gunga, check and see what the US oil companies priced their oil at when the prices were at their highest. I betcha that they undercut those OPEC bastards and forced them to put their prices back down, right? Meanwhile they passed all their obscene profits on to deserving little 'Mericans so they could drive more.

1 Reply

@JTT,

If they can sell 1 bbl at $200.00, or two at $100.00, their way is clear. There is no conscience in international trade. Still, they may see a loss of revenue by persuing that course. Amhed Yemani was a master at pricing for the greatest return on investment. Every day, I see the shift to smaller cars, and it sometimes seems like traffic is lighter. We just might get to the point where we don't need them, or their oil.

Come on, though, JTT. Gloating isn't pretty.

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cutting production by OPEC (which is hardly a cohesive force) will probably cause several non OPEC sources to benefit with the temporary price hike by sending out more oil which will cause OPEC to send out more oil. They tried this several times before.

Its interesting that the "drill only" guys have been quiet since the economics driven conservation program has caused all this price drop and not any new wells. Very Happy

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It's the thought that counts in this case and some of this stuff is nearly or entirely irrelevant. The spot market follows the futures market closely because of the inexpensiveness of storing oil and unless those guys have a reason to go short, they never will. Thus the upwards spiral was broken by W. merely talking about drilling offshore.

Likewise Sarah Palin has been able to deal with the oil companies to the benefit of ordinary citizens in the past at least in Alaska. With her as energy Tsar the companies would not get the same price in America for American drilled oil as they might selling it in Japan or China.

Likewise we have at least 30 years worth of rolling stock which will need oil and gasoline even if we were to start making all electric vehicles this year and I'm still waiting for an explanation as to how FDR and Ike would have prosecuted WW-II while paying Hitler $148/barrel for oil.

The envirowhacks and demoKKKratgs of course don't give a rat's ass about any of this and are willing to do any amount of damage to this country in order to rule it.

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Likewise the percentage of oil OPEC supplies to us or anybody else is fairly irrelevant. Above some point, and they are above it, they behave as if even if we could get our requirements for foreign oil down to one barrel, they'd try to charge us $70B for that one barrel of oil.

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@roger,

Quote:

We just might get to the point where we don't need them, or their oil.

Would this be some of that gloating that ain't pretty, Roger? This is just all too common in the USA, casting blame upon others who do nothing more than the USA has been doing for centuries.

"The Arab countries don't care about the American consumer"; why should they? Why should any Middle Easterner give a rat's ass about a country that has done nothing but heap misery upon them. [not the only one, mind you]

The Arab countries have every right to look out for their own needs. Having the greediest country in the world lecture others is really too much, don't you think?

Much of the high price of oil can be laid right at the US's doorstep. A ill-thought out invasion of one of the biggest oil producers in the world has nothing to do with high prices. Pull my other leg.

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@JTT,

we should have been using solar/wind/wave power years ago, as well as driving electric cars.

but then, how much can someone charge for energy that is almost free?

money. it doesnt work in the long run, period.

all it does is restrain humanities potential, we wont ever get anywhere until we can work as a global community.

1 Reply

@JTT,

JTT wrote:

Would this be some of that gloating that ain't pretty, Roger? This is just all too common in the USA, casting blame upon others who do nothing more than the USA has been doing for centuries.

Well, yes. Sad

I don't see myself blaming anyone, though.

1 Reply

@roger,

Quote:

I don't see myself blaming anyone, though.

I think that's because you're a better man than I.

Me, I hate to see hypocrisy and dishonesty and I have to say, way way too much of that issues from the USA for the very things that the US does, in spades.

Look at what the USA has done and continues to do to the people of Cuba. Why? Because Cuba is an oppressive communist country. Give up trade with China and Vietnam and any other country that oppresses people and people might start to take the USA seriously.

The ONLY reason that there is an embargo on poor little Cuba is that she is small enough to bully. That DOES NOT speak well to the much vaunted American ideals of fair play and justice.

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@OGIONIK,

Quote:

we should have been using solar/wind/wave power years ago, as well as driving electric cars.

Some of that stuff is just now becoming feasible, other parts of it will never be feasible. Moreover the envirowhacks have thwarted EVERY effort to develop energy of any sort in this country over the last 40 years.

There are two efforts in particular at present which might amount to something, which are the EESTOR super capacitor and the ongoing efforts to develope algae farming to produce oil. The envirowhacks will probably find some way to stop those two developments but we haven't seen it yet and one can always hope.

There's the further fact that even if EESTOR totally succeeds in what they're doing those super capacitors will need electricity and the ewhacks will try to prevent that, whatever source you care to name.

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when you look at the money trail, oil companies have invested very little into energy research as a proportion of their incomes. US automakers have been smoked by the JApanese because the hybrid programs begun under Clinton (just like alternative energy research during Carter) have been abandoned and some corporate "double speak" has been used to explain away why theyve been scooped when our govt incentivised them during the late 90's.

We should be increasing drilling but not at the omission of alternatives research. Unfortunately we cant rely on industry or govt to make it viable. We gotta listen to crap that gunga spins about how that asshole Bush had "somehow cause d the recent oil price decline" , when the global forced consrvation was 100% responsible.

Dont be politicizing this without being at least a little objective there gungasnakkke.

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It's a fact that the first time W. even mentioned the possibility of drilling offshore like he was serious it knocked ten bucks off the price of a barrel of oil in a single day whereaas it had done nothing but go up since January.

The futures market is a pure zero sum game in which nobody makes a dime other than by somebody else losing a dime, and you have to give those guys a reason to go short it they never will.

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OPEC Plan to Drop Production and Raise Prices

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