Tuesday, December 16, 2008
OPEC Plans to cut output further
OPEC will make its biggest oil production cut ever, reducing output by 2 million barrels a day, or 2.5% of its total production. The cartel is trying to catch up with the plummeting demand for oil in these hard times, and decrease the swelling supply. Prices are dropping, and OPEC, which accounts for 40% of the oil supply, doesn't like it. Some analysts say their best bet is to keep prices moderate during this recession and help the economy out of it in order to reap future benefits in places like the US, Japan and Europe.
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2 comments:
I understand why OPEC is doing this, but I'm hoping it will make people less inclined to buy gas just to stick it to OPEC.
Doesn't this happen to sound like the principal-agent issue. I mean we want to consume as much oil as possible at an extremely low price. OPEC wants to sell oil at the highest prices possible, which means that they need to create a shortage to drive up prices. I hope that these constant swings force the United States to finally decided to go full-steam into developing an alternative. Maybe if the Auto-industry bailout were to retooled to force them to continue to invest in alternatives, then it might actually get passed.
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