OPEC – No Increase in Prices
Dec 1, 2008 – While US readers were enjoying the remainder of the 4-day Thanksgiving weekend, members of OPEC were meeting in Cairo. Just as the Detroit Big 3 flew to Washington, one can be sure that the oil ministers of OPEC nations did not fly to Cairo in coach class. OPEC members produce about 40% of the world’s oil. Normally, as prices soar, not just increase, Saudi Arabia and some others show their solidarity with the West and begrudgingly agree to official increases in the amount of oil they will produce. Generally, as prices decline precipitously, they decide as a group to reduce production to bolster prices. Earlier this summer as the TV talking heads forecast oil at $200 per barrel before New Year’s, OPEC agreed to pump more oil to slow the increase in the price. Now that oil is below $50 and some prognosticators are claiming oil will go lower to $30 per barrel, OPEC at its Cairo meeting did not announce a target price for it to achieve by adjusting the output of oil. It seems oil output is going to decrease because the current worldwide economic downturn is just going to require less fuel. Demand in the US was down in September and certainly it is expected that official reports will show demand falling again in October and December. As usual, check back here for further updates.
