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  • Will OPEC Cut Production to Prevent Producer Deficits? [View article]
    How are you doing Fred?

    Opec has no control at all once worldwide demand exceeds a certain level say 88 mil brls per day as an example. They would all be pumping at capacity except for say Saudi Arabia which might be able to tap another 1 mil. Brls.

    On the way down however, Countries like Iran, Russia($70), Venezuela(90), and others can curtail output by a mere 15% to quickly drive oil back above $100. A 50% gain on a reduction of 15% seems to be a gimme to me.

    The West loves low priced oil, but what this brings with it is deflation. The Mortgage Meltdown wasn't triggered by high oil. The financial crisis wasn't triggered by high oil.

    However the meltdown in commodities is being exacerbated by low oil. The deflationary scenario now present for the Developed World is due to low oil and lowered expectations for prices for every commodity because of it.

    Stimulus packages all over the world are being proposed to stop the Deflationary Spiral. Energy is the life blood of growing economies. If its use declines, regardless of price, those economies have stopped growing.
    Oct 23 01:17 am |Rating: 0 0
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