The Oil Barrel Roll
CAIRO — Over the summer, the OPEC cartel could not prevent oil prices from surging to record levels even as its members pumped as much oil as possible. Now, oil producers seem equally unable to stop prices from collapsing as economies around the world slow rapidly.
After topping $145 a barrel in July, prices have slipped more than $90 because of slower global growth. Prices could keep falling next year, analysts say, with some predicting new lows of around $30 a barrel.
On Friday, oil futures in New York settled at $54.43 a barrel, after dropping below $50 the previous week, their lowest in more than three years. The cartel said Saturday that it would consider reducing production when it met next month in Algeria.
Is it just me or is it rather ironic… OPEC couldn’t keep the prices from going to high and now can’t keep it from falling to low. The fact that the prices can flux that much to me shows how much gouging seems to be going on. I great website shows how much fuel America uses (and energy in general) is this site. America although smaller than countries such as China uses almost twice as much energy. America relies on oil so much that companies that have oil can price as they will. The fact that a inelastic good can jump between 145 dollars and 90 dollars in a few months scares me. An inelastic good is something that everyone has to buy because American life requires it. (Gas, Food, Toothpaste).
OPEC members need prices of $60 to $90 a barrel to balance their budgets, and the prospect of lower prices and revenue is daunting to many. Even Saudi Arabia, the biggest exporter, indicated that it considered $75 a barrel to be a “fair price,” a far higher figure than most analysts had expected from the kingdom.
When a Country such as Saudi Arabia says that it considers a certain price fair and the rest of the world doesn’t agree… that causes problems. A country that has a huge supply of oil trying to keep prices high while the rest of the world is falling into a semi-depression. Supposedly this is the lowest price barrels have been in two years. It’s amazing how quick oil companies want to erase the past to try and make it seem like higher oil prices are normal.
