OPEC: Will Cut Production To Increase Oil Prices

Posted by ZZ Bachman...

Just in case there is any doubt that OPEC is still alive and well maintaining its control over oil production, just take a minute and read the following carefully:

MarketWatch
Last update: 3:09 p.m. EDT Aug. 16, 2008

An Iranian official in the Organization of Petroleum Exporting Countries (OPEC) said Saturday that the producers group is considering leaving oil production levels unchanged or perhaps even trimming them to shore up lagging prices and defend market share.
“The market is oversupplied by at least 1 million barrels a day. If OPEC would like to remove this additional oil out of the market, then OPEC has to cut some production,” OPEC governor Mohammad Ali Khatibi told Dow Jones in a telephone interview.
“There will be maybe two options. One option is maintaining the level of production. It means OPEC will roll over the production. The other option will be some decrease in production,” he added.
The topic will lead OPEC’s agenda when representatives of the group’s 13 member nations gather Sept. 9 in Vienna to discuss production policy.
Oil prices peaked in early July at over $145 a barrel. They have since fallen 22% as the high prices carved deeply into demand, especially in the transport sector. The September crude oil futures contract closed Friday at $113.77 a barrel on the New York Mercantile Exchange, a fresh three-month low. See Futures Movers.
Khatibi’s comments come just a day after OPEC said higher prices and weak economic conditions in most industrialized nations are slowing global oil demand.
“Summer strong oil demand growth in China, Middle East and Asia has not been enough to offset the huge decline in OECD oil demand in the second quarter,” the producers group said Friday in its monthly oil report.
The group’s latest estimate trims 2008 demand growth by 30,000 barrels per day — its fifth consecutive month of downward revisions. The group now estimates global oil demand this year will average 86.9 million bpd. It sees demand inching up to 87.8 million bpd next year.

At the same time, the revised forecast sees oil demand from OPEC’s members slipping to 32.1 million bpd, or 100,000 bpd less than in 2007. The 2009 forecast extends the trend, with demand for OPEC oil easing to an average of 31.3 million bpd. The drop is the result of slowing demand growth and oil coming into the market from newly developed fields in non-OPEC nations.
OPEC claims it has bumped up output to help calm the volatile oil market, pumping 32.64 million bpd in July, or 780,000 bpd more than in April. The group’s monthly report also said OPEC is now producing “well above the demand for its crude.” — MarketWatch

The U.S. House and Senate Democrats better start working with the Republicans (who have been working through the recess) and pass that vote to open up our current oil fields and shale deposits to start seeking energy independence from OPEC. OPEC says the world does not need the amount of oil they are producing so they will cut back. Dems don’t you get it? You cannot control the price of oil by simply not using it. Oil used as a basic starting material for virtually everything we consume not just gasoline! The reduced demand just means OPEC will produce LESS to keep the oil price where ever they want it. Too high and they drive the world into recession/ depression. They don’t want that either because consumption will drop. Too low and their profits drop — so they cut back. The point is the WANT CONTROL. That’s their bargaining chip. This maintains their global political control since by shutting off oil flow they can in effect successfully hold the world hostage as world ecomomies fall into recession or worse. Russia has now joined as a major oil producer. They look at us as fools for not developing our energy sources right here at home !! They WILL take advantage of our stupidity.

Pelosi, Obama, Reid and the other back peddlers are just now waking up to these economic facts. Yes, the back-peddling has begun to get themselves closer to the Republican position on oil drilling. Voters need to make their voices heard in November and boot the naive morons and political opportunists out of Congress in November on both sides of the aisle and vote for leaders who will get America to start seriously using our technology to make energy recovery within our country environmentally safe and efficient. They need to do this instead of telling us to check our tire pressure or simply conserve and sacrifice pandering to their far left base.

There is plenty of U.S. recoverable oil to last well into the next millennium and we can make its use more efficient through technology over time. Why should I believe this? America can put a man on the moon, unleashed the energy stored in matter both confined and unconfined, so there should be no doubt that we have the scientific capabilities to achieve this. At least use the current state of the art drilling techniques and recovery technology being used in other countries to help make us less reliant on oil from countries that hate us. We should do this while we develop the other new petroleum sources like shale oil recovery. In fact just recovering oil from wells that we have already drilled with these modern new technologies would be a big start in the right direction!!  Just get these self serving politicians out of the way and stop handcuffing our right to become energy independent. It may just become a matter of national security sooner rather than later.

Then there is this excerpt from the Washington Post to consider:

Here’s a dispatch from the Aug. 13 edition of the Financial Times: “OPEC pushed its oil production to the highest level in its 48-year history last month, even as demand was slipping in the United States and Europe, the International Energy Agency (IEA) said yesterday.”

That dramatic increase in OPEC oil production, adding about 300,000 barrels daily to the world market — an estimated 200,000 barrels a day less than what industry experts think OPEC can produce — has helped to reduce the per-barrel price of oil by 24 percent over the past month, bringing it down to about $115 a barrel from a July high of $147.27.

Gasoline pump prices have fallen in turn, dropping below $4 a gallon for regular unleaded for the first time this summer. Oil industry experts are predicting that those prices will fall to at least $3.65 a gallon by summer’s end.

The financial markets and consumers are all giddy over that news, like junkies who have just been given a free fix. They need to get control of themselves. They are being suckered, snookered worse than a pitiful street-corner addict.

OPEC is engaging in addiction marketing. It is doing now what it has done before whenever its biggest customers start getting serious about reform. It has increased production, lowered the price and made its drug of choice more accessible — all in a bid to keep its high-paying customers hooked.

OPEC knows what the drug dealers know: Addiction is so much more attractive than the hard and often painful work of cleaning up one’s act. Affordable addiction is even more attractive. It dulls the senses and corrupts the will to change, to travel a different and ultimately more nationally secure route.

The questions are: Will we fall for OPEC’s latest fix? Will we abandon the path toward energy conservation and a more energy-secure nation? Will we sell our nation and our souls for another OPEC high?

Posted by ZZ Bachman...

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