Global Economy Vs. Oil
In recent weeks oil prices have fallen tremendously. In mid July prices peaked around 147 dollars a barrel and today the price of a barrel is around 60 percent lower. Many expected OPEC to announce output cuts at the most recent meeting but this action has been put off.
In order to respond to the lowered demand for oil it is thought that OPEC will cut production. This will in turn lower the supply and most likely increase the price paid per barrel. Since this change was held off in the past meeting many will still continue to enjoy the recent favorable prices at the pump. It has been a treat paying under 2 dollars a gallon when just this past summer 4 dollars was the norm.
These low prices won’t last long since OPEC has it sights set on a cut in output which will translate into 2 dollar a gallon gas being only a memory. King Abdullah of Saudi Arabia suggested a target price of around 75 dollars a barrel. He stated that he thought this would be a “fair price”.
As the global economy continues to slip into recession OPEC will continue to take measure in order to insure the profitability of oil. Oil has become the commodity that fuels the world economy and has almost become as critical to life as air and water.
by: Patrick Sullivan
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Oil is such a requirement for the modern global economy that no matter how high the fuel prices are, there will be someone in the world willing to pay for it. I do agree that is has become a “necessity”. We can just enjoy the lower prices for now until the oil companies find a way to raise the prices again. This just shows how much we need alternative fuel technologies.
jakekuss - December 1, 2008 at 12:28 am
I always believed that it was wrong how OPEC can control the oil supply and thus the price. But what it really makes me think about is the US Dollar. Since the USD was taken off the gold standard, its price has been linked to oil. Have you ever realized that oil is traded in USD? And that any country that doesnt trade oil in USD has pretty much been invaded by the US?
bkriger - December 1, 2008 at 4:01 am
I always believed that it was wrong how OPEC can control the oil supply and thus the price. But what it really makes me think about is the US Dollar. Since the USD was taken off the gold standard, its price has been linked to oil. Have you ever realized that oil is traded in USD? And that any country that doesnt trade oil in USD has pretty much been invaded by the US?
bkriger - December 1, 2008 at 4:03 am
Economists have forecasted that the price of oil will rise around december 12th so this information is in support of what they have projected. The fact that OPEC essentially represents a monopoly is all the more reason why we need to move toward alternative sources of oil as soon as possible.
Jazelle Reed - December 2, 2008 at 2:07 am
Alternative sources for fuel need to be perfected and put into effect as soon as possible. I think the use of oil as the only efficient source of fuel at this point is terrible because it essentially allows for a monopoly and can be charged however the oil companies want. They’re even intentionally withholding production to rise the price! I know that hydrogen is being used in some places in California, but the hydrogen gas stations are so far apart that it makes it almost pointless. We need to react to this gas monopoly and come up with something fast because people cannot afford rising gas prices in the current state of the economy.
chadingalls - December 3, 2008 at 3:42 pm