Tag Archives: OPEC

  • Blog

    OPEC Has Lost the Power to Lower the Price of Oil

    by Gregor Macdonald

    Tuesday, May 22, 2012, 3:39 PM

    0

    There’s been a lot of excitement in the past year over the rise of North American oil production and the promise of increased oil production across the whole of the Americas in the years to come. National security experts and other geo-political observers have waxed poetic at the thought of this emerging, hemispheric strength in energy supply.

    What’s less discussed, however, is the negligible effect this supply swing is having on lowering the price of oil, due to the fact that, combined with OPEC production, aggregate global production remains mostly flat. 

    But there’s another component to this new belief in the changing global landscape for oil: the dawning awareness that OPEC’s power has finally gone into decline. You can read the celebration of OPEC’s waning in power in practically every publication from Foreign Policy to various political blogs and op-eds. David Ignatius of the Washington Post wrapped up nearly all of the recent claims in a nice bundle in his May 4, 2012 piece, An Economic Boom Ahead?, when he quoted PFC Energy’s David West:

    “This is the energy equivalent of the Berlin Wall coming down,” contends West. “Just as the trauma of the Cold War ended in Berlin, so the trauma of the 1973 oil embargo is ending now.” The geopolitical implications of this change are striking: “We will no longer rely on the Middle East, or compete with such nations as China or India for resources.”

    (Source)

    While it’s true that the Americas hold great promise to convert natural gas resources to higher production levels, that is not the case with oil. The celebration of a geo-political swing in energy power therefore misses a crucial point: No region — from OPEC to Non-OPEC, from Africa to Russia — has the single-handed ability to lower the price of oil now, because none can bring on new supply quickly enough for a long-enough sustained period of time.

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  • Blog
    © Wenbin Yu | Dreamstime.com

    OPEC Has Lost the Power to Lower the Price of Oil

    The cartel's power has finally gone into decline
    by Gregor Macdonald

    Tuesday, May 22, 2012, 3:39 PM

    50

    There’s been a lot of excitement in the past year over the rise of North American oil production and the promise of increased oil production across the whole of the Americas in the years to come. National security experts and other geo-political observers have waxed poetic at the thought of this emerging, hemispheric strength in energy supply.

    What’s less discussed, however, is the negligible effect this supply swing is having on lowering the price of oil, due to the fact that, combined with OPEC production, aggregate global production remains mostly flat. 

    But there’s another component to this new belief in the changing global landscape for oil: the dawning awareness that OPEC’s power has finally gone into decline. You can read the celebration of OPEC’s waning in power in practically every publication from Foreign Policy to various political blogs and op-eds. David Ignatius of the Washington Post wrapped up nearly all of the recent claims in a nice bundle in his May 4, 2012 piece, An Economic Boom Ahead?, when he quoted PFC Energy’s David West:

    “This is the energy equivalent of the Berlin Wall coming down,” contends West. “Just as the trauma of the Cold War ended in Berlin, so the trauma of the 1973 oil embargo is ending now.” The geopolitical implications of this change are striking: “We will no longer rely on the Middle East, or compete with such nations as China or India for resources.”

    (Source)

    While it’s true that the Americas hold great promise to convert natural gas resources to higher production levels, that is not the case with oil. The celebration of a geo-political swing in energy power therefore misses a crucial point: No region — from OPEC to Non-OPEC, from Africa to Russia — has the single-handed ability to lower the price of oil now, because none can bring on new supply quickly enough for a long-enough sustained period of time.

    Read More »

  • Blog

    Daily Digest 12/12 – China Rates Worries on Gold, Senate Bill Extends IRA Donations, OPEC Dismisses $90 Oil as ‘Blip’

    by DailyDigest

    Sunday, December 12, 2010, 4:00 PM

    0
    • China Rates Worries Weigh On Gold
    • Failed Us Bank Count In 2010 Nears 150-Mark
    • Euro Will Not Fail, Say Wolfgang Schaeuble and John Major
    • Senate Bill Extends IRA Donations, Other Provisions
    • Bond Market Signals No End to Deflation for Eight More Years: Japan Credit
    • A Secretive Banking Elite Rules Trading in Derivatives
    • Swan Takes on Australia’s Four Big Banks With Plan for Greater Competition
    • OPEC Dismisses $90 Oil Price as ‘Blip,’ Maintains Production Targets Again

    Crash Course DVDTake home the Crash Course DVD for an insightful look at the next twenty years. (NTSC or PAL)

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