The oil ministers at OPEC could not leave well enough alone and just tell the world that they would not alter production at their current meeting. They had to add that they might decrease output in March because they believe that economic growth in the U.S. is slowing.
Reacting to these comments, the International Energy Agency said "With the current pressures from the financial system, the economy does not need additional downward pressure on consumer spending and growth from near record oil prices," according to the Financial Times. That is a masterpiece of understatement.
Much of the movement of oil price is now based on rumor and psychology as much as on real measurement of supply and demand. The willingness of China to underwrite gas and diesel prices perverts the global market's normal action. Oil suppliers are now keeping more of their output for growing numbers of cars and new infrastructure building within their own borders. The normal measurements of how oil is priced have warped into something new.
OPEC's hint at a March cut says one thing and one thing only. When oil is over $90, we make more money. The current slowing of the global economy has not dropped prices much. If it does, we can keep prices high by a slight manipulation of what we ship.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
2-02-2008 @ 9:07PM
robby said...
Is OPEC deciding to cut production or are they finding it difficult to maintain current production levels
2-02-2008 @ 10:30PM
John said...
Keeping oil high is the only way to get the US economy off its addiction to the cheap-oil crutch.
High oil prices makes us get smart; low oil prices makes us stay stupid.
You pick where you want to be.
4-07-2008 @ 7:41AM
Chris said...
I think Opec Should Raise Gas to 600 dollors a barrel This way our goverment can get so rich eventually they can just up and walk away from washington move to some Fancy rich 1st world nation in the Med someware and forget about the American people and Our goverment all together.. This way Demacroats republicans can all go Live in Fonzy someware in tropical paradise while america becomes a Thrid world nation that will have to Once Again Rise to the tests of time and rise outta the ashes by Comming together to Bail our self's Out of this mess and once again Establish our self's as Number One In the World, Only This time Screw foregen trade Screw What happens in India with Desease or National Destaires its time to Keep our Money and Polticis here at home Not Abroad... And the Un is a Bunch of terrost Leaders that sit in the heads of the Un So its time to Dissmantle that also.. since they have no intrest in the american Goverment or our well being..