Posted on 10/25/2006 6:56:27 AM PDT by Lockbox
OPEC to Keep Oil Prices Low to Discourage Alternative Fuel Use
Jefferson City , MO – OPEC announced late last week that they were planning on cutting oil production by 1.2 million barrels per day in hopes to keep costs of crude at about $60 per barrel. This cut is intended to bring the cost of gasoline up a bit but to keep it low enough so as to be more attractive than alternative fuel pricing.
“It’s unfortunate that OPEC feels that they can control the vision of this country and the destiny relative to alternative fuels,” exclaimed Curtis Donaldson, Chairman of the National Ethanol Vehicle Coalition.
OPEC expects to keep the price of gasoline at about $2.25 per gallon. According to a Foxnews.com news story on October 20 (which can be found by clicking here), “OPEC's cut also signaled that it would defend a price of about $60 a barrel, high enough to justify its investment in future production capacity but low enough to allow economic growth and deter a flood of alternative fuels.”
U.S. oil prices set a record high in July of this year topping at $78.40 a barrel and averaging record high fuel costs. Alternative fuel pricing, including E85, tended to be much lower during the summer, thus making them more attractive to consumers.
“OPEC feels that they can manage the price of gasoline to a point where increasing the production of E85 and providing it at more locations across the country will become less attractive. It will be disappointing if we allow this to happen when everyone knows, now more than ever, we need more energy independence,” added Donaldson.
According to an Automotive Fleet article (whiche can be found by clicking here), Saudi Arabia’s Oil Minister supports OPEC’s decision to decrease production.
I like that thinking. Give me 1.50 gas again, and put the alternate fuels on hold for the next 100 years.
I would spend MORE to keep those damn fanatics from getting American dollars to feed their Wahhabist Mosques, Madrassehs and homicidal maniacs.
What? This cannot be...OPEC manipulating its price for world oil? Well, we don't need OPEC, with our government's aggressive policy of expanding our energy independence, why we can just tell these guys what to do with their oil....(/sarcasm)
The gift from Washington just keeps on giving.
If OPEC actually succeeds at holding oil prices as high as $60 per barrel for the long-term, that will be a great encouragement to folks producing alternative energy. I suspect that there are a lot of alternative energy sources that would be profitable at the equivalent of $60 per barrel of oil.
There is absolutely no free market in the petroleum production business, as OPEC makes abundantly clear.
What's interesting about this is that it shows how it's almost impossible for anyone to maintain a monopoly. Even if your compnay or industry has no competitors, you basically have to run your business like you do -- to discourage new competitors from entering your market.
The more we reduce demand, the more we foil OPEC's plans.
I'm begiining to think we need to regaed dependence upon oil as the mechanism of religious conquest for Islam.....
http://www.freerepublic.com/focus/f-news/1725452/posts
They cannot forestall the biggest alternative fuel source, oil, namely the Alaskan tar sands oil which has become less and less expensive to produce and may well by itself in a few years eliminate US dependence on Moslems for fuel. Add that to the new Gulf of Mexico finds and the Venezuelan tar sands, and oil is its own alternative fuel. Yes, Venezuela. No matter what sort of tyrant rules there, the US controls that oil. It is an American resource and it will ultimately take American capital to develop it. And ANWR? It could be a big deal, but it is not necessary. Fighting over ANWR does, however keep the focus of the green crazies there while we develop the other sources, and ANWR, too will be eventually tapped unless the cost of production of the other sources declines below that of ANWR.
It fits the perfect definition of monopoly. Being able to manipulate prices in order to snuff out the competition, then increase them once the threat has been eliminated is a monopoly.
Stable $60 oil will extend the sway of Islamic oil just until Canadian tar sands oil is in full production. If The Saudis desire to remain dominant longterm then they probably need to "control' the price of their oil back down to $20 or so.
One Alaskan pointed out to me that American oil production is actually down 15% this year. That's probably due to CA housewife economics in the senate.
There absolutely is. 'swhy OPEC is doing what its doing.
Continental US production is, indeed declining, but that is largely because of resistance to drilling off the coasts. That resistance is fading and offshore Gulf oil is found but not yet in production. That takes time. The tar sands and Utah shale are slow to develop but progress is inexorable and the Sauds probably see the writing on the wall only vaguely. Restance to Nuclear power is also fading away and that is coming on line, too, but again, that will take time. For the time being the price of oil will be determined by OPEC though OPEC will try to balance max immediate profit with the necessity of not raising the price so high that it brings other energy sources online that will permanently reduce OPEC price control ability. Other sources are coming online regardless of OPEC manipulation. The costs of production of the tar sands have come down to levels that must be scary to the Sauds if they are paying attention.
How can that be? OPEC is a cartel whose members openly collude with one another to actively manipulate oil prices on the world market. In this case, the cartel is worried that alternative fuels technology is on the drawing board because of $3.00 per gallon gas prices and wants to undercut it by collectively driving down oil prices. No free market there...
I think old Adam Smith would call this "the invisible hand of competition."
Just yesterday they were cutting production to keep prices high...................Is the media lying to us or is OPEC that fickle?
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.