I'm relieved, OPEC wants to cut production and get oil back prices up
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I'm relieved, OPEC wants to cut production and get oil ... - 10/21/2008 2:44:45 PM
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rlj
Posts: 2350
Joined: 4/14/2005
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I was beginning to get upset at the low cost of gas and oil when I stumbled on this:
quote:
Just as Americans are finally beginning to reap the benefits of plunging gasoline prices — including more money in their pockets — OPEC is getting ready to squeeze them once again by cutting oil production and driving up prices to refineries.
The 13-nation global oil cartel — which includes Mahmoud Ahmadinejad's Iran and Hugo Chavez's Venezuela — will hold an emergency meeting in Vienna Friday to discuss the steep and rapid decline in oil prices.
"The era of cheap oil is finished," Iran's Oil Minister Gholamhossein Nozari boasted on Tuesday.
When asked what price Iran would want for its oil, Nozari declared, "The more the better."
"A few member nations have voiced their intentions of pushing for a cut in production, including Qatar, Iran, as well as OPEC's president Chekib Khelil, who said that output could be slashed by as much as 2 million barrels a day," analysts for Raymond James & Associates told MarketWatch.com.
http://www.foxnews.com/story/0,2933,442343,00.html
It sounds like at their cold, rotten hearts the Iranians, Venezualans, etc are capitalists to the core. ; )
_____________________________
-Roger
I could wile away the hours
Conferrin' with the flowers
Consultin' with the rain
And my head I'd be scratchin'
While my thoughts were busy hatchin'
If I only had a brain
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RE: I'm relieved, OPEC wants to cut production and get ... - 10/21/2008 4:06:31 PM
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stamper_ben
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All I know is I sure am glad to see the free market at work on a world wide scale.
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RE: I'm relieved, OPEC wants to cut production and get ... - 10/21/2008 6:30:55 PM
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dramagal
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By definition, OPEC is not free market capitalism. It is a cartel.
With enemies like Russia, Iran and Venezuela controlling so much oil, it really is in our national interest to Drill Here, Drill Now.
And by 'Here', I do not mean 100 miles off the coast!
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Who let the wild donkey go free? Job 39:5.
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RE: I'm relieved, OPEC wants to cut production and get ... - 10/22/2008 9:35:56 AM
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blessedinnyc
Posts: 2003
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quote:
ORIGINAL: dramagal
By definition, OPEC is not free market capitalism. It is a cartel.
With enemies like Russia, Iran and Venezuela controlling so much oil, it really is in our national interest to Drill Here, Drill Now.
And by 'Here', I do not mean 100 miles off the coast!
It really depends how you define "free market". If "free market" is the absence of regulation, you do tend to get cartels. We saw it with the Standard Oil monopoly back in the late 1800s and the turn of the 20th century, as well as with various trust organizations.
So although I respect the Mises Institute on interest rates, if you use their definition of free market (as a lot of strict economic libertarians do), you're going to see a lot of cartels. If you use the U. Chicago's or Keynesian definition of free market, you're not going to see cartels.
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RE: I'm relieved, OPEC wants to cut production and get ... - 10/22/2008 9:39:12 PM
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Dubya
Posts: 1017
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From: Texas
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quote:
ORIGINAL: blessedinnyc
quote:
ORIGINAL: dramagal
By definition, OPEC is not free market capitalism. It is a cartel.
With enemies like Russia, Iran and Venezuela controlling so much oil, it really is in our national interest to Drill Here, Drill Now.
And by 'Here', I do not mean 100 miles off the coast!
It really depends how you define "free market". If "free market" is the absence of regulation, you do tend to get cartels. We saw it with the Standard Oil monopoly back in the late 1800s and the turn of the 20th century, as well as with various trust organizations.
So although I respect the Mises Institute on interest rates, if you use their definition of free market (as a lot of strict economic libertarians do), you're going to see a lot of cartels. If you use the U. Chicago's or Keynesian definition of free market, you're not going to see cartels.
If you look at OPEC and don't see a cartel you're blind. I don't care where you went to college or what model of economics you subscribe to.
But...
In terms of the world oil market - it is most definitely "free-market" - cartels or not.
Those who have the resources can ask whatever the market will bear... and that is exactly what they do. When there is more demand, they can ask more. When demand drops, the high price structure collapses.
Very simple.
Very free.
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RE: I'm relieved, OPEC wants to cut production and get ... - 10/22/2008 10:32:36 PM
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blessedinnyc
Posts: 2003
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quote:
ORIGINAL: Dubya
If you look at OPEC and don't see a cartel you're blind. I don't care where you went to college or what model of economics you subscribe to.
Indeed. One friend put it this way:
Organized
Petroleum
Extortion
Cartel
I'm not shedding any tears that our buddies Hugo Chavez and Ahmanuttajob are getting less money, right now.
quote:
But...
In terms of the world oil market - it is most definitely "free-market" - cartels or not.
Those who have the resources can ask whatever the market will bear... and that is exactly what they do. When there is more demand, they can ask more. When demand drops, the high price structure collapses.
Very simple.
Very free.
And in the meantime, however, it creates an inefficient system for everyone else. I think everyone here agrees that government-imposed price controls don't work, but monopoly-imposed price-controls tend not to encourage market efficiency, either. If you form a cartel of car companies that forces everyone who wants to buy a new car to pay $50,000, that's neither efficient for you or for the market. Although it isn't a free-market practice, the most efficient resolution for the market is to have the federal government come in and break up the cartel.
Since the international oil market is unregulated, however, cartels exist.
I guess my whole point is that we can't confuse free-market with cartel-free-market. By definition, cartels can exist in free markets. In fact, only in a moderately regulated market can we ensure they won't exist.
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RE: I'm relieved, OPEC wants to cut production and get ... - 10/23/2008 12:10:38 AM
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mapachito13
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quote:
ORIGINAL: Dubya
If you look at OPEC and don't see a cartel you're blind. I don't care where you went to college or what model of economics you subscribe to.
Will the word "conglomerate" or "consortium" sound more "free market".
Keynesian economics only works in an honest and ethical world! Just like "trickle down" economics.
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RE: I'm relieved, OPEC wants to cut production and get ... - 10/23/2008 10:01:01 PM
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Dubya
Posts: 1017
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blessedinnyc and mapachito13,
You are both arguing from the perspective that the cartel is actually "working". The fact is that the very greed which you claim creates the cartel is breaking it down. It comes down to each member state's self-interest. No one wants to cut production because they are afraid they will lose market share and revenue.
Another point can be taken from history. When the embargo imposed by the cartel in the early 70s forced world oil prices up, the world responded by increasing oil exploration and production among non-OPEC nations. In addition, energy saving measures were adopted by many nations. The higher price created by OPEC made more expensive forms of energy affordable.
OPEC is trying to find a price which is the highest price they can achieve but still low enough so alternative souces of energy will not be economically feasible. Ideally, they don't want us to be energy independent.
Fortunately for us, IMHO, their greed gets in the way and prices have been cut in half in recent weeks. Unfortunately, for the alternative energy proponents, the lower process make it harder to justify (economically) their initiatives. There are always government mandates... but then so much for the free-market.
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RE: I'm relieved, OPEC wants to cut production and get ... - 10/24/2008 6:16:51 PM
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blessedinnyc
Posts: 2003
Joined: 10/12/2007
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quote:
ORIGINAL: Dubya
You are both arguing from the perspective that the cartel is actually "working". The fact is that the very greed which you claim creates the cartel is breaking it down. It comes down to each member state's self-interest. No one wants to cut production because they are afraid they will lose market share and revenue.
Agreed; if the oil-producing states were run by intelligent long-term investors rather than dictators and politicians, they'd realize that catels are bad in the very, very, long-term. OPEC has inadvertently helped accelerate the development of energy-saving technology as well as oil alternatives.
However, the most efficient situation during a human lifetime when people are dumb enough to form cartels is to eliminate them. OPEC has been around since the 1960s, and I'm not sure they've hurt themselves enough, yet.
quote:
Another point can be taken from history. When the embargo imposed by the cartel in the early 70s forced world oil prices up, the world responded by increasing oil exploration and production among non-OPEC nations. In addition, energy saving measures were adopted by many nations. The higher price created by OPEC made more expensive forms of energy affordable.
LOL, it looks like we agree on at least a few points (maybe we disagree on the time scale). Great minds think alike!
quote:
Fortunately for us, IMHO, their greed gets in the way and prices have been cut in half in recent weeks. Unfortunately, for the alternative energy proponents, the lower process make it harder to justify (economically) their initiatives. There are always government mandates... but then so much for the free-market.
IMHO, this is 1975, not 1980. Me? I haven't sold my oil stocks- when the economy recovers, we will be using more oil. If I'm not selling my oil stocks, I still think that the solar, wind, and uranium companies that do survive will be excellent growth plays. A few loan guarantees for alternative energy companies that are in decent shape seems to still make sense if we're making loan guarantees for banks.
I do agree that it's reasonable for there to be less budget emphasis on alternative energy with lower oil prices, but as a private investor, the best time to put money into something is when it's still got good long-term fundamentals and everyone is running head-over-heels away from it. (Although I'm already pretty busy doing that with Pharmaceuticals and Utilities)
If the recession gets really bad, though, spending money on energy infrastructure seems to make a lot of sense. The last time we had a depression, it ended with a war that was won based on energy availability. Let's build infrastructure that can run on stuff we have at home; uranium, wind, solar, and maybe wood/biomass.
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RE: I'm relieved, OPEC wants to cut production and get ... - 10/24/2008 6:58:54 PM
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Dubya
Posts: 1017
Joined: 10/25/2006
From: Texas
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quote:
ORIGINAL: blessedinnyc
IMHO, this is 1975, not 1980. Me? I haven't sold my oil stocks- when the economy recovers, we will be using more oil. If I'm not selling my oil stocks, I still think that the solar, wind, and uranium companies that do survive will be excellent growth plays. A few loan guarantees for alternative energy companies that are in decent shape seems to still make sense if we're making loan guarantees for banks.
I agree about oil company stocks. I haven't sold mine either... I have bought while the prices are down. I would caution you on the alternative energy stocks, however. It is too heavily dependent on politics. I don't know if you remember oil shale in the late 70s and early 80s. It was a real big deal for a while but when the price of oil dropped in the mid 80s the oil shale business died. Lots of losses. Very sad. But that is the risk you take when you depend on the government to prop up value artificially.
quote:
I do agree that it's reasonable for there to be less budget emphasis on alternative energy with lower oil prices, but as a private investor, the best time to put money into something is when it's still got good long-term fundamentals and everyone is running head-over-heels away from it. (Although I'm already pretty busy doing that with Pharmaceuticals and Utilities)
As I said above, not when the value is artificially propped up. If the market is allowed to work, energy would still be oil and gas based for many, many decades.
My money is being invested in things that I believe will be paying off at least in my life time. I don't expect to live long enough for many of the alternatives to be viable. (hey I just used an "Obama word" but in a good way... he uses it to refer to a fetus... as in pre-viable - oh well off topic).
quote:
If the recession gets really bad, though, spending money on energy infrastructure seems to make a lot of sense. The last time we had a depression, it ended with a war that was won based on energy availability. Let's build infrastructure that can run on stuff we have at home; uranium, wind, solar, and maybe wood/biomass.
Ugh! You will never get out of a recession by spending the high costs required to fund viable (there's that word again) enregy projects from "wood/biomass", wind, or solar.
If financial resorces are limited the cheapest alternative, by far, is oil and gas. Open up more off-shore leases, allow drilling in the Rockies and upper mid-west, and in ANWAR.
If a family needs a car but has a severe limitation of cash, they don't buy a new Lexus... they settle for a used Toyota.
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