Nowadays, paying $100 of oil is relief to many customers. This is most likely from the fact that a few months ago, back in July, the price of a barrel of crude was at an ultimate high of $147, but since then has dropped by more than 25%. However, this drop in prices is disliked by The Organisation of the Petroleum Exporting Countries(OPEC). This was brought to attention when Iran and Venezeula, two members of OPEC, demanded to cut output because of the slide in oil costs. Opec decided to keep its goal of 18.8 million barrels of crude a day, but cut 1.8% of output.
Link http://www.economist.com/finance/displaystory.cfm?story_id=12209376
This article relates to the topic in many ways. Oil is clearly one of the most scarce land resources in the world, which makes it quite surprising that OPEC is not making their price rates higher, just because of the fact that oil use may decrease from some of the rich countries. Clearly, they want to find a price that would satisfy their consumers and maximize profit. The fact that OPEC is constantly experimenting with the prices and production just goes to show that economics is a science. As oil becomes more and more scarce, it is almost guaranteed that prices will increase, and output will decrease.
It is surprising to me that OPEC has not risen the prices of crude/oil, but this is also understandable as well. With so many different ways to travel, such as public transit, biking, and simply walking, there is plenty of competition for OPEC and the many other gas/oil selling companies. On the other hand, there are many consumers, like travel agencies that must buy gas and oil, no matter what the cost; this is due to the fact that their travel buses, cruise ships, and airplanes all must have fuel to take vacationers to their destinations. At the moment, these prices look very good to consumers, but for certain, they will change as soon as a month's time, because the prices for certain scarcee resources are never consistent.
Subscribe to:
Post Comments (Atom)
2 comments:
It is great that the oil prices have finally declined. Apparently, 90% of the oil reserves can manage to produce a barrel of oil for only around $55. Even after taking labor costs into consideration, $150 per barrel is ridiculous. The high and evergreen demands for crude are to blame for these high prices.
Oil is a scarce resource and, I agree, that as we consume more and more of it the price is only going to witness more dramatic fluctuations. I believe, to avoid this we should try our best to optimize and preserve our scarce resources. For now, though, our main concern should be the direction we are inevitably plunging towards.
-Rafaat Mir
Post a Comment