Crude oil is currently at $34.54/bbl, the lowest price in years. The OPEC cuts don’t seem to be affecting the law of supply and demand. Who knew?
Dec. 19 (Bloomberg) — Crude oil headed for the second- biggest weekly decline in more than five years as a deepening global recession sapped demand, countering efforts by OPEC to boost prices.
Oil has slumped 33 percent this month even as OPEC agreed to its largest production cut in more than a decade, because traders speculated that declining demand may outweigh the reduction. Global oil use may drop the most since 1983 next year, Deutsche Bank analyst Adam Sieminski said yesterday.
“Demand is falling faster than OPEC is able to tighten supply,†said Thina Saltvedt, an oil analyst at Nordea Bank AB is Oslo. “As long as the global economy weakens, demand will continue to fall.â€
Right now, it’s falling faster than Bloomberg’s writers can keep up with it. I read an article last week that had futures traders betting on $25/bbl by February. They may have been off by a month.
There are some downsides to this. Ninety percent of Alaska’s budget comes from oil revenues. Really, after tourism, that’s all Alaska’s got. And this does delay the exploration of oil sands and shale. However, it gives working Americans huge relief during these difficult times. And of course, our enemies are hurting badly right now. Russia wants to sell weapons to Iran to make up for the lost oil revenues, but Iran won’t be able to afford to buy those weapons. I think falling oil prices are going to greatly affect the political situation in the Middle East, just as rising oil prices and the money glut gave the Mad Mullahs the confidence to move forward with their nuclear ambitions.
You can’t feed your people with a nuclear bomb. If oil goes below $30 a barrel and stays there, things may change for the better. With any luck, Hamas, Hezbullah, and Syria will be cut off from their Iranian sugar daddy. Well, in a logical world they would be. Never underestimate the power of Jew-hatred in the Middle East.
I hate that Alaska is suffering at this, but I am loving it that the greedy mongers at OPEC are suffering since when oil was $150 a barrel (or so) they felt like production was just fine where it was.
Fitting Justice in my opinion.
On a side note, am I the only one who didn’t feel pity at the Saudis when their oil tanker was hijacked? I mean come on, BILLIONS of dollars in oil money every year and you can’t even hire MERCENARIES to protect you oil tanker (much less keep a real navy).
Oil sands and shale are a dead proposition with Obama anyway, he just chose Ken Salazar of CO as his Secretary of the Interior, a foe of such activity. Drill Baby Drill died along with any hopes of avoiding the next age of aquarius.
I am loving seeing Putin squirm, but as we aren’t willing to produce our own selves, we’re just reaping the whirlwind, and winds change.
How long until there are rumors that the Jews are engineering the drop in oil prices to starve Iran and all the other Arab oil states so they won’t have enough money to eliminate Israel. Let’s start the rumor here and enjoy the craziness.
I expect it has already surfaced somewhere in the Middle East.
Now, now. If the Saudis hired mercenaries to protect their shipments, they might fall a few thousand short of being able to afford their air conditioned beaches.
In any case, civilian ships are not allowed to have armed mercenaries on board, because international law doesn’t allow it. The international peacekeepers might not be able to tell a cargo ship firing on a pirate ship apart from a pirate ship firing on a cargo ship, and besides they’re morally equivalent anyhow, since all corporations are raiders and slavedrivers, and only communism can save us from their scourge, and, uh… what was I talking about again?