Gas Prices down, OPEC not happy
In the United States, housing market is bad, economy is bad, and job market is bad. But we do have one thing to be happy about. I filled my gas tank up last night to $2.75 a gallon, and then this is what I read this morning…
While consumers celebrate cheap gas prices, OPEC is panicking. The Organization of the Petroleum Exporting Countries has rescheduled their “Extraordinary Meeting” three weeks early to deal with the 50% drop in oil prices since July. Oil prices rose to over $68 a barrel today after dipping as low as $66.12 yesterday afternoon.
“We should also remember that low prices will, without any doubt, result in the cancellation of many upstream and downstream projects, and this will lead to future long-term supply problems,” said OPEC Secretary General HE Abdalla Salem El-Badri in a speech delivered at the 3rd International Energy Week in Moscow this week.
“I should like to stress, however, that despite the current financial stress and its inherent uncertainties, and the increasingly tight access to credit for businesses in all industries, OPEC remains committed to ensure the market is adequately supplied at all times.”
All of the OPEC countries have billions of their country’s dollars invested in oil production, and the lack of consumer consumption is hitting their pockets hard. While OPEC is likely to cut production at their newly-scheduled meeting on October 24 to keep oil prices from falling further, judging by the secretary general’s words, OPEC is committed to pumping enough oil to meet the returns on their investments, plus some.
As consumers, we can continue to control the direction of gas prices by limiting our consumption. Reduced-consumer consumption has made a direct impact on falling prices. Demand for gasoline has dropped 6.4% since last year. “Last week, 62.9 million barrels were sold at retail locations, compared to 66.9 million barrels that were sold during the same week in July when gasoline prices surged to a record high,” wrote Emily Maltby on Tuesday in a piece from CNN Money.









$2.75 a gallon. phew! In May this year i was paying close to $4.6 a gallon. the entire world has changed since then.
In India the prices have not come down because the govt ends up paying out of its own pocket anyways. The prices are subsidized. Its about Rs 54 a liter in New Delhi. Now do your maths if you need to compare.
I can see why OPEC is worried, but cheaper gas means cheaper transport cost and hence cheaper price for commodities. I know a lot of other demand and supply economics plays its part, but cheaper gas makes me happy. I am sure about that.
Nice site. There?s some good information on here. I?ll be checking back regularly.
Ah well, depending on how you look at it, cheaper gas also means more consumption, which will lead to more pollution. One person I’m sure is worried now is Al Gore
I wrote a follow up to this original post about just how much OPEC decided to cut oil production per day.
If consumers can stay on track with their conservative driving habits as we have over the last year, we should still be ok in terms of gas prices.
OPEC meets again in December, we’ll see if they cut production again. Oil prices fell this morning despite OPEC’s decision, but we’ll see how long that lasts.
Its gone down a couple of bucks more per barrel. I just read that OPEC plans to slash down production by 1.5 millions barrel per day, effective Nov 1.
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