OPEC has moved up an “Emergency Meeting” to discuss decreasing oil output, in order to reap higher prices per barrel. Currently, they supply 40% of the world’s oil usage. This will be interesting, especially when considering the following factors:
- If they raise oil prices too much, consumers conserve; therefore demand drops. Drops in demand mean lower oil prices.
- Higher oil prices (by output reduction, for example) spur consumption of alternative energy sources, eating away at OPEC’s base revenue; price-parity between oil and alternative sources is also more likely, due to demand of alternative fuels, which spurs economies of scale.
Read More: Analysts: 1 million barrel OPEC cut not enough – Yahoo News.
Posted under Energy
This post was written by PoliticsRX on October 19, 2008
