Cutting the Prices: Oils price falls even lower. Why is It?
The price of oil has
fallen down to 55 dollars a barrel. Since last summer oil prices have been cut
in half. 50 % discount for consumer, but this also means a whole lot less
profit for the producer.
Many believe though that
OPEC is playing a role in the price cuts. Saudi Arabia is trying to have
absolute price setting power over oil. Another is that, with so much oil OPEC
is losing it power to set the price where they want them. This is allowing a
competitive market to take place.
Only time can tell
whether OPEC is losing t power, or are they trying to hold on to their absolute
control over the oil market. I believe that OPEC is trying to cut off the
profits that have driven the energy boom here in the United States. They are
trying to stop countries from being energy independent.
The competition in the oil market is actually a bad things for all oil producers. They cannot sell the surplus of oil at high enough prices to stay in business. OPEC needs its price setting power back.
ReplyDeleteThe price of oil has been a popular topic lately and I'm beginning to realize how unstable this market can be. The fact that in only a year the price dropped by 50% means that the fluctuation is rapid and ever-changing.
ReplyDeleteFor right now, the drop in oil prices is great for the consumers. We have nothing to complain about now that gas is in the $2-$3 range. It's bound to go back up eventually though which isn't a good thing. Since there is such a surplus right now, in a couple of years the producers might cut down the supply which will cause the price of gas to get pretty high. We'll just have to wait and see, and enjoy the low gas prices while they last.
ReplyDeletePersonally, I do not think OPEC has much to do with the price of oil. America is producing a lot of oil at the moment which is why prices are so low. OPEC is very upset about this because their countries are losing money because of cheap prices.
ReplyDeletePersonally, I am not complaining about the price of oil. I am glad that it is low. Fracking certainly contributes to prices being so low. With America producing for itself, finally, prices may stay low for a good period of time. I think it is a good thing that we are finally becoming more self reliant.
ReplyDeleteWith the amount of oil America is now producing I don't think that OPEC has as much power as they used to, OPEC will try and do everything in their power to try and bring up the price of oil again
ReplyDeleteI agree with Joel on this topic. OPEC does not have to do with the massive natural gas production in the U.S.
ReplyDeleteI think that OPEC is controlling this price drop. OPEC has the power and the profit margins to survive, however fracking companies here in the US may fail because of lower profit margins. If OPEC can get US suppliers to fail, they would control the market.
ReplyDeleteYour observation about stopping countries from being energy independent is interesting, I suppose offering foreign oil at a fraction of the price of domestic is one way to get consumers to switch.
ReplyDeleteAll the competition in the oil market is bad for these companies. Like Kevin stated in the beginning comment. These companies cannot sell a huge surplus for large amounts of money with all the other business getting involved.
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