Forum Discussion
ShinerBock
Feb 02, 2018Explorer
Groover wrote:travelnman wrote:
Gas is on its way up again. They drop it to get the gas hogs sold then when things look sold they allow it to rise again. Check this out over the years,
they need to reduce the size of those unsold pickups that get 15mpg. Watch if unsold vehicles pile up on the lots you will see gas come down. Wish it was not so. This way we all share in the manufacturers costs and keep the plants open. Tricky but looking around my neighborhood it looks like it is working again.
The oil producers, including OPEC and others countries, do manipulate prices to keep volume at a comfortable level for them but as you go on to observe "looking around my neighborhood it looks like it is working again." This basically means that we do our part in the cycle. I could not even begin to tell you how many statements I have seen online by people that seem to have disdain for fuel economy. Anytime anyone suggests buying a truck that is not overkill for what they need people jump all over them telling them to buy a bigger, more fuel hungry truck. The only people that we can control is ourselves and when our actions contribute to a bad outcome we need to correct ourselves before trying to blame others. And certainly don't act surprised that history is repeating itself again.
By the way, the only reason that fuel got down to $2/gal was that OPEC lost control for a while. Sometimes the market changes faster than they can adust their production. Once you have suck several billion $ into drilling wells and building refineries it is hard to just shut everything off. The best thing that we can do is keep producing oil here. Even if we can't fully control the price we can at least enjoy the good jobs and wealth that have stayed in this country instead of going overseas, often to people that want to kill us.
The reason why oil prices dropped so low was due to OPEC trying eliminate it's US shale competitors from taking more market share. In their annual meeting in November 2014, they decided to continue pumping at higher than demand levels to purposely flood the market with increased supply. Their goal was to lower the price per barrel below what their US competitors can produce it at and still make a profit. Then they planned to increase it once they have eliminated the competition. Many big companies practice this very same tactic when up against competitors that do no have their buying power especially companies like Walmart.
What OPEC did not count on is the resilience of the US energy companies, and instead of eliminating them it made most of them that did survive more efficient lowering the price per barrel cost that they can still be profitable at. Back in 2012 when we had our meetings with many of these energy companies, such as Halliburton and Baker Hughes, the price per barrel needed to be profitable was around $70-$80. Now due to reducing waste, new technology, and the industry as a whole becoming more efficient it is around $30-$40 per barrel. This means that OPEC does not have the power to control prices like the once did, and I doubt they ever will again.
The major reason why prices are going up right now is because demand has gone up, and the supply in places like Venezuela and Nigeria have gone down.
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