Price of Oil May Stabilize To Prevent Profit Losses - Political Opinion

The Organization of Petroleum Exporting Countries (OPEC) will be meeting to discuss the future of oil tomorrow. Venezuela and Iran will attempt to slow the exportation of this natural resource in a effort to keep prices over $100 per barrel, according to Bloomberg.

“They want to prevent a build-up of crude stocks, which rules out an increase, but don’t want to send prices skyrocketing by announcing a cut,” said Mike Wittner, head of oil research at Societe Generale SA in London.

With countries looking for alternatives to this fossil fuel, oil companies need to look to get as much out of their commodity as they can. For Venezuela and Iran, the situation is even more urgent as their supplies run low.

Even with the 27 percent price cut on oil, the price of gasoline in the U.S. is still an average of $3.70 per gallon. The high gas prices have lead to a 19 week long drop in demand. Some members of OPEC worry that oil will be stockpiled. In July industrial nations bought enough oil for nearly two months. This trend is seen by some, like International Energy Agency executive director Nobuo Tanaka, as “the slowdown of the economy.”

Whatever OPEC decides tomorrow, the U.S needs to end its addiction to oil.

Source Bloomberg:

Oil has plunged $40 a barrel, or 27 percent, from its record $147.27 on July 11 as economies slowed, the dollar halted a three-year slide against the euro and Hurricane Gustav caused almost no damage to U.S. drilling platforms and refineries.

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Oil stockpiles in industrialized nations, excluding government reserves, were above average in July and enough to meet 54 days of demand, according to the International Energy Agency.

Source: Economy in Crisis

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