The end of OPEC?

The end of OPEC?

blogs.moneycentral.msn.com

Saudi Arabia walked out on OPEC yesterday. It said it would not honor the cartel's production cut. It was tired of rants from Hugo Chavez of Venezuela and the well-dressed oil minister from Iran.

As the Saudis left the building the message was shockingly clear. According to The New York Times, “Saudi Arabia will meet the market’s demand,” a senior OPEC delegate said. “We will see what the market requires and we will not leave a customer without oil."

(visit the link for the full news article)

Wouldn't it be great if our "friends" actually stood up for us.

blogs.moneycentral.msn.com
(visit the link for the full news article)

Originally posted by ATruGod


Wouldn't it be great if our "friends" actually stood up for us.

blogs.moneycentral.msn.com
(visit the link for the full news article)

It would be, but have they ever? Maybe they are just using this theatrical moment to negotiate better terms for themselves. Would we ever know?

If it leads to cheaper fuel, it can't be a bad thing either way.

I don't think it's a matter of our "friends" standing up for us. I think they are being told what to do.

If you really want to know what is going on, it's already been predicted...

www.abovetopsecret.com...

If they don't do what we tell them, they wind up like Iraq. Besides, they're in too deep with the Great Satan at this point anyway. The Saudis sold their soul decades ago.

How in the heck does this thread not have any discussion. If this actually happens, it is one of the biggest pieces of economic news since the Fannie and Freddy incident. If OPEC dissolves, expect some wild things to happen.

Oil prices will plummet. OPEC have been suppressing production since day 1, and this has caused quite a large bubble in the price of oil. This will be good for the consumer and non oil producers, but other large oil producing nations/companies will be upset. As much as they all claimed to hate it, you know they secretly loved it. OPEC drives up prices and looks like the bad guy, while everyone else can appease their citizens/stockholders while still looking good.

Thankfully the world demand for oil won't let up any time soon, so the industry won't crash too hard, and prices may rebound. I'm not too sure on this one... It looks like SA wants to pump out a lot of oil.

Saudi Arabia will meet the market’s demand,” a senior OPEC delegate told the New York Times. “We will see what the market requires and we will not leave a customer without oil."

On a more socio-political note, this could be the best thing to happen to citizens of the Oil Producing Arab states since, well, ever. And the exact opposite for those nations respective regimes. Most ME Arab nations function based on a system of Rentier economics; in that the measure of governmental spending in comparison to tax rates is among the highest in the world. They tax virtually nothing while providing lots of social programs with money from the oil industries. This allows a regime to limit democracy and reform as the Rentier system serves as a means to suppress dissent (they can keep people happy and provided for without taxing them). This, in my opinion, is one of the biggest roadblocks to democracy and equality in the ME (especially in regard to gender issues). The end of this system would put more women in the workplace (to get that GDP back up there). It would create an atmosphere more ripe for the development of civil society organizations. It would instill the basic roots of democracy that most political scientists agree do not exist in many ME Arab nations.

But then again, I am not the biggest fan of Democracy in the first place...

If anyone wants to learn more about Rentier economics, hit me with a PM and I will point you towards some great Journal articles about this issue. It has kind of spun off of the Clash of Civilizations debate - gotta love old man Huntington! I still haven't decided whether he was right, or whether they emulated him...

[edit on 11-9-2008 by WuTang]

[edit on 11-9-2008 by WuTang]

Originally posted by jackinthebox
I don't think it's a matter of our "friends" standing up for us. I think they are being told what to do.

If you really want to know what is going on, it's already been predicted...

www.abovetopsecret.com...

If they don't do what we tell them, they wind up like Iraq. Besides, they're in too deep with the Great Satan at this point anyway. The Saudis sold their soul decades ago.

I think the Saudis know that if they go along with the cuts it will destroy their long term interests. They know that the rush to alternative fuels is already here and the downfall of oil is upon us. Sure, we'll need oil for plastics, but you won't need the good stuff...not that Texas Tea...Light Sweet Crude. The Saudis might have been nudged, but they know that it's in their economic interest to get the oil out of the ground as fast as possible.

Wonderful!!!

Lets hope this continues. Trusts are bad for anyone and OPEC is probably the worst Trust to ever exist.

Now there will be competition again if this holds true in the future. The other countries will be forced to compete on both price and supply.

I wonder if Chavez going to bed with the re-emerging Soviet Union forced their hand to pick a side. Seems likely. There is more here than meets the eye.

If our State Dept. had anything to do with orchestrating this; three cheers for them.

reply to post by yellowcard


What you said may be the exact catalyst used to influence this. Makes plenty of sense. Sell it now while it still has a high value. One thing is clear it seems; alternate energy sources are going to be developed at high speed now that we and the rest of the world are agreeing that it is time.

Originally posted by WuTang
How in the heck does this thread not have any discussion. If this actually happens, it is one of the biggest pieces of economic news since the Fannie and Freddy incident. If OPEC dissolves, expect some wild things to happen.

Good news does seem to go unrewarded with commentary. Sigh

Hmm... something tells me that oil prices will skyrocket.
Think about it, where does America get most of it's stuff from? China, Arabia, any place other than here.
We don't have nearly as much oil production here in the U.S. as we use, so we buy it from others.
Oil will become a rare and highly valuable thing if the main source of oil goes away. The less there is of something the more valuable it becomes, that's pretty much a fact, excluding unpopular things.
So the price of oil will go up due to the demand, we already have the ability to make cars that run on air alone, so why the dependance on oil still?
Money, money, money, that's what it's all about.

-Jimmy

reply to post by jimmyjackblack


It cannot skyrocket. The reason why it so high is the oil cartel was holding back. They said they will meet the demand. This has got to drive the price down.

reply to post by ATruGod


If this is accurate, I can't help but smile. OPEC is only OPEC is Saudi Arabia plays along.

So I guess all the OPEC countries will cut their oil exports to tighten the oil supply since S.A. will keep pumping away........NOT.

Hopefully this is true.

Great find, a star on your forehead!!

Baseless speculation. Who says Saudi-Arabia is going to leave OPEC anytime soon? Do you really think it lies in S.A.'s interest to leave OPEC and see prices go down.

Like every other country on this world, Saudi-Arabia does what's good for itself. Leaving OPEC is not part of that.

reply to post by WuTang


OPEC as far as most of the people's experience here knows, is a gripping cartel, all of them are damned to collapse into themselves. If Saudi has indeed walked out, expect others to follow. It only takes one.

This could be wild and quite awesome news really.
Excellent news as a matter.

Maybe this will end this outrageous gas price era?

I don't think Saudia arabia walking out will make any difference in the long run. How could it? As the world stages its self for another global cold war, the groups are already cuddling up.


Even if OPEC dies, smaller cartels will exist, tightly bound by political and philosophical ideologies, and they will all compete at each other for greater influnce.

We all know economic theory regarding Cartels, they are self destroying by mutual greed, be it political reason, or economic. Its all the same.

Short term (perhaps a relief in prices shooting up, but not a extreme down pressure on the price of oil)

Long Term (greater uncertainity about supplies of oil and trade, several blocs will attempt to push their influnce via oil.)

Are we to assume that we are saudi arabias only customer? and that IF they were to opt out of opec that the price of oil will spiral downward to the point lower prices actually reach the consumer? While i doubt S.A. will abandon opec, i highly doubt they will increase production anywhere near enough for that to happen....My guess is if anything what they are saying is that as long as the world is happy to pay these insane prices for oil, that they will be happy to supply it to them.........them being the highest bidder

Iran is not the greatest friend of Saudi Arabia, I guess this was a smart move! There is more and more concern in the middle east on the growing influence of Iran . Actually some of the middle east countries would even back and US action .

from other sources i've read during the previous 3-4 days...
Saudi oil production has been in the process of being cut back already,

just about a month ago they (Saudi) began ramping up production to some 9.5 million bbl per day...

in the interim, the price of oil has dropped to around $100. bbl
and thats why they unilaterally began cutting production to the tune of 250,000 bbl day --- so that oil would stay at plus $100. bbl


my take on the staged walkout was that Saudi see itself as the natural leader of OPEC, and the upstart Venezuela had no business trying to upstage the Saudi leadership...
OPEC may well get restructured but it sure isn't going into the dustbin of strategic geo-political failure...


OPEC will expand to include all the combined SWF (Soverign Wealth Funds) of Saudi and the Gulf States of Abu Dhabi, Dubai, UAE...also Iran and Russia will combine their own SWFs to take the place of the soon to be 3rd world economic status of America/USD

reply to post by jimmyjackblack

We don't have nearly as much oil production here in the U.S. as we use, so we buy it from others.

I really have to question that statement. Fisrt of all, most US oil comes from Canada, which is a part of the North American consumption figures. But more importantly, the US is the third largest oil producer in the world.

Originally posted by yellowcard

Originally posted by jackinthebox
I don't think it's a matter of our "friends" standing up for us. I think they are being told what to do.

If you really want to know what is going on, it's already been predicted...

www.abovetopsecret.com...

If they don't do what we tell them, they wind up like Iraq. Besides, they're in too deep with the Great Satan at this point anyway. The Saudis sold their soul decades ago.

I think the Saudis know that if they go along with the cuts it will destroy their long term interests. They know that the rush to alternative fuels is already here and the downfall of oil is upon us. Sure, we'll need oil for plastics, but you won't need the good stuff...not that Texas Tea...Light Sweet Crude. The Saudis might have been nudged, but they know that it's in their economic interest to get the oil out of the ground as fast as possible.

Exactly. They want to spend the next 10 years bleeding their wells dry whilst there is still a high demand for oil and to hell with anyone else. Banking the cash before the oil crash.

It doesn't take much to cause a rapid decline in the use of oil for fuel. As you work towards ever higher efficient use of fuel (cars, houses, electronics) then the ability to use a lower energy density fuel becomes much more viable. As soon as the cost compares then bingo its the big switchover. The high cost of oil is accelerating this activity and the Saudis can see it.

Oh and don't forget this little nugget : It is now more cost efficient to "mine" old buried waste dumps for plastics and metals than producing them from raw materials.....hmmmm.