Gas is $2.15 at the local Costco and Sam’s Club in Richmond, and OPEC is meeting to try to stop oil from falling any further.
Crude oil rose for a second day on speculation OPEC will agree to cut output to stem a more than 50 percent in drop in prices from July’s record.
Venezuela and Iran are among members to have called for a reduction at today’s meeting in Vienna. OPEC President Chakib Khelil said there is a consensus to trim supplies without agreement on the size. Oil is poised to drop for a fourth week, the longest losing streak since January last year.
“There are a lot of people who don’t want to be in a short position ahead of OPEC’s announcement,” said Toby Hassall, an analyst with Commodity Warrants Australia Ltd. in Sydney. “OPEC will probably go with a strategy of cutting now and then wait for more evidence of the demand situation and then cut output again before the end of the year.”
Yeah, but rising from $66 to $68/bbl is my kind of rise. Plus, there’s the potential for some serious falling-outs among, um, frenemies.
Crude prices dipped yesterday after Saudi Arabian Oil Minister Ali al-Naimi declined to express his support for a possible cut, on his arrival in Vienna. Saudi Arabia and Iran are the Organization of Petroleum Exporting Countries’ two biggest producers.
“Who said anything about a cut?” al-Naimi said when asked whether he supports the possibility of the group agreeing to reduce output. “Prices will be determined by the market.”
It is to be hoped. Because when I read facts like these, I smile, smile, smile.
Saudi Arabia needs oil prices of less than $30 a barrel to balance its government budget, according to Merrill Lynch & Co. estimates. The United Arab Emirates requires $40 a barrel and Qatar $55.
Iran, with double the population of Saudi Arabia, has a breakeven point of about $100 a barrel, according to Edward Morse, managing director and chief economist at Louis Capital Markets LP in New York. In Venezuela, where President Hugo Chavez’s government is spending oil revenue on social programs, the figure is about $120, he said.
Even if the price goes back up to $70-80/bbl, Iran is screwed—and we still get relief at the pump.
I wish the OPEC ministers the very worst of luck. Particularly the Iranians. It couldn’t happen to a nicer bunch of oil ticks.
Update: OPEC is cutting production by 1.5 million bbl. The market reacted by dropping the price of crude oil to $62.96 at 8 a.m.
The must-read quote of the day:
OPEC President and Algerian Oil Minister Chakib Khelil said at a news conference that the cut will be “100 percent effective” in stabilizing prices.
Pardon my schadenfreude. Oh, no, don’t. These are the scumbags who have financed the murderers of Jews and Americans for decades, and who take our money and turn it into dictatorship and despotism. I hope oil collapses to $30 a barrel. We’ll still be working on alternative fuels. They won’t be working on alternative products for their economies.
As long as the Obamessiah doesn’t find some way to bail them out to make it easier for them to get nukes…
The easiest, most economical, least injurious mathod of neutering Iran is to reduce North American dependance on imported oil by better use of public transit, more efficient tansportation and energy use. We gain, they lose!
Public transit only works well in areas with a high population density and a workforce that heads in the same direction at the same time.
Public transit sucks, for instance, if you want to commute from Richmond to Washington, D.C. And it ain’t so hot from Fredericksburg, either.
Easy to say take mass transit. Not so easy to do outside of the New York and Chicago metro areas.
Just invent a usable cargo teleporter. Based on the range, transportation will be limited to getting the cargo to the central matter transmitter for relay.
Think what that would do to the oil industry.
I should have been a bit more expansive. I was thinking of Toronto, a large city I grew up in. They have a very good transit system, electric street cars, buses and subways. When I go there, that is wwhat I use.
Public transit could have a hard time of it in less dense areas. Here, Toronto and Ottawa in Canada, as a rough rule, public transit to head downtown, your car going the other way or at night.
It would not take a huge drop off in fuel use to hit Iran, just a few percent.