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To: kjam22
This is not supply and demand that is driving the price this low.... it is geo-political.

With all due respect, I think that's an incorrect read on your part. The sudden drop in oil prices is geo-economic.

The law of supply and demand is most definitely in full force. We're seeing a drop in the price at the pump, precisely because there's such a glut of crude oil on the market. Prices cannot fall, unless supply exceeds demand.

The reason there's such a glut, is because America is now producing so much more oil (due to fracking), and the fact that the Saudis and the other OPEC nations are refusing to lower their oil production.

My take is that the Saudis are keeping the price artificially low in order to break the back of the U.S. fracking boom. At some point, it will (again) become more profitable for America to buy cheap Saudi oil, than to drill our own reserves.

Slick, eh?

27 posted on 12/20/2014 10:04:34 PM PST by Windflier (To anger a conservative, tell him a lie. To anger a liberal, tell him the truth.)
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To: Windflier
How much of a glut is there?

Prices cannot fall, unless supply exceeds demand.

You've never heard the term "price fixing?"

45 posted on 12/21/2014 3:53:59 AM PST by kjam22 (my music video "If My People" at https://www.youtube.com/watch?v=74b20RjILy4)
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