Posted on 12/18/2008 1:51:35 AM PST by TigerLikesRooster
PEC's Surprise Announcement Gets Big Yawn
OPEC is struggling to get prices up. To achieve that result OPEC Agrees Larger-Than-Expected Cut
OPEC, supplier of more than 40 percent of the world’s oil, agreed to cut production quotas by a larger- than-expected 9 percent to revive prices as a global recession reduces demand for crude. “OPEC is sending a message that they are trying to cut pretty seriously,” said Mike Wittner, head of oil research at Societe Generale SA in London. “If they need more cuts, there will be more cuts.”
Market Greets OPEC's Surprise Announcement With Big Yawn
OPEC may be sending a message but the market sent a bigger one as Crude prices tumble despite record OPEC cuts.
Here's how bad things are for OPEC these days: It announced its largest-ever production cut Wednesday and oil prices promptly slumped to $40 a barrel, the lowest level in more than four years.
Ministers of the 13-nation oil cartel were trying to shock moribund markets into life by slashing output 2.2 million barrels a day, more than double two recent production cuts. "I hope we surprised you," said OPEC President Chakib Khelil when asked whether the move would send prices upward.
Instead the markets yawned and there appeared to be more good news for consumers -- at least for the short term. Benchmark crude prices tumbled to $39.88 per barrel Wednesday, levels not seen since July 2004 on the New York Mercantile Exchange. In just five months, crude has given up all the price gains made over the past four years amid an oil glut and the spreading recession.
(Excerpt) Read more at globaleconomicanalysis.blogspot.com ...
Ping!
Interesting to see how at this time OPEC doesn’t seem to have the leverage it is used to.
As the economies recover, they will wield more influence...and as the libs continue to stall our efforts to get our own oil, OPEC will become stronger.
Looks to me like the dems done stalled sufficiently to allow the high price to slide to the point that exploration and drilling, domestically is not cost effective. That, to some extent has been the issue all along. The price at the pump needs to be exorbitant to galvanize the people to be able to cause congress to pay attention for more than the two minutes they are capable of paying attention to anything.
Not to mention the brainless and arbitrary rules on drilling for the stuff. If all those laws against domestic drilling were dumped into the ash heap of history, at least oil companies would have no excuse for not moving forward when prices per barrel make it feasible.
Wonder how much more anti business anti citizen stuff will manage to get by the congress, before the next short period in history where the oil companies reap record profits and the dems/socialists, and commies will be able to beat them black and blue through of course the complicit media that makes it possible for congress to beat anything they want black and blue.
George W, oil companies, the automobile industry, drug companies for example. There is more, much of it a result of unintended consequences of long noses and loud mouths of our congressional saviors.
If Obama implements even one tenth of his campaign promises the recession will deepen as higher taxes drive out entrepreneurship, demand for oil will continue to fall and exploration will be to expensive for anybody.
re: As the economies recover
I know they always have (recover), but I have to wonder how long this one will take. So many things are wrong now I don’t see how we can get back on an even keel, or even close to it.
Most of the prosperity the world has enjoyed in this recent growth spurt, as long as it was, was paid for by credit. Until we find a way to get over the huge pile up of debt there’s no way any of world’s economies can begin to recover.
The next big hit will come as all the second mortgages begin to fall into default. Lots of people used the increase in the value of their homes to finance a lifestyle well beyond what their income could provide. Many of them find the value of their homes has gone down, in some cases way down, and the credit ride is over.
One possible solution short term would be a one year hiatus on the federal government. Five years would be better, but one year for starters. No money, no government, and that works both ways. I don’t expect any, and I don’t cough any up.
One month in, seniors would be screaming, but many of them should be able to exist on savings for a year. Only the homeless, bums, non working disabled, single moms, and a few others would be desperate and it would then be up to the states, churches and charities to care for them if needed.
The only problems I see long term, oh never mind, the list of people with their hands in the federal pocket is so big we would never make it. Speaking from experience, as a military retiree on social security.
It now appears that the only solution is to allow those who brought this upon us to continue business as usual, which if I am not mistaken is the definition of insanity.
I know I don’t drive near as much as I used to. Even with gas being cheaper, I’m just too broke to go do anything!
I imagine I’m not the only one.
“I know I don’t drive near as much as I used to. Even with gas being cheaper, I’m just too broke to go do anything!”
I don’t drive much either. I’m not broke but I’m not spending any money either. The only thing I’ve bought recently is guns and ammo.
>As the economies recover,<
Currently economies are weakening.
I think the next big hit will come as the commercial mortgages begin to fall into default which will cause many local, smaller banks to fail.
“The next big hit will come as all the second mortgages begin to fall into default. Lots of people used the increase in the value of their homes to finance a lifestyle well beyond what their income could provide. Many of them find the value of their homes has gone down, in some cases way down, and the credit ride is over.”
On the other hand, there are going to be many re-financed mortgages to take advantage of the historically low rates.
I know we’ll probably start the process once the holidays are over.
We don’t have an upside-down problem, but I wonder how many people will be able to refinance if they are severely upside-down?
Are you maintaining your job search thread? Even if you’re not, can you post the URL? Thanks.
Are you looking for a job? (#4) [A Better List]
http://www.freerepublic.com/focus/chat/2148186/posts?
Great point. Think how much better our economy would be today if a massive effort for increased drilling, production and refinery growth had been started two years ago. It would have taken the edge off the price spike as well. Not to mention all the new jobs in the US.
And to make matters worse, some lenders will call in a loan when the value of the property used to back it falls too low. That's especially a problem for businesses, which when it's all over, is where jobs and money have to come from if the economy is to grow.
Most people I know are upside down if they took advantage of the deadly combination of bubble property values and lax loan qualifications. And as more homes are foreclosed on, or simply abandoned, the problem is going to be getting worse.
I fear America has grown soft in the last 50 years and we are ill-prepared for the kind of belt-tightening it's going to take to get over this. If you compare the lifestyle of my parents right after WWII and my sister and I were toddlers with that of a similar family today it's no surprise it more expensive to make it now. I won't bore you with details, but think about the huge differences in the size of their starter home, the car they drove, etc.
And I keep hearing that even with the steps taken to make it all better the sources of credit are still reluctant to make loans.
Amen! Except I would add government at all levels to the mix. As bad as the feds are government at all levels has simply outgrown the ability of taxpayers to support it.
The answer is a freeze on government expenditures, period. Let the chips fall where they will. It might even require an actual cut in spending by governments, gasp!
A five or 10 percent cut in everything government does would be a lot less painful than a 50 percent or higher cut when the bottom finally falls out.
I don’t think we have any control on ‘if’ it’s going to happen, only as to ‘how’ it happens. I liken it to being the pilot of a plane that knows a crash is inevitable. The pilot’s only control of the situation is to try to make sure the crash is under his control as much as possible. We might still have some control over the situation, but time is running out!
” I won’t bore you with details, but think about the huge differences in the size of their starter home, the car they drove, etc.”
I know what you’re talking about here.
Hubby and I took the traditional approach as advised to us by our parents...start out with a small inexpensive apartment.
Save up for a down payment on a small starter home.
If you outgrow that home, you can add on to that home or sell and put the money to a new home.
Now we see these early-twenty something couples buying McMansions right out of college that is fully furnished via credit from the furniture store. 2 beautiful brand new vehicles.
I have been wondering how they all managed to swing it because the math just doesn’t add up.
We have a twenty-year-old grandson living with us. When I write down what he needs to earn, actually bring home, just to live a minimal independent life I realize he simply can't do it with his education and experience. It's appalling.
He works for a chain electronics store in a very depressed part of town. My wife or I frequently drive him to work and every street corner near the store has several young men just standing around usually talking on a cell phone. They are there any time of the day. You have to wonder how they support themselves. Or maybe you don't.
Until we get back to the basics things are not going to get any better. Deep down inside I really fear we've passed the point of no return. There are simply too many of us that are totally dependent on government at various levels for all of our needs from housing to health care, etc. The “Womb-to-Tomb”, Nanny-State. And the number of them is increasing much faster than the number of producers in society.
A five or 10 percent cut in everything government does would be a lot less painful than a 50 percent or higher cut when the bottom finally falls out.
Excellent point, the government layoffs need to start with the congressional staff. I have always said that bills produced by congress ought not to be longer than one page and written by the elected officials not hired staff. One secretary and a chief of staff for every senator and congressman, period. No local offices. Think of the reduction of pressure on the phone system. their lines would be constantly busy as only the secretary is able to answer.
Anyone here have a clue what the size of congressional staffers would be? My guess would be at least ten times the population of the 535 legislators. How are they are paid, what the total federal work force population might be, not including the military. Freeze all hiring, all spending not related to social security, military action and pay,
Think of the money that could be saved if earmarks, boondogles, unnecessary junkets, fact finding missions, were suddenly halted. The list goes on and on and who will be able to implement it?
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.