I can't reconcile you post with alloysteel's #4;
>>Just the rumor would do it.
in reference to;
>Time for the US to dump oil from the Strategic Petroleum
>Reserve, to knock the price down even further. We should
>be doing everything we can to disrupt the OPEC cartel and
>make it difficult for them to control prices.
>We can then replenish the Reserve at the lower price that
>would result from massive dumpting.
but alloysteel said;
>The supply/demand curve is working perfectly.
>Supply remains the same, demand decreases, price drops.
Is rumor an element of supply and demand or is a stand alone capitalistic market force?
Buy on the rumor. Sell on the fact.
The important thing to remember is that with a small number of producers, and several of those producers combined into a cartel, it becomes not only about supply and demand but also about game theory.
In game theory, the actions of one player is a group are based on the actions of the other players in the group. If one player takes action to achieve a certain result, and the others behave in a predictably and passively, the active player has an advantage. Through trial and error, as well as study, he can learn how to manipulate the group to his advantage.
This is what is happening with OPEC. They have been working for years to dial in their models of how to maximize the price of oil and maximize their profits. The rest of the World has responded passively and predictably, allowing OPEC to pretty much do whatever they want. The result is ever increasing prices for oil and ever increasing profits for OPEC.
But if one actor starts to act unpredictably, or in such a way as to upset the game, all those historical and empirical models go out the window, and OPEC will not be able to manipulate the market so successfully. The result will be lower prices and lower profits for OPEC.
I can see your befuddlement. Let me try this. We draw on our strategic reserves and REPLACE the higher priced imported crude. There then becomes a lot of excess supply on the world market. The higher cost of importing the crude will make this exercise a negative enterprise. There will still be world market, but not enough to support the high cost of production. A near total collapse of the petroleum market and then we begin to buy at much lower cost. Oil at $10 - $12 BBL. The European countries would be better off and they would attract all of the Muzzies in the world. They can have them.
Terrorism can no longer be supported and there is chaos in Venezuela, Iran, Saudi Arabia, and a host of annoying little countries. Remove the Petro$$ from the world economy and you have a new level of upheaval.
What I like about all of this is that Israel winds up being the only economy in the region that survives. The Islamic countries all revert to where they wish to be and that is the 16th century.