We saw this coming. This is not a surprise, even though OPEC President Chekib Khelil hoped it would be.
Let’s see, oil prices drop prior to an election and rise after. Been there, done that. Especially when in October, we heard that OPEC would be cutting production in mid-November.
OPEC announced that they have agreed to slash daily production by 2.2 million barrels. This is their single largest cut ever. Russia and Azerbaijan also announced cutbacks of hundreds of thousands of barrels.
“I hope we surprised you,” said Khelil. This is OPEC’s attempt to shock the oil market’s price higher. “If you’re not surprised we need to do something about it.”
The only surprise is that OPEC waited so long to do something to try to raise the price of oil.
But something weird happened, didn’t it? Usually, when OPEC announces a cut in production, the price of oil rises. But this time, the price fell to $40.20 after OPEN made their announcement. The last time we saw $40 per barrel was 2004.
I hope Khelil was the one that was shocked when the price still fell.
Could the drop in price rather than an increase be related to the lack of speculators in the market which has made me happy because I paid less than $1.70 last week after paying about $4.20 just yesterday – almost literally. Or is the price related to the fact that we just learned that we’re in a recession, though nearly every one of us have known this for about a year?
Interestingly, Russia pulls away from OPEC. Russia is the number 2 oil producer after Saudi Arabia. They did reduce production by 600,000 barrels but that didn’t appear to be enough for OPEC.
“We also hope that other producers who are not in OPEC will chip in for the purpose of bringing stability to the market,” said Saudi oil minister Ali Naimi.
He meant to say ‘for the purpose of raising prices.’
The only point I want to bring out here is that this must keep us focused on getting the hell off of oil. The only way to get back at OPEC is by telling them to [expletive] off, we have no use for their games or their oil.
We have all cut our consumption of oil by driving less. I work from home 1 day a week now. I bring lunch to work so I never leave the office during the day – and that includes no errands during lunch. I make sure that every time I head out to the store, I combine other stops along the way to save trips. Previously, where I would need to fill my tank every 5 or 6 days, I now can make it 10 days no problem.
This is how we beat them.