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How will the record OPEC supply cut affect consumers?

By Reuters Staff
December 17, 2008

The Organisation of the Petroleum Exporting Countries agreed on Wednesday to make its deepest output cut ever to counter slumping demand and falling oil prices.  The output cut has been received with cautious optimism by analysts.

Some say that the price of oil will fall further, while others say $40 a barrel was the lowest it will go. “If you look at the market, prices are going up immediately,” said Frank Schallenberger, head of commodity research at Landesbank. “I really think this is the end of a bear market. $40 was the bottom.”

However, the White House called to the historic cut “short-sighted” and said the oil cartel has an obligation to keep the market well-supplied. “It’s not clear that OPEC’s actions will be effective given the shift in global demand and the ability of OPEC members to meet the cartel’s targets,” White House spokesman Tony Fratto said.

Will the price of oil continue to drop or will it recover? And how will the oil supply cut trickle down to the consumer in terms of cost?

Comments

The opec countries are just greedy. They contributed to the slowdown in the global economy by limiting production in the summer and raked in high prices. I guess that oil will start to go up in price and therefore petrol, diesel and other oil related products, which will be a negative to lower prices and reflating economies.

 

Great news for the environment. Every cloud has a silver lining.

Posted by Matthew | Report as abusive
 

Opec President Chakib Khelil on Tuesday said that oil prices would not come down.He also assured that the oil cartel lhad already done what it could do in the matter but there is no hope of coming down of surging oil price rates.
“OPEC has already done what OPEC can do and prices will not come down,” Khelil told journalists as he arrived for a meeting with EU energy officials in Brussels.
Due to the increase in international crude oil price, government wants a price hike in fuel to combat the crisis. Can’t the central government reduce the price in the same situation??
Yes, government can reduce the price. But centre is busy in making profits by fooling the public.

 

Saving passed down to the public at the petrol pumps…..if you believe this will happen in the long term then which planet is it you have just come from. ALL governments are in the business of squeezing every penny they can from TAX paying people of the United Kingdom. There are very few tax breaks for the working man and those he finds are soon plugged up and any saving on fuel prices will go the same way. There will come a point when this country will grind to a halt because no one will be able to pay for fuel to get to work and DON’T say ‘use the buses and trains’ either. A short journey on a bus that is just over a mile in distance cost me £1.35p recently. Expand that to having to travel 10 miles a day to get too and from work and that’s IF they turn up at all!!!

Posted by Glen Livesey | Report as abusive
 

The goal, for the US AND the rest of the world, should be to severely reduce our dependence on oil. Not just our dependence on foreign oil, but all oil. Want to see the OPEC folks scramble like headless chickens? Quit buying their stuff. Want to see the big oil companies change? Quit buying their stuff. Want to see conventional/fossil energy prices drop to new lows? Start using a competing product or reduce use of the petrol-based kind.

Posted by Russ | Report as abusive
 

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