Quote:
Originally Posted by Bring_Back_Shantz
It isn't a matter of allowing OPEC to determine what our oil is worth, it's a matter of our customers dictating what they will pay for it. Well, guess what, our number one customer is the US, and their number one supplier is OPEC countries.
It works both ways, when Opec decides to cut production and supplies are in demand, then Canadians benefit as the oil here can be sold at a higher rate. As Opec increases production, the demand is lessened and we can no longer charge such a high prices because the US isn't willing to pay it because they can get it cheaper elsewhere. The fact of the matter is we aren't big enough to dictate prices on a world wide scale, and OPEC is.
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At various points, including the one we are now at, its dubious whether or not OPEC is actually setting a price or much in control of anything . . . . . no one believes the individual members will cut production as they say they will, so the ability to use moral suasion to move prices diminishes . . . . hence the current weakness.
There are also large suppliers outside the OPEC umbrella who do what they want, including Canada which is rapidly ramping up production, and Russia.
The one thing OPEC learned from the 1973 oil embargo is that it can certainly kill oil-dependent economies for political gain but, in doing so, it generally will also kill itself as those economies it depends upon wither away.
Hence OPEC's multi-decade apparent desire to modulate prices somewhere in an area that doesn't offer much encouragement for the economics of alternative technologies while keeping oil dependent economies sucking happily away.
Oil remains cheaper on an inflation-adjusted basis today than it was in the 1970's and 1980's.
Cowperson