Unimpressed weighs in further on who can control oil prices.
I posted this comment inquiring about a specific point (pertaining to the results of previous OPEC oil production modulation) in Lorenzo's posting:
"The closest instance was the 500,000 barrel production increase on Nov. 1, 2000."
This number is like 0.6% increase of daily worldwide production. Explain how much the price of gas would drop due to this? Maybe 1 cent/gallon after a month? Plus it might get queued up at the refinery leading to a bit of a lag.
Posted by Webster Hubble Telescope at June 4, 2004 11:37 PM
My exact point. The chart clearly shows that none of OPEC's production changes had the effect of causing an immediate reversal in oil price trends and only came close once (of course a 500,000 barrel a day move would be hardly enough to spur the serious decline in prices that began a month later).
My exact point was to demonstrate how *inefective* OPEC is at controlling crude oil prices.
Posted by Lorenzo at June 5, 2004 02:02 AM
The mix of politics, economics, and technology makes for some counter-intuitive behavior. My concern is how these mechanisms change when supply is no longer quasi-infinite, as when we start to hit the gobal peak. Kind of like switching from a multiple deck card game to a single deck card game. Politics becomes more protectionist, economics theory becomes more constrained, and technology becomes the wild card.
Historical gas price fluctuations
and Fight for Gulf Oil