OPEC Pushing Envelope on High Oil Prices and They Know It
By: Lance Winslow
OPEC realizes that it is pushing oil prices too high and it also realizes that the world demand is going up and if it does not move quickly to keep prices lower and keep production high then it is obvious that there will be problems down the road for their economies in the Middle East as well as the world’s first world economies.
OPEC also realizes that it is pushing the envelope on high oil prices and they realize that if they do not keep these prices lower the new technologies and research and development dollars will be from thrust into the market and propel a future without oil.
We can already see in the United States with the new initiatives for alternative fuels that the bankers and venture capitalists are putting new monies into innovative technologies, which will use alternative fuels, hybrids and propulsion.
If OPEC fails in keeping prices low for sweet crude oil then in the future they stand to lose out. Currently with gasoline prices at three dollars per gallon and oil barrel prices approaching $80 it is quite obvious that biofuels such as Biodiesel and Ethanol are starting to make a lot more sense.
If OPEC is to keep their stranglehold on world markets for energy and fuel then they will need to consider the price point at which they are offering it to the rest of the world. If oil prices get too high and economies stagnate there will be less purchases of oil and they will have shrunk their overall pie for demand.
Indeed this would keep prices high but volumes low and therefore they will make less money in the end. Please consider all this in 2006.
Lance Winslow