General Question

LDRSHIP's avatar

Oil prices are dropping?

Asked by LDRSHIP (1784points) December 14th, 2014

I don’t keep on the news much anymore.

Supposedly oil prices are dropping, 40%. Is this true?

If so, why?

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6 Answers

grac3alot's avatar

Yes.

The reason:

The declining prices reflect the combination of robust world crude oil supply growth and weak global demand, which have caused global oil inventories to rise Figure 1. Recent events, including the Organization of the Petroleum Exporting Countries’ (OPEC) decision in late November to maintain its current crude oil production target, have raised expectations that oil supply growth will continue contributing to rising inventories through the first half of 2015. Source

FireMadeFlesh's avatar

Yes, today it is the lowest price we’ve seen since mid-2009. This is due to increased production from North American shale oil and fracking, reduced growth in demand, particularly from Russia, and OPEC’s decision not to reduce production to compensate for these factors. There is also a political game behind the scenes that has led to some intentional downward pressure on the oil price.

Bill1939's avatar

The cold war continues. In addition to sanctions applied in response to Russia’s incursion into Ukraine, the West has encouraged an increase in supply of crude oil to force a decrease in cost per barrel, which hurts Russia economically whose main source of wealth is oil and gas. Russia’s response is to use military intimidation in an attempt to reverse this economic assault, buzzing commercial aircraft and sending destroyers and submarines into the waters of other nations.

stanleybmanly's avatar

Tricky business. Plenty of both predictable and unforeseen repercussions in our near term future.

SquirrelEStuff's avatar

Possibly economic shock testing?

“Economic engineers achieve the same result in studying the behavior of the economy and the consumer public by carefully selecting a staple commodity such as beef, coffee, gasoline, or sugar, and then causing a sudden change or shock in its price or availability, thus kicking everybody’s budget and buying habits out of shape.

They then observe the shock waves which result by monitoring the changes in advertising, prices, and sales of that and other commodities.

The objective of such studies is to acquire the know-how to set the public economy into a predictable state of motion or change, even a controlled self-destructive state of motion which will convince the public that certain “expert” people should take control of the money system and reestablish security (rather than liberty and justice) for all. When the subject citizens are rendered unable to control their financial affairs, they, of course, become totally enslaved, a source of cheap labor.

Not only the prices of commodities, but also the availability of labor can be used as the means of shock testing. Labor strikes deliver excellent tests shocks to an economy, especially in the critical service areas of trucking (transportation), communication, public utilities (energy, water, garbage collection), etc.

By shock testing, it is found that there is a direct relationship between the availability of money flowing in an economy and the real psychological outlook and response of masses of people dependent upon that availability.”

FireMadeFlesh's avatar

If you’re interested in the politics behind the price engineering, a recent Reuters opinion piece explains it very well.

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