This story explores how, thanks to a small group of powerful individuals, oil prices will remain high despite changes in demand.
- Though oil prices initially dropped when the global economy began to falter, they have recovered and stayed more or less stable – even as demand for oil continues to drop.
- This doesn’t really make sense economically – according to the law of supply and demand, prices should be plummeting as unemployment around the world grows and oil consumption slows.
- But as other markets remain volatile, investors are seeking the relative safety of oil. Oil production is tightly controlled by OPEC, which can keep prices stable by limiting supply when demand decreases, and vice versa.
Facts & Figures
- In July of 2008, the price of oil rose as high as $140 per barrel. By December, the price had dropped to $33 a barrel. Today, the price fluctuates somewhere between $40 and $50 a barrel.
- Demand for oil is expected to drop 2.8% this year – to 83.4 million barrels per day.
- Oil inventories are at their highest level since 1990, but members of OPEC have cut production of new oil by approximately 3.5 million barrels a day.
Best Quote
“This is a measure of just how abruptly the world economy has fallen in recent months, and how dire and uncertain its future prospects have become. De-globalization may already have begun.” – from a report published this month by PFC Energy, a consulting firm