Originally Posted by
ORAC
OPEC Cuts oil production…..
The OPEC+ alliance of oil-exporting countries has decided to sharply cut production to support sagging oil prices. The move could deal the struggling global economy another blow and raise politically sensitive pump prices for U.S. drivers.
OPEC's decision today to cut oil supplies directly and immediately assists Putin's war effort. They were not compelled to do so. They choose to do so. Don't ever forget it.
OPEC seems to continue the time honored squandering of resources that we have grown to expect. Revenue from finite reserves have made for wonderful palaces, edifices, and lots of decadence in the form of exotic cars, planes, yachts, watches etc, all based on finite resources that are being replaced as technology can provide more sustainable alternatives. Our favorite global leading producers have established economies that rely on ever increasing base pricing to cover the economic needs while production costs quietly increase as reserves reduce. OPEC's former cash cows are needing cash injection to keep their masses kept in the manner they have grown to expect. Some structural adjustments coming along at some point in the future. In lots of areas, those adjustments will have a "fundamental" flavor.
Cutting production continues to favor US and Canadian and other producing countries as they are given opportunities to increase margin and volumes. The elevation of cost softens global activity, which reduces demand in part for discretionary consumption, which doesn't help the short term OPEC revenue status, and promotes alternative supply and substitution.
When OPEC acts, it has a history of zagging when zigging is helpful to their interests.
Use of revenue towards nation building and diversification rather than multi jet shopping trips to Harrods might be a good option. Its a spectrum, some have done better than others, and some have more unemployed population pressure with diminishing future prospects which is a bad mix. Fixable? not without a change of heart of management.
