OPEC: Backed into a corner...
Well, I guess you can say that it's been another ho hum week in the markets with nothing really to report.
The traders kept trading and the sellers kept selling.
As for oil, the telltale glut had them talking in Vienna, Austria last week. The talk around the table was mostly from fellow OPEC members who, interestingly, seemed to have been put in a situation that I can almost say assuredly, they have never found themselves in: backs into a corner as they face the awful prospect of "competition".
No ordinary competition, mind you.
The competition doesn't come from just one country, where years ago you could measure the threat of strategic pooled oil reserves that may come lurking to the surface as an eager oil company may pump. It comes from almost everywhere that one can find shale oil formations, from which the fracked threat surfaces. Not that I am a solid backer of fracking, mind you. There are simply too many questions around the security and safety of water that need to be answered and secured before we go "full bore" on drilling.
You should be asking those questions too, before we lose even our own water here in Newfoundland and Labrador via the "frack door".
They call it "democratic oil", simply because almost every country in the world has somewhat of a shale deposit wherein lies the golden juice of light, sweet oil or natural gas reserves. It has literally forced the Saudi's as well as other member OPEC nations to turn their eyes toward "joining them, because they simply can't beat them" club. OPEC nations themselves, because of the low break-even price of producing product from a fracked oil well, are now forced to join the club and start looking at lower cost bottom line projects in oil production, and that's the new "where, why and when" oil prices may make another solid retreat.
In the not-too-distant future, you can see that OPEC itself will start to get into the game, ahead of getting standard pooled reserves to flow, simply because production costs to pound a hole in the ground are much lower than "older" technologies can deliver. Fracking may simply be the reason why OPEC can't make a production cut: It will simply cut itself out of what used to be a solid maketing opportunity for them. We'll have the excuse to turn off the OPEC spigot.
You see, even to OPEC, they're now forced to keep up with the Jones's...
And that's another reason why even the electricity markets aren't what they used to be...
Here's what I have for price changes this week:
- Heating and stove oils to drop by 1.2 cents a litre.
- Diesel to drop by 1.6 cents a litre.
- Regular gasoline to drop by 1.1 cents a litre, and...
- Reformulated blends show just a 8/10ths of a cent change in price.
Consumer Group for Fair Gas Prices