Saudi Arabia May Increase Oil Production

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After some hemming and hawing on the matter, Saudi Arabia looks ready to increase oil production in an effort to reduce oil prices. According to reports, the Kingdom is concerned that high oil prices will eventually shrink global demand for oil.

Yes, heaven forbid we ever move on to a more sustainable energy source.

Of course, Saudi Arabia is only planning to increase production by 200,000 barrels a day, a 2% uptick from their usual production. That does not seem like enough extra supply to lower market prices. Which is why we’ll probably be hearing more about cars like this, even as Saudi Arabia wishes we’d just stick with our gas guzzling SUVs.

  • kranky kritter

    Faster, please.

    This doesn’t really surprise me, and I’d ben hoping for it.

    here’s the thing…if only the Us complains and suffers, them Opec-etc nations can get away with chiding us for our profligate use and demur on raising production.

    But as the pain becomes greater and more widespread, that becomes a far less tenable position. There are some serious global ripples spreading in response to such high fuel prices, and they’ll spread pain to everyone. When i see things like truckers in Spain shutting down in protest at their $7.35/gallon equivalent prices, and both the US and the EU (and others) making hints that interest rate rises are on the way, its clear that some things are changing.

    I have no problem giving the Saudis credit for understanding that if prices get too high then they the Saudis are hastening their eventual demise as world fuel providers.I tend to think that current price levels are being driven as much by speculation and fear as by true underlying lack of supply(sat the most base level of oil in the ground).

    Over the past decade we’ve seen at least 2 bubbles, the tech bubble and the real estate bubbles. in both of these instances, the breaking of the bubble was preceded by the growing spread of the theme to the effect that “the market had fundamentally changed and was operating on new principles.”

    No telling precisely how long the speculation-fueled component of this market will last. Usually it bursts soon after average joes begin to get on board en masse. Consider several things:

    1)US policy will shift slowly because any true sacrifice-based policies are likely to be deferred until after the election.

    2) fear about fuel prices will grow as heating season approaches. These fears will be fanned by opportunists after the 4th of july and on into the run up to labor day. What we may likely see is various offerings of price guarantees by bigger entities than small suppliers who have done this sporadically. However it unfolds, this will be the equivalent of average joes entering in to the speculation. What this will create is a mass of investors who stand to profit big if prices fall.

    I hope the spiral breaks down before I have to pay to heat my house next winter, but I think it’s more likely that they break in mid to late winter or next spring. Unless various OPEC nations decide to up production. OPEC may decide to do it right after they benefit from the process of selling contracts to cowed consumers.