OPEC and the stagnant price of oil – Counting the Cost

The 15th International Energy Forum, held in Algiers earlier this week, saw OPEC members decide to cut production by about 800,000 barrels per day. The cut would not be consistent across all member states but was significant nonetheless, being the first in eight years.The move is forecast to stabilise global oil prices.

“Today OPEC has taken an historic decision. OPEC will go back to its role of monitoring the market. It’s a role that it lost many years ago, that it is now reclaiming,” said Noureddine Boutarfa, Algerian energy minister.

We’ve seen that in the past, when Saudi Arabia was serious about cutting down oil, it has significantly impacted the oil price.

John Sfakianakis, Gulf Research Center

Many oil income reliant states have welcomed OPEC’s decision, in light of the dramatic drops in oil prices from 0 per barrel in 2014, to less than per barrel this year.

However, details on the production cut are still vague. There are yet to be any specifics concerning which of the OPEC states will be set to decrease their output, how long for and when the plan will come into play.

With a formal OPEC gathering set for 30th November – which means that realistically, effects from this decision will only really come to fruition in the New Year – concerns about compliance are arising.

Experts say the oil price wars have been affected by the competition between traditional oil producers and U.S. shale producers. Regionally, there is also a high tension relationship between Saudi Arabia and Iran, to consider. Saudi Arabia and fellow Gulf states, however, maintain that no politically-driven decisions have been made. Some analysts have faith in what is to come from these member states.

“The change in tone, the body language from Saudi Arabia, that they are willing to work together with other producers… and it’s not that they haven’t been trying to do that – other producers have to give something as well,” says Amrita Sen, chief oil analyst at Energy Aspects.

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A new domain name system: As of October 1, the U.S. government will no longer supervise the internet’s domain name system – domains are the ‘addresses’ by which autonomous networks around the global internet scope connect with each other on a voluntary basis. The Internet Corporation for Assigned Names and Numbers (ICANN) is now responsible for managing these addresses.

We speak with Andrew Sullivan, fellow at the DYN Internet Company, about safeguarding the internet, ensuring the absence of political intervention and how ICANN’s new role can affect the 3.5 billion internet users worldwide.

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“Efforts have to be undertaken, deliberate efforts, to include women. It does not reduce the pie, it does not eliminate boys – men. It improves the position.”

Mission to Mars: CEO of SpaceX, Elon Musk, says he has a plan for interplanetary transport between Earth and Mars. A fleet of one thousand spaceships, carrying 100 volunteers at a time are part of the plan to see if humans can colonise Mars. An unmanned mission is set for 2018, whilst plans for the first human visitor are a decade away.

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14 thoughts on “OPEC and the stagnant price of oil – Counting the Cost”

  1. LOL! Will never happen. Even if they start co-operating, shortly after, it will fall apart like it always did in the past. Besides there is no REAL co-operation, only talk. The one important fact that everyone overlooks and is the fundamental problem is that if the masses don't have money, people are gonna not buy any more oil than they absolutely have to.

  2. As Shell said, Peak Oil DEMAND (!) could be as soon as 2020 since Euro 5 and Euro 6 car norm led to cars (they are forced by law and without any research time the highly efficient engines are available and because the EU is heavy about fossil fuels – especially coal power and (ok now its done with Euro 5 and a green marker needed to drive into Cities? At least in Berlin you can only drive in the suburbs within Berlin borders with a "Yellow" sticker on your car, I think around 5 to 7 kilometers inside the city and than you need a green one or you get in real financial trouble and of course your driver license…

    If Euro 5 and Euro 6 would not be requested than in USA/Canada/Australia + NZ and Europe we would still drive with Euro 3 and Euro 4 cars (since the Euro is measured by co² per Kilometer or 100km?! Means it is coupled to the fuel demand… Stone-, Bronze- and Copper-Age did not end because there were no stones, bronze and copper left… By 2030 oil could be soo cheap because of low demand that the demand will be a bit higher for a few years (I mean if prices drop extreme than it slows down the non-gasoline/diesel car market, especially in the US were taxes are a joke and gasoline price really is fixed to oil price heavily… a 15 US-$ (from 2016, without inflation adjustment!) in 2022 for a Barrel of Crude Oil would make gasoline really extreme cheap, they could be happy if they could increase demand by such prices…..because we did not even close to 50% already consumed oil from all right now technical possible oil reserves, only price right now is too cheap to develop the non-conventional (they make around 2/3rd of the initial oil reserves in the world, and only a bit extreme heavy oil in Venezuela for example, a few Russian, Kazakhstan and especially newesst Mexican onshore drilling rigs, heavy oil comes from there and from Canada with its Oil Sand, but I think from these reserves we maybe used only 1% yet, the ultra heavy oil and the Oil Sands…

  3. A domain name is an identification string that defines a realm of administrative autonomy, authority or control within the Internet. Domain names are formed by the rules and procedures of the Domain Name System (DNS). Any name registered in the DNS is a domain name. Domain names are used in various networking contexts and application-specific naming and addressing purposes. In general, a domain name represents an Internet Protocol (IP) resource, such as a personal computer used to access the Internet, a server computer hosting a web site, or the web site itself or any other service communicated via the Internet. In 2015, 294 million domain names had been registered.[1]
    Domain names are organized in subordinate levels (subdomains) of the DNS root domain, which is nameless. The first-level set of domain names are the top-level domains (TLDs), including the generic top-level domains (gTLDs), such as the prominent domains com, info, net, edu, and org, and the country code top-level domains (ccTLDs). Below these top-level domains in the DNS hierarchy are the second-level and third-level domain names that are typically open for reservation by end-users who wish to connect local area networks to the Internet, create other publicly accessible Internet resources or run web sites.
    The registration of these domain names is usually administered by domain name registrars who sell their services to the public.
    A fully qualified domain name (FQDN) is a domain name that is completely specified with all labels in the hierarchy of the DNS, having no parts omitted. Labels in the Domain Name System are case-insensitive, and may therefore be written in any desired capitalization method, but most commonly domain names are written in lowercase in technical contexts.[2]

  4. Renewable energy is generally defined as energy that is collected from resources which are naturally replenished on a human timescale, such as sunlight, wind, rain, tides, waves, and geothermal heat.[2] Renewable energy often provides energy in four important areas: electricity generation, air and water heating/cooling, transportation, and rural (off-grid) energy services.[3]
    Based on REN21's 2016 report, renewables contributed 19.2% to humans' global energy consumption and 23.7% to their generation of electricity in 2014 and 2015, respectively. This energy consumption is divided as 8.9% coming from traditional biomass, 4.2% as heat energy (modern biomass, geothermal and solar heat), 3.9% hydro electricity and 2.2% is electricity from wind, solar, geothermal, and biomass. Worldwide investments in renewable technologies amounted to more than US$286 billion in 2015, with countries like China and the United States heavily investing in wind, hydro, solar and biofuels.[4] Globally, there are an estimated 7.7 million jobs associated with the renewable energy industries, with solar photovoltaics being the largest renewable employer.[5]
    Renewable energy resources exist over wide geographical areas, in contrast to other energy sources, which are concentrated in a limited number of countries. Rapid deployment of renewable energy and energy efficiency is resulting in significant energy security, climate change mitigation, and economic benefits.[6] The results of a recent review of the literature [7] concluded that as greenhouse gas (GHG) emitters begin to be held liable for damages resulting from GHG emissions resulting in climate change, a high value for liability mitigation would provide powerful incentives for deployment of renewable energy technologies. In international public opinion surveys there is strong support for promoting renewable sources such as solar power and wind power.[8] At the national level, at least 30 nations around the world already have renewable energy contributing more than 20 percent of energy supply. National renewable energy markets are projected to continue to grow strongly in the coming decade and beyond.[9] Some places and at least two countries, Iceland and Norway generate all their electricity using renewable energy already, and many other countries have the set a goal to reach 100% renewable energy in the future. For example, in Denmark the government decided to switch the total energy supply (electricity, mobility and heating/cooling) to 100% renewable energy by 2050.[10]
    While many renewable energy projects are large-scale, renewable technologies are also suited to rural and remote areas and developing countries, where energy is often crucial in human development.[11] United Nations' Secretary-General Ban Ki-moon has said that renewable energy has the ability to lift the poorest nations to new levels of prosperity.[12] As most of renewables provide electricity, renewable energy deployment is often applied in conjunction with further electrification, which has several benefits: For example, electricity can be converted to heat without losses and even reach higher temperatures than fossil fuels, can be converted into mechanical energy with high efficiency and is clean at the point of consumpion.[13][14] In addition to that electrification with renewable energy is much more efficient and therefore leads to a significant reduction in primary energy requirements, because most renewables don't have a steam cycle with high losses (fossil power plants usually have losses of 40 to 65%).[15]

  5. That's not much of a cut in production, but we've got to start somewhere! I've got an itchy finger to buy some oil futures. Of course, we don't know whether there may be a war in the Middle East that could threaten the passage of crude tankers through the Straits of Hormuz.

  6. how can they show a piece about opec and the arabian industry, then immediately do a piece about the importance of women in executive positions? (12:20) in the developed world, if your job involves negotiating with sexist foreign companies (like opec), being male is a legitimate requirement.

  7. So, how is this agreement going to help OPEC countries?
    They will produce less oil and get a bit more money per barrel. Overall, they will get the same amount of money. Selling 20 barrels for 20$ or selling 10 barrels for 40$ is exactly the same 400$. OK, they will take out less oil from the ground and they will be able to fire some people working in the oil industry due to reduced production.

  8. Most OPEC members do not have diversified economies. They have been living off their inheritance for the past 100 years. America and Canada are producing their own oil now and are even exporting some of it. Europe, India and China are moving towards green energy technologies for their energy needs, so oil demand is falling in these countries. Russia and Iran are net exporters of oil. I see no relief for OPEC countries in the near future, unless someone starts a war in the Middle East.

  9. The price of oil looks like it will be impacted by green technologies this time around. Furthermore things like electric cars(Tesla), ebikes, electric scooters, a more youthful population that cares for the environment and education will make a difference. Hopefully the rising population should affect that in their favour.

    A more useful solution is for smaller countries OPEC countries to use the generated money wisely (if) oil price does get to the same level and massively diversify their economies just like Russia.


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