It's interesting to hear of some of the politics behind the headlines and Saudi, the worlds largest oil producer and key member of OPEC, a predominantly MiddleEast organisation set up to stabilise the price of the worlds oils and gas supplies, but more often refereed to as a Cartel.
According the News this morning Saudi is saying OPEC won't be cutting production, which they traditionally do to ensure the price of oil remains high. This now seems to be turning in to a high risk poker game as American Shale gas production increases lowering the demand from OPEC.
After an emergency meeting by OPEC leaders, they decided to not to cut production and said they had the given other world producers the chance to reduce production who had refused. So conspiracy theorists now see this as a plot to undermine non OPEC producers in particularly the new US reserves, and see whose nerve holds out the longest as the price drops.
Source BBC News
So good news for the person in the street, lower costs, should mean lower transport costs which means lower product costs and supermarket prices.
But the reverse is our own oil and gas industry is now dangerously exposed. With everyone producing and demand declining, who is going to make the decision to slow production across the board. So it seems we are still being held to ransom by OPEC, only this time it's our oil and gas industry and not our pockets.
I wonder how it will pan out?
