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Politics : Foreign Affairs Discussion Group
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To: John Carragher who wrote (53842)10/22/2002 8:48:33 AM
From: zonder  Read Replies (2) of 281500
 
Oil price can certainly fall below USD 17-18 per barrel if the OPEC cartel is broken and market economy reigns free. Remember what happened in Philedelphia?

There is only one reason for OPEC - keeping prices artificially high. No more OPEC = much lower oil prices. Anyway, even if we go down only to the USD 22 price you have stated, that is a 27% decline from current levels. I wouldn't want to be in a business where product prices are expected to fall 26% :)

I don't know if this would hurt oil companies..

Of course it would hurt oil companies. Think of it this way - you have a commodity product whose price will fall 40-50%, never to recover to OPEC levels. How can it not hurt? :) Revenues will fall more or less by the same percentage, and so will profits, albeit at a lower rate, due to the mark-up pricing mechanism you have mentioned.
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