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Politics : Politics of Energy -- Ignore unavailable to you. Want to Upgrade?

To: Brumar89 who wrote (8823)	6/1/2009 2:15:15 PM
From: RetiredNow	Read Replies (1) \| Respond to of 86356

I can guarantee you if we decided to attack Iran tomorrow, the price of oil would skyrocket. Even a threat would do the trick. A muscular policy in the Middle East acts to keep the price high. In addition, oil is largely denominated in US dollars around the world. So as the dollar slides, producers increase the US dollar price of oil. That is a pricing action that is not related to supply and demand. So again, there are outside factors besides supply and demand that impact price. Also, you are quite wrong about this being a free market. When prices were high, OPEC was fond of saying they were ready to keep the market well supplied with oil and that there was no reason for speculators to keep the prices so high. However, that was a deliberate sleight of hand. In actuality, OPEC producers were willing to keep the market supplied, as long as the market paid the prices they set! A real free market would act differently. Instead, each producer would be producing without limit and the market prices would set based on the marginal sales price of the last barrel sold, which means a freely floating market price. Don't tell me the price is set by supply and demand when OPEC says there's plenty of oil but only if you'll buy it at $X. That's not a free market.