Dear MEL Topic Readers,
What it costs to produce a barrel of oil
Familiar with oil prices? Not the price of gas that you pump into the gas
tank of your car but the crude oil prices traded in the world market. The price
of oil plunged to around US$40 per barrel, or 159 litters, in the latter half
of 2015, which was traded over hundred dollars before and after the 2008
financial crises. Good news for users but bad news for producers.
Why the plunge? It was driven by the decision made by OPEC,
Organization of Petroleum Exporting Countries, to keep the production level
despite the decreasing demand.
Why is OPEC so influential? OPEC member countries produce about 40 percent
of the world's crude oil, but more importantly, their oil exports represent
about 60 percent of the world petroleum trade.
Why do they want lower oil prices? They seem to want non-member states
such as the US, Canada and Russia, whose production costs are much higher than
OPEC members, to be squeezed out to the market.
Enjoy reading and thinking if OPEC’s target is limited to non-member
states or greener energy.
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