From another site...
No oil war. This is all about decreasing demand growth, due to a worldwide economic slowdown, coupled with simultaneously increasing efficiencies in energy consuming devices, and previously expected oil demand growth that simply has not materialized. OPEC also simply does not have the clout or pricing power they used to have, as their market share is also decreasing. US oil shale isn't the only world oil play either impacting OPECs decreasing influence. Russia has innumereable reserves that are now being cost effectively tapped, and reserves that now exist, where none was thought to in deeper geological formations. Their geological prowess is being spread to many other continents. OPEC, Like any cartel, over time technology and innovation will be weaken them, and erode a cartels hold on a particular market.
Commodity prices are self correcting though, and often they will be driven to one extreme, and set the course for prices to go in the other direction. Hence, if we get $50/bbl oil, or even $30, it won't stay there long. Us Shale oil producers know this, and hence it will be drill, baby drill, despite the spigot staying wide open from OPEC.
And don't forget the big picture either. We are in one of histories 'golden ages' and that is of technology advancement. Generally these golden ages in history have lasted 100 years, or a bit longer, and the 90's with the advent of the Internet, which has promulgated far more information sharing, and speed of information sharing, and rapidity of innovation, and rapidity of real products from that innovation to come to market faster than ever before, has really just begun the tip of this particular golden age. From computer chips, to biological advances, to nanotechnology, to rapidly advancing genome sequencing, to artificial intelligence, to every available known material to mankind being transformed, to previously unknown and unimagined materials, and technology, we have so much more yet to see and coming to us, during this golden age of high technology. Couple in the consumerization of all of the worlds populations, driving greater needs, and financial vehicles providing a new sea of liquidity and monetization to keep feeding the progress of the golden age, and that driving a need from all sorts of new energy sources, such as solar or wind, who's cost themselves are rapidly being driven down further to compete with fossil fuels of all kinds, and you begin to understand that oil or natural gas or coal has competition it never has before faced. Then there are new battery and energy storage technologies, which aid the efficient transmission of previously widely available, but untapped fuels, such as hydrogen, or advancement of transmission in current energy carriers like electricity, and suddenly its not just the energy use that is getting more efficient, but the transmission of it too, which is then opening the door for uses of more energy sources like the sun itself, or water, or ocean currents driven by the gravititational forces of our planet.
This Opecs competition as it were, and the ability to hold the oil consuming world hostage as in the 70's simply is eroding.
Again, i wouldn't get too caught up in these stories about what appear to be the reasons for OPEC doing this or that. Or why price of something is doing this or that. Same holds true for stocks and the markets. However, markets could have gotten way ahead of themselves anticipating or over pricing in all of this glorious technology advancement, which could continue in spades, but not be as easy for companies to adapt to, and profit from, unless they rapidly change models. Especially, the model of the corporation itself, and especially large ones like those in the Dow and S&P 500 which quite simply may not be able to react and adapt their behemoth business models fast enough for the coming technological changes, that aren't just linearily changing, but exponentially and asymmetrically changing.
Personally, and lastly, I see the corporations and CEOs of them being crushed in all of this, and that model of heirarchy and decision making being slow to adapt and becoming the proverbial dinosaurs driven into extinction.
Best I can say, is simply enjoy the ride. The next 100 years is going to be a boatload of fun for those who adapt and know how and what to adapt to so they may prosper.
Enjoy your thanksgivings all !
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