Democrats Urge Trump to ‘Stand Up to OPEC’ Amid Rising Oil Prices

U.S. Senate Democrats  urged President Trump to try to prod OPEC to take steps to lower oil prices and suggested that millions of Americans will see tax cut proceeds canceled out by higher fuel costs. They criticized Trump for not doing more to lower fuel costs and saying that gasoline prices had jumped 25% since he took office. On the other hand, analysts think that the influence of the U.S. on an OPEC meeting is basically zero. 

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I don't know how Trump could leverage the situation. It appears to be beyond his control. 

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6 minutes ago, Fulcaneli said:

I don't know how Trump could leverage the situation. It appears to be beyond his control. 

Yep. Kind of difficult for an outside party to "control" a cartel.

The general purpose of a cartel is to restrict supply to customers, in order to increase prices that it can charge to customers.  (Although the cartel's "mission statement" may use more flowery words and throw in some high ideals for consumers to fawn over.)

So why would a cartel listen when outside parties complain about prices?  The cartel is doing precisely what it is designed to do.

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10 minutes ago, Tom Kirkman said:

Yep. Kind of difficult for an outside party to "control" a cartel.

The general purpose of a cartel is to restrict supply to customers, in order to increase prices that it can charge to customers.  (Although the cartel's "mission statement" may use more flowery words and throw in some high ideals for consumers to fawn over.)

So why would a cartel listen when outside parties complain about prices?  The cartel is doing precisely what it is designed to do.

Exactly. It looks like we're just going to have to find a way to live with it.

I suppose there is a point where OPEC could drive prices to a point where they begin to hurt themselves, and I have little doubt that they'll get as close to that point as they can. 

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(edited)

Well, well, well, look what we have here!  The same anti-drilling Democrats that have prohibited oil companies from drilling offshore and in onshore sweet spots on BLM land now want Trump to stand up to OPEC to fight rising oil prices?  Send Trump a bill to open up more drilling and permit more pipelines so we can further increase our production.  

Where were these Democrats in 2013 when Obama was in office?  Did they ask Obama to stand up to OPEC?  No!  They didn't give a damn about high oil prices back then, and oil prices today are significantly less than were.  They are only saying this now to put more Mainstream Media pressure on Trump while at the same time, doing their best to block Trump's efforts to help expand our oil and gas industry here at home.

Yes, our shale oil production has increased a lot in recent years, but there is also plenty of untapped conventional oil in the Western States and Alaska as well as offshore.  There are plenty of sweet spots with ultra low break even prices that the Democrats have continued to keep off limits.  The more oil drilling we permit, the faster we eventually reach energy independence, further reducing OPEC's control on the market.  

As far as fuel costs go, the Democrats are, again, hypocrites!  Jerry Brown has raised gasoline taxes in California.  Other Democrat governors have done the same.  They want to pin all the blame on the increase in cost of fuel on OPEC, Oil Companies, and Trump when their raising taxes on gasoline hurts poor families the most.  

If the Democrats had their way, they would ban all fracking and new drilling, increasing both oil prices and our dependence on foreign oil.  

Edited by GeoSciGuy
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9 minutes ago, GeoSciGuy said:

Well, well, well, look what we have here!  The same anti-drilling Democrats that have prohibited oil companies from drilling offshore and in onshore sweet spots on BLM land now want Trump to stand up to OPEC to fight rising oil prices?  Send Trump a bill to open up more drilling and permit more pipelines so we can further increase our production.  

Where were these Democrats in 2013 when Obama was in office?  Did they ask Obama to stand up to OPEC?  No!  They didn't give a damn about high oil prices back then, and oil prices today are significantly less than were.  They are only saying this now to put more Mainstream Media pressure on Trump while at the same time, doing their best to block Trump's efforts to help expand our oil and gas industry here at home.

Yes, our shale oil production has increased a lot in recent years, but there is also plenty of untapped conventional oil in the Western States and Alaska as well as offshore.  There are plenty of sweet spots with ultra low break even prices that the Democrats have continued to keep off limits.  The more oil drilling we permit, the faster we eventually reach energy independence, further reducing OPEC's control on the market.  

As far as fuel costs go, the Democrats are, again, hypocrites!  Jerry Brown has raised gasoline taxes in California.  Other Democrat governors have done the same.  They want to pin all the blame on the increase in cost of fuel on OPEC, Oil Companies, and Trump when their raising taxes on gasoline hurts poor families the most.  

If the Democrats had their way, they would ban all fracking and new drilling, increasing both oil prices and our dependence on foreign oil.  

I couldn't have said it any better. Well done Buddy!

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(edited)

Well Said! 

It's so interesting that the Democrats, who all lined up to Oppose the Tax Cuts, then called them "Crumbs", are now grandstanding about oil prices taking the tax cuts away. If it was up to the Democrats, we would never have had the tax cuts in the first place!

Nothing here but political hype. I'm so tired of the endless back biting by Democrats on everything that is done. During the State of the Union Address, none of the Democrats applauded when the lowest unemployment rates in years were announced. Talk about hypocrisy.

Edited by Tom Blazek
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In 80 $ per barrel environment USA in near future will be biggest oil producer in the world .

Their biggest geopolitical rival China will pay significantly more for oil then recently.

So whats the problem?

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2 minutes ago, Mahyar said:

OPEC can't be called a cartel. The Organization of Petroleum Exporting Countries (OPEC) was established in 1960 by sovereign states to protect the interests of oil producers.As an example ,Trade Unions are "cartels" formed by corporations not sovereign countries. 

It can when those sovereign countries are running their own corporations.

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Speaking of hypocrisy, I find it amusing that people are all upset at OPEC now for artificially raising prices, when they were yelling at OPEC a year or so ago to do that very thing. Price fixing is price fixing. Consumers should be mad. 

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15 minutes ago, Tomasz said:

In 80 $ per barrel environment USA in near future will be biggest oil producer in the world .

Their biggest geopolitical rival China will pay significantly more for oil then recently.

So whats the problem?

What's the source of your statement? U.S. department of energy hasn't made such an announcement that in near future the situation will change.

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21 minutes ago, Rodent said:

Speaking of hypocrisy, I find it amusing that people are all upset at OPEC now for artificially raising prices, when they were yelling at OPEC a year or so ago to do that very thing. Price fixing is price fixing. Consumers should be mad. 

Cartels gonna cartel.

Download the OPEC Children's Book and read the last few chapters.  I always find the flowery rhetoric amusing.

The first few chapters are actually an excellent Primer for kids about Oil & Gas.  But I normally don't recommend the book due to the politics in the last few chapters.  

tl;dr politics in last chapters of OPEC Children's Book:

- International Oil Companies black hat bad guys.

- OPEC white hat good guys.

- OPEC will save the day!

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45 minutes ago, Rodent said:

Speaking of hypocrisy, I find it amusing that people are all upset at OPEC now for artificially raising prices, when they were yelling at OPEC a year or so ago to do that very thing. Price fixing is price fixing. Consumers should be mad. 

Considering high rate of inflation in consuming countries, in fact, about $80 a barrel today would be the equivalent of $12 or $13 in the early 1970s.

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If high gasoline prices got you down, get an economy car. I've been driving my Daughters four cylinder Elantra every chance I get, instead of my SUV.  When I do drive my SUV up to Nebraska, I'll be purchasing E-85 whenever I can, its a Flex Fuel Vehicle. I here E-85 is running up to 80 cents per gallon less than E-10 in the Midwest. Its a bargain at those prices. 

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5 hours ago, Tom Kirkman said:

Download the OPEC Children's Book and read the last few chapters.  I always find the flowery rhetoric amusing.

The first few chapters are actually an excellent Primer for kids about Oil & Gas.  But I normally don't recommend the book due to the politics in the last few chapters.  

tl;dr politics in last chapters of OPEC Children's Book:

- International Oil Companies black hat bad guys.

- OPEC white hat good guys.

- OPEC will save the day!

For those who wonder what the heck I'm talking about, here's an excerpt from the "political" chapter of the OPEC Children's Book (available as a free download in the link above).

==============================

OPEC's Mission

OPEC’s mission is to coordinate oil policies in its Member Countries and help stabilize oil markets. It also includes working together—to make sure there is always a regular supply of oil available to consumers, and to make sure a steady income is generated for producers. All this is formally stated in the OPEC Statute.

Chapter 4
About OPEC

The Organization of the Petroleum Exporting Countries (OPEC) is an intergovernmental organization currently made up of twelve oil exporting countries that work together to coordinate their petroleum policies.

The Organization was formed in response to the activities and practices of seven large international oil companies (IOCs) known as the “Seven Sisters”. The activities of these IOCs were often detrimental to the growth and development of the oil-producing host countries, whose natural resources they exploited.

The first move towards the establishment of OPEC can be traced back to 1949, when Venezuela approached four other oil-producing developing countries—Iran, Iraq, Kuwait and Saudi Arabia—to suggest that they explore avenues for regular and closer cooperation on oil matters.

But the main impetus for OPEC’s birth came a decade later, after the IOCs had decided to reduce the price of oil without first asking the governments. In response, several oil-producing countries decided to hold a meeting in Cairo, Egypt, in 1959. This was the First Arab Petroleum Congress. Iran and Venezuela were invited as observers.

The meeting adopted a resolution asking IOCs to consult the governments of oil-producing countries before changing the posted price of oil. But the IOCs ignored the oil-producing countries. And in August 1960, they once again lowered the price of oil.

The birth of OPEC

In response to this, five of the largest oil-producing countries held another conference on September 10–14, 1960.  This time the venue chosen was Baghdad, the capital of Iraq. The countries that attended the conference were: Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. These are the Organization’s Founder Members.  That was when OPEC was born.

Each country sent a delegate: Fuad Rouhani from Iran, Dr. Tala’at al-Shaibani from Iraq, Ahmed Sayed Omar from Kuwait, Abdullah Al-Tariki from Saudi Arabia and Dr. Juan Pablo Pérez Alfonzo from Venezuela.

At this Baghdad Conference, the delegates discussed the role of the IOCs and changes in crude oil prices. The oil-producing countries saw an urgent need to create an organization for the defence of their most important non-renewable natural resource, oil.

Thus, OPEC was established as a permanent intergovernmental organization. Its first headquarters were located in Geneva, Switzerland.

In April 1965, OPEC decided to move the Secretariat to Vienna, the capital of Austria. A Host Agreement was signed with the Austrian government and OPEC moved to Vienna on September 1, 1965.

After OPEC was created, the governments of OPEC’s Member Countries began to have more control over their own natural resources. And in the years that followed, OPEC became increasingly aware of the important role it could play in the global oil markets.
...
 

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The way to look at gasoline prices can be much simpler by looking into the past. When oil was at its highest, gasoline prices weren't out of reach for the average consumer. It's not as though gas pump prices doubled as oil prices doubled. For example, say $60 per barrel oil hits $120 per barrel, fuel prices in Canada would likely leap from $1.25 Canadian per liter to close to $1.65 Canadian per liter. As in the past, gas outlets sell product by reaching a compromise with the consumer. Think back to times when oil was at its highest. Gas prices were high but not out of reach.

The persons crying loudest at fuel prices are the loudmouths pretending to speak for others rather than to speak for themselves. They are preying on others, claiming that others are too weak-minded to speak for themselves. They say it so much, they start to believe it themselves. Their weak minded following become dyslectic about the harm such statements are doing to the majority of persons that like to live in a stimulated, thriving economy. It's shameful!

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In protest, U.S. Senate Democrats are taking public transportation and walking a few blocks. Got to hand it to them. 

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On 5/24/2018 at 1:59 PM, GeoSciGuy said:

Well, well, well, look what we have here!  The same anti-drilling Democrats that have prohibited oil companies from drilling offshore and in onshore sweet spots on BLM land now want Trump to stand up to OPEC to fight rising oil prices?  Send Trump a bill to open up more drilling and permit more pipelines so we can further increase our production.  

Where were these Democrats in 2013 when Obama was in office?  Did they ask Obama to stand up to OPEC?  No!  They didn't give a damn about high oil prices back then, and oil prices today are significantly less than were.  They are only saying this now to put more Mainstream Media pressure on Trump while at the same time, doing their best to block Trump's efforts to help expand our oil and gas industry here at home.

Yes, our shale oil production has increased a lot in recent years, but there is also plenty of untapped conventional oil in the Western States and Alaska as well as offshore.  There are plenty of sweet spots with ultra low break even prices that the Democrats have continued to keep off limits.  The more oil drilling we permit, the faster we eventually reach energy independence, further reducing OPEC's control on the market.  

As far as fuel costs go, the Democrats are, again, hypocrites!  Jerry Brown has raised gasoline taxes in California.  Other Democrat governors have done the same.  They want to pin all the blame on the increase in cost of fuel on OPEC, Oil Companies, and Trump when their raising taxes on gasoline hurts poor families the most.  

If the Democrats had their way, they would ban all fracking and new drilling, increasing both oil prices and our dependence on foreign oil.  

Try to put it all in perspective by reminding yourself that Democrats, generally, are incapable of doing simple arithmetic. If they could, "getting something for nothing" would be impossible, rather than the Democrat promise.

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On 5/25/2018 at 1:16 AM, Tom Kirkman said:

For those who wonder what the heck I'm talking about, here's an excerpt from the "political" chapter of the OPEC Children's Book (available as a free download in the link above).

==============================

OPEC's Mission

OPEC’s mission is to coordinate oil policies in its Member Countries and help stabilize oil markets. It also includes working together—to make sure there is always a regular supply of oil available to consumers, and to make sure a steady income is generated for producers. All this is formally stated in the OPEC Statute.

Chapter 4
About OPEC

The Organization of the Petroleum Exporting Countries (OPEC) is an intergovernmental organization currently made up of twelve oil exporting countries that work together to coordinate their petroleum policies.

The Organization was formed in response to the activities and practices of seven large international oil companies (IOCs) known as the “Seven Sisters”. The activities of these IOCs were often detrimental to the growth and development of the oil-producing host countries, whose natural resources they exploited.

The first move towards the establishment of OPEC can be traced back to 1949, when Venezuela approached four other oil-producing developing countries—Iran, Iraq, Kuwait and Saudi Arabia—to suggest that they explore avenues for regular and closer cooperation on oil matters.

But the main impetus for OPEC’s birth came a decade later, after the IOCs had decided to reduce the price of oil without first asking the governments. In response, several oil-producing countries decided to hold a meeting in Cairo, Egypt, in 1959. This was the First Arab Petroleum Congress. Iran and Venezuela were invited as observers.

The meeting adopted a resolution asking IOCs to consult the governments of oil-producing countries before changing the posted price of oil. But the IOCs ignored the oil-producing countries. And in August 1960, they once again lowered the price of oil.

The birth of OPEC

In response to this, five of the largest oil-producing countries held another conference on September 10–14, 1960.  This time the venue chosen was Baghdad, the capital of Iraq. The countries that attended the conference were: Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. These are the Organization’s Founder Members.  That was when OPEC was born.

Each country sent a delegate: Fuad Rouhani from Iran, Dr. Tala’at al-Shaibani from Iraq, Ahmed Sayed Omar from Kuwait, Abdullah Al-Tariki from Saudi Arabia and Dr. Juan Pablo Pérez Alfonzo from Venezuela.

At this Baghdad Conference, the delegates discussed the role of the IOCs and changes in crude oil prices. The oil-producing countries saw an urgent need to create an organization for the defence of their most important non-renewable natural resource, oil.

Thus, OPEC was established as a permanent intergovernmental organization. Its first headquarters were located in Geneva, Switzerland.

In April 1965, OPEC decided to move the Secretariat to Vienna, the capital of Austria. A Host Agreement was signed with the Austrian government and OPEC moved to Vienna on September 1, 1965.

After OPEC was created, the governments of OPEC’s Member Countries began to have more control over their own natural resources. And in the years that followed, OPEC became increasingly aware of the important role it could play in the global oil markets.
...
 

 

On 5/25/2018 at 1:16 AM, Tom Kirkman said:

For those who wonder what the heck I'm talking about, here's an excerpt from the "political" chapter of the OPEC Children's Book (available as a free download in the link above).

==============================

OPEC's Mission

OPEC’s mission is to coordinate oil policies in its Member Countries and help stabilize oil markets. It also includes working together—to make sure there is always a regular supply of oil available to consumers, and to make sure a steady income is generated for producers. All this is formally stated in the OPEC Statute.

Chapter 4
About OPEC

The Organization of the Petroleum Exporting Countries (OPEC) is an intergovernmental organization currently made up of twelve oil exporting countries that work together to coordinate their petroleum policies.

The Organization was formed in response to the activities and practices of seven large international oil companies (IOCs) known as the “Seven Sisters”. The activities of these IOCs were often detrimental to the growth and development of the oil-producing host countries, whose natural resources they exploited.

The first move towards the establishment of OPEC can be traced back to 1949, when Venezuela approached four other oil-producing developing countries—Iran, Iraq, Kuwait and Saudi Arabia—to suggest that they explore avenues for regular and closer cooperation on oil matters.

But the main impetus for OPEC’s birth came a decade later, after the IOCs had decided to reduce the price of oil without first asking the governments. In response, several oil-producing countries decided to hold a meeting in Cairo, Egypt, in 1959. This was the First Arab Petroleum Congress. Iran and Venezuela were invited as observers.

The meeting adopted a resolution asking IOCs to consult the governments of oil-producing countries before changing the posted price of oil. But the IOCs ignored the oil-producing countries. And in August 1960, they once again lowered the price of oil.

The birth of OPEC

In response to this, five of the largest oil-producing countries held another conference on September 10–14, 1960.  This time the venue chosen was Baghdad, the capital of Iraq. The countries that attended the conference were: Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. These are the Organization’s Founder Members.  That was when OPEC was born.

Each country sent a delegate: Fuad Rouhani from Iran, Dr. Tala’at al-Shaibani from Iraq, Ahmed Sayed Omar from Kuwait, Abdullah Al-Tariki from Saudi Arabia and Dr. Juan Pablo Pérez Alfonzo from Venezuela.

At this Baghdad Conference, the delegates discussed the role of the IOCs and changes in crude oil prices. The oil-producing countries saw an urgent need to create an organization for the defence of their most important non-renewable natural resource, oil.

Thus, OPEC was established as a permanent intergovernmental organization. Its first headquarters were located in Geneva, Switzerland.

In April 1965, OPEC decided to move the Secretariat to Vienna, the capital of Austria. A Host Agreement was signed with the Austrian government and OPEC moved to Vienna on September 1, 1965.

After OPEC was created, the governments of OPEC’s Member Countries began to have more control over their own natural resources. And in the years that followed, OPEC became increasingly aware of the important role it could play in the global oil markets.
...
 

"OPEC’s mission is to coordinate oil policies in its Member Countries and help stabilize oil markets." Look at the price profile for the past forty years of OPEC's history and report, please, on their performance in keeping prices stable.

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On 5/23/2018 at 9:11 PM, Fulcaneli said:

It looks like we're just going to have to find a way to live with it.

This comment confuses me, but maybe that's because I (perhaps wrongly) assume that if you're on this board or website you are on the oil-production side of the equation, at least in part. If you make your living from oil exploration and/or production, I would think a higher price per barrel would be somewhat of a good thing. I don't consider myself economically rapacious, but there is a tipping point where companies do not engage in productive activities because the payoff at a certain price level make the initial investment of work, capital, time and risk not worthwhile. This has been the case with the offshore drillers for the past few years while, at least where I am, we saw a layoff of 70% of our employees, the cessation of overtime, and no raises or bonuses for three years, while we waited out the stagnation of work in the offshore market). The price per barrel and profit margin has only recently risen and stabilised enough to encourage producers to start getting back out there. So people are paying a bit more for gas, but my company is posting help wanted ads and giving out raises again after a three-year drought. There's a balance, no?

Consumers don't enjoy higher prices at the pump, but that is the dynamic of supply and demand. The price rises, producers are incentivized to produce (yay, profit/more jobs/bigger paychecks!), the production increases supply, prices go lower (yay, gas is on sale! I hope you still have a job), production slows, supply dwindles, prices rise (here we go again).  There are other factors involved, like when governments and cartels fix prices and meddle, but that is the pure market if it were left alone.

The Democrats calling for Trump to "Stand up to OPEC" - by essentially engaging in price fixing - demonstrates, yet again, that their actions and policy choices run consistently counter to free market principles, or that they are truly ignorant, or both. They never seem to learn that they can't control everything, nor should they try.

OPEC already artificially fixed prices by over-producing a few years ago, not in response to market demand for more supply, but to over-supply in an effort to drive prices down below the cost of production for American shale producers. Their gambit was that their cost of production is low enough and their cash reserves were large enough that they could starve us out of business. They were partially successful. What the idiot politicians don't realize is that the recent rise in oil prices is indication that Trump already stood up to them and convinced them to stop doing that.

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8 hours ago, William Edwards said:

"OPEC’s mission is to coordinate oil policies in its Member Countries and help stabilize oil markets."

Look at the price profile for the past forty years of OPEC's history and report, please, on their performance in keeping prices stable.

OPEC's mission statement is just flowery rhetoric, meant for oil consuming countries to believe.  

"Have a Coke and a smile."

Pure advertising nonsense.

A gentle reminder, the purpose of a cartel is to restrict supply in order to increase prices.

Near as I can tell, OPEC has little interest in stabilizing oil prices, but seems far more interested in restricting oil production sufficiently in order to extract the highest oil price that markets can bear.

The recent Saudi whisper campaign to nudge oil prices toward $80, and then nudge even higher to talk of $100 and triple digit prices, seems to be an exercise in determining how high of oil prices the market is willing to bear.

Seems to me that OPEC cartel received the feedback / message this week that the attempts to get to triple digit oil prices via scaremongering isn't going to work at the moment.  They will try more scaremongering later.

Which is a bit of the picture of why I'm not in the current majority camp of bulls pushing for $80 oil.  I don't see a real reason for an increase to $80.  And I still think the best Goldilocks price range for oil is around $65.  That's the general range that I think will currently balance out global supply and demand, not too high to hurt global economies, not too low to hurt oil producers.

Note: the $65 oil price I keep mentioning is not a prediction, it's my best guestimate of where I think oil prices should be at - the oil price I'm hoping for.  I'm not an oil trader.

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20 minutes ago, Tom Kirkman said:

I still think the best Goldilocks price range for oil is around $65

Smart guy. That seems to be right around the price level I started noticing new orders coming in.

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