OPEC Has Abdicated Its Throne and You’ll Be Shocked Who’s Taking Control
As of late, OPEC has made the decision not to protect the price of oil, but has instead decided to make an attempt at stabilizing their market share of oil, which has dropped from over 40 percent before the 2008 financial crisis to around 30 percent at the end of 2014. As such, it’s up to oil companies to keep the price of oil in manageable ranges by continuing to invest in new oil projects. Otherwise, prices could go back up over $100, while the leader of OPEC has suggested that even a massive spike to around $200 is possible should companies cut back on their investing. Rick Kinder, the CEO of Kinder Morgan has stated that OPEC could lose full control over oil prices if they stay away from regulating oil prices for too long. It was his suggestion that the U.S. oil market is soon to be in control over what happens when it comes to oil prices.
If this is the case, then oil prices will rise or fall depending primarily on how many new oil wells will continue to be drilled, which further depends on how much money oil companies in America are willing to spend. If money and profits can still be made at these lower oil prices, then new oil wells should be drilled. However, if the opposite happens and oil companies deem that there isn’t money to be made, then they will likely wait it out until prices rise. It was fully expected that OPEC will keep with their strategy of maintaining the line of $100 per barrel of oil in order to stay over budget. This would have to be done by reducing output. Instead, OPEC has kept production levels at the same point, which has sent oil prices down to the level they are at now. If American oil companies continue to stay away from investing in new oil projects, oil supplies will reduce, leading to higher oil prices.
What matters now is what the free market decides to do with oil investments. Prices for oil were hovering in the mid $40’s just a month or so ago. Currently, prices have rebounded to above $60 per barrel. It’s clear that prices are gradually beginning to go up and have reached a point where it is finally safe to invest once again. As Rick Kinder states that the nominal price per barrel is $65 to $75 in order for companies to make profit on their investments, today is the perfect time to invest with Aschere Energy, before OPEC returns and begins to regulate prices again. As prices have begun to stabilize and rise, now is the best time to start the initial stages of an oil project. There’s little to no risk at the moment and choosing to invest in oil and gas with Aschere Energy just as prices are arriving at profitable ranges would provide you with all of the necessary tools to ensure your next oil project is a success.