Generally speaking, when oil production is cut, who gets shorted?
When OPEC cuts production, all you ever hear about is the price going up. But oil is fairly inelastic here in the U.S. So we rarely see shortages at the pump. Who's left turning to alternatives or going without because of the smaller supply of oil?
Answer:
For the most part OPECs announced cuts are not put into action - for quite awhile now, member nations have been pumping at all times at their full capacity because they are dependent on that oil for their national wealth, and the price has remained very high in the past few years.
When OPEC actuallly does cut its oil supply, then the market does the rationing - prices will rise to the point at which demand and supply reach equilibrium. Those who go without will usually be those for whom the new cost is no longer worth it. Equilibrium will not be reached if any sort of price cap is set on the price of gasoline and/or oil products, as this will artificially limit the price at a lower level than supply and demand would dictate, and there will be more people lining up for and searching for gas/oil products than there will be supply.
they will never cut production,,, because the demand is too high.come on now.they are making money.there are not enought rough necks to fill the positions.
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Answer:
For the most part OPECs announced cuts are not put into action - for quite awhile now, member nations have been pumping at all times at their full capacity because they are dependent on that oil for their national wealth, and the price has remained very high in the past few years.
When OPEC actuallly does cut its oil supply, then the market does the rationing - prices will rise to the point at which demand and supply reach equilibrium. Those who go without will usually be those for whom the new cost is no longer worth it. Equilibrium will not be reached if any sort of price cap is set on the price of gasoline and/or oil products, as this will artificially limit the price at a lower level than supply and demand would dictate, and there will be more people lining up for and searching for gas/oil products than there will be supply.
they will never cut production,,, because the demand is too high.come on now.they are making money.there are not enought rough necks to fill the positions.
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