Quote:
911digital said:
Why would the oil producing nations want to drop the price of oil? they are the only ones gaining by it so are the governments with the taxes but it doesnt cost more to get oil now than it did back 20 year ago, in fact with modern equipment its easier than ever to drill and pump out oil..

the only reason why thery are whacking the prices up is because they can control the supply, you would think if something is in great demand the price would be cheaper?



If the demand is stronger than supply (and grows faster as well), prices can go nowhere but up.

While it is true that increasing production enables economies of scale - thus lowers production costs - the selling price has rarely anything to do with those production costs (except as a floor, since one cannot keep selling at a loss). Instead, it will be the highest price that the market can bear.

As for the control issue, there are several opinions even within OPEC. Some countries want the prices to rise as much as possible just to punish the US (Venezuela or Iran comes to mind). Others want the prices to rise as much as possible because they need the cash badly and know they are running out soon anyway.
However, Saudi Arabia wants the prices to drop and return to the $30-40 range. There are two reasons for this: unlike smaller OPEC countries, Saudi Arabia is not going to run out of oil any soon. This means it is not interested in selling whatever oil it still has at the highest price possible: it still has a long-term agenda.
The second reason is that Saudi Arabia is afraid that if prices run out of control, OECD countries are going to look for other energy sources from other countries. This would have huge consequences on the balance of power in the Middle East and in the world. If oil prices keep rising to the point that Canadian and Brazilian tar sands become profitable, it would mean that SA might drop from #2 producer to #4. This would be a huge loss of status for SA within OPEC. It would also mean that the top 3 oil producers would not be OPEC countries. OPEC countries would then be unable to have any significant impact on the world supply. It would increasingly appear irrelevant. Its credibility has already been dealt quite a blow when Russia, the #1 producer, started selling to the West and made clear it would no play OPEC's quota game.

The problem is that the oil producers are unable to meet the strongly growing demand already, so there's not anything Saudia Arabia can do about it.

Quote:
911digital said:
does the population of the uk like to get ripped off!

it seems like they do!



Unfortunately, everything is outrageously more expensive in the UK. Maybe you should join the dark side and switch to the euro! Only once the rampant price-gouging has become obvious will UK retailers bow to popular pressure and drop their prices to continental levels.
And yet, this bold but obvious move sounds impopular among the very people who stand to benefit the most from this.