(Update 2) OPEC Cuts 1.5 Million Barrels a Dayby Tim Manni
The Organization of the Petroleum Exporting Countries took less than two hours to agree to cut 1.5 million barrels of oil a day from global markets. The cut, which represents 1.7% of the world’s oil demand, was made in order to rein in oil prices that finished today at $64.15, down 11% for the week.
“In these economic times, producers should be looking to reassure the global market place that energy supplies are affordable and dependable, lest they prolong or deepen the challenges we now face,” said Healy Baumgardner, a spokeswoman for the U.S. Department of Energy. “We need more supply in the market, not less.”
Descending oil prices have remained a bright spot over the last several months as other various economic factors have hurt consumers. Defending their decision, OPEC explained how the dramatic slide in pricing, coupled with the rising cost of new drilling technology, has made the cost of doing business more expensive, which will continue to put many production products at risk or on hold. The cut will go into effect November 1. OPEC’s next meeting is scheduled for December.
According to the Department of Transportation, US drivers drove 15 billion fewer miles in August than they did a year ago. Check out this graph at Calculated Risk that “shows the annual change in the rolling 12 month average of U.S. vehicles miles driven.”
Consumers should continue to limit their driving to maintain oil prices at or near $65 a barrel despite OPEC’s latest cut. Keep those tires inflated!