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From the WSJ’s Morning Brief:

Oil prices are trading higher this morning following OPEC members’ decision last night to cut production. Such premeditated decisions on either side of the supply-and-demand equation don’t always bring their intended effects. But even with demand now expected to slow this year any tightening of the OPEC spigot wouldn’t be good for the faltering global economy.

Then, from a comment on the Environmental Economics Blog–

BUT I heard on the radio this morning the head of OPEC himself claim that gasoline prices would come down despite the cuts in production.

Gosh…I wonder why he’d say that…I wonder…I wonnnnnnderrrrrr…

Of course falling prices are possible if demand drops more than supply does, though clearly the commenter believes it is only a political ploy. In any case, with less supply prices will be higher than they would be otherwise.

OPEC’s strategy? I am not sure and a bit surprised. I would be less surprised to see them increasing quotas, trying to reestablish some countries’ dependence on oil—to reverse recent trends toward more sustainable and greener energy sources.

What do you think?


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