Monthly Archives: December 2014

Why Are Crude Oil Prices Falling? And Will We Regret It?


Saudi Arabia is a major producer and seller of crude oil as well as the unelected leader of the Organization of Petroleum Exporting Countries (OPEC). Saudi has, in the past, adjusted its production (and thus sale of crude oil) to keep the price OPECnetoilexportrevs2013chart2at a level that OPEC desired. For example, if global demand for crude softened, Saudi would cut back production to match demand thus stabilizing the price. The Department of Energy chart shows how Saudi dominates OPEC export sales.

This autumn the demand for OPEC crude fell—but, Saudi decided not to balance supply and demand.   Consequently the price of crude oil has dropped to about 50% of what it was at its high in June 2014.

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