Saturday, July 27, 2013

Gas Prices Do Not Reflect a Free Market

Gas prices actually have nothing to do with the break-even price of private oil companies, said Anne Korin at a recent media briefing. Instead, it’s about the price required to balance the budget of the OPEC regime. The Arab Spring, a series of demonstrations and protests in the Arab world that began at the end of 2010, has had a profound impact on the fiscal breakeven price of oil. After these events, OPEC had a choice—sell more oil at a lower price or sell less oil at a higher price. “Being an oil cartel, OPEC will always choose to sell fewer barrels at a higher price,” she said.

And, she pointed out, that break-even price to meet OPEC’s budget has continued to grow over the years. In the 1990s OPEC said $20 a barrel of oil was a fair price. Today, it’s $90 or $100 a barrel and more for certain OPEC countries. “And it will simply go higher and higher,” she said.

The above is excerpted from an article by Holly Jessen. Read the whole article here.

We do not need to continue being robbed by OPEC. The Open Fuel Standard will bring fuel prices down by creating fuel competition, and it will take surprisingly little time. If you want to help change America's trajectory, start here.

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