What???
The cause … quotas
Angola is leaving OPEC
Brazil is joining OPEC
Qatar left OPEC in 2019 (I was unaware of this development)
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So clearly we can count on these guys pumping whatever the like (as much as they can). Most cartels eventually collapse; DeBeers is one of the few that is still going, but that’s very much different since they own most of the output and can unilaterally reduce supply - and even they are showing signs of strain now that artificial diamonds are a thing.
Gas here last week was $2.59 not counting the various food chain discounts.
Ever see “Blood Diamond”? I enjoy the story, but the end is a laffer. The end talks about the campaign to keep “conflict diamonds” off the market. What is the effect of keeping “conflict diamonds” off the market? Reduced supply. What is the effect of reduced supply? Higher prices. Who is heading the campaign? DeBeers.
Steve
Speaking of which, I gassed up last week at $2.79 in metro Detroit. Laffer on the news last night. A certain BP station, near Metro Airport, has been sued by the state AG for gouging customers. This is the last station for people to top up their rental cars, before returning them at the airport, and has been notorious for gouging customers for years. That station presently charges $3.99 for cash transactions and $4.09 on a credit card, at the time of the TV report last night.
Saudi Arabia controls OPEC because it is the largest producer. On more than one occasion it has threatened to flood the market to keep members in line.
BTW, there are no artificial hydrocarbons to speak of yet. 
The Captain
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What does “leaving OPEC” mean? They no longer participate in production allocations?
So they can produce and sell as much oil as they please? Is Saudi Arabia large enough to compensate?
They also flooded the world with oil after the 1993 collapse in Asia. They let the price fall to $12/bbl as i recall. That put the famous Rockefeller “sweat” on those who invested in energy alternatives after the Arab oil embargo. In particular ethanol producers were forced into bankruptcy. Producers were disciplined.
If a country (Angola) is no longer a group/cartel (OPEC) member, why would they be bound by cartel rules? At least the way the current data is reported, it doesn’t seem like Angola has major production increase in the pipeline. Then again, maybe they do, and that is part of the reason for their OPEC protest.
If Brazil is replacing Angola in OPEC, then Brazil’s production (abt 2M bbls daily) can easily replace Angola’s output (abt 1M bbls daily), no? The bigger question, will Brazil be prepared to participate in a quota system?
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Cartels are set up to control markets by controlling supply and demand. What’s the purpose of joining a cartel otherwise?
The Captain
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@captainccs - on the purpose of cartels, I hear you (and also was aware of their purpose). But is Brazil joining OPEC with its eyes open? To my knowledge, Brazil is still a growing oil producer.
I have no way of knowing that but I went to Brazil for a sailing regatta which happened to coincide with the news that Brazil had struck oil, late '60s early '70. The elevator operator asked where I was from.
TC. Venezuela.
EO. Did you hear that we found oil?
TC. Yes, I saw it in the news.
EO. Does your country have oil?
TC. Yes.
EO. But enough to be self sufficient?
TC. Yes.
Brazil and Venezuela share a border. It’s part of the Amazon forest so there is little contact, most of the people living there are either stone age or gold miners. For Brazilians there is not much outside their borders. Well, some nasty Argentinians who try to beat them at football (the kind you play with your feet). Back then Venezuela was one of the major oil producers and today it still has the largest proven oil reserves.
But Brazil is huge, it used to have the largest VW factory in the world and the largest pasta factory (Borden’s I think). Our host, an American who previously had worked for Rockefeller in Venezuela, warned us about VD. When asked if it was common, he said, “Everyone has it.”
Talking about VW, a taxi looked remarkably familiar but I could not say why. I found out that it was a modified VW made in Brazil.
Talking about playing football with your feet, they play football on the beaches, running on sand as nimbly as most people run with cleats on grass. And the string bikinis got vanishingly smaller the further we wondered south from Copacabana to Ipanema and on to Leblon.
The Captain
was not there to race but to take pictures for a sailing magazine
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Did you get pictures of the vanishing string bikinis?
DB2
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- They can’t get any smaller…
- This one is smaller
- They really can’t get any smaller…
- Look at this one…
Who has time to take pictures?
The Captain
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Hence the impetus for the development of the Brazilian wax treatment.
DB2
Ah, I can just see where we stayed on that map. Far left lower corner, Sao Conrado. We were in a condo a block behind the Hotel Internacional. They had the F-1 winning car on display. Major disconnect: Open-ended sewer(s) pipes (2-4 ft diameter) stopping short of the beach (about a half-block away). Really made you want to NOT SWIM there…
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