You may have seen the word OPEC across your phone yesterday when you were scrolling through your news feed, and like your friends 500th post about her gluten free lunch you just ignore it and went on with your day. But did you know OPEC or (The Organzation of the Petroleum Exporting Countries) actually has a huge affect on your wallet and the price you pay at the pump? And what does Donald Trump have to do with it? #ThanksDonald?
Orca’s are not traditionally the biggest fan of oil, but at the end of the day we understand that it is a huge factor in our economy. Orca’s are smart and can sense when a change is coming and understand that a decision that were made on Wednesday has some upcoming effects on our wallets.
What is OPEC
•OPEC is an organization of 14 nations founded in 1960
•They accont for about 43% of the oil production and 73% of the oil reserves
•Members include Qatar, Saudi Arabia, UAE, Iran, Iraq, Algeria and more.
•United States is not part of OPEC
•They meet to discuss the oil market and how they can work together to regulate oil production and through it the price of oil
• They have a huge influence on the price of oil as they help set the supply for oil production and sales
Click here to understand the supply and demand of oil as compared to Katy Perry’s Hot n Cold.
What Happened
•OPEC met on November 30th 2016
•They reached an agreement to cut oil production by 1.2 million barrels
•This is the biggest cut in 8 years
•This sent the oil market into a frenzy, shooting oil prices up #oiloiloil
•Remember less supply means with the same demand, increases prices
•Even non OPEC members like Russia agreed to cut oil production by 600,000 barrels a day!
Trump’s Influence
•Trump made promises in his campaign to open up drilling in the United States #drillbabydrill?
•United States buys most of the oil from OPEC.
•If the United States starts drilling and supplying their own oil this will hurt OPEC’s profits
•More oil being produced by USA means more supply pushing prices down, as Jay Sean would say “Baby are down”
•OPEC, may have seen the new potential policies as a threat to their profits. Therefore decreasing their supply and increasing prices now to maximixe their profits. (UAE about get a whole new set of gold Ferrari’s?)
What Does It Mean For Us
•Price per a barrel will shoot up, which means gas prices will go up
•We can expect to see gas prices to have a $3 in front of it, and in some states go up to having a $4 again. (Time to buy that Tesla)
•Trump’s policies will take some time to take effect, and no one really knows if it is the best thing to drill in America. #globalwarming
Orca’s again don’t freek out, and go all OMG silly over this, but we swim calmly and stategize on our next move, we take all policies into consideration and understand that we must plan ahead for moments like this. If you would like to learn more about taking advantage of markets like this; reach out here to speak with one of our ecosystem partners.
