An oil price plummeting because of a decision by OPEC to cut production can create a crisis in the United States if the West loses out. Instead of having the effect of creating an abundance of supply, it may instead result in a shortage. It may also create a sense of panic that will force prices to rise in order to recover production levels.
When crude oil prices are falling due to OPEC meetings, this is called a supply/demand imbalance. In other words, there is more supply than demand.
The North American and Western European nations that rely on OPEC for their oil exports to feel the effects as they export fewer barrels and struggle to make up the difference. On the other hand, OPEC members that produce large amounts of oil that would be exported to those countries need to make a decision either cut back production or do nothing.
OPEC oil producers need to meet the group’s terms to sell less oil and get paid. If they do not cut back on production, they will receive no payment and this could result in low oil prices for the U.S.
There are many benefits to OPEC meeting its commitments, but the oil risks should be considered. If prices rise too high, it could result in an energy crisis in the United States.
With prices near zero, the U.S. could have a severe energy shortage as we suffer from lack of fuel. In addition, it could lead to a global economic slowdown as many people will go into debt to buy gasoline and keep heating their homes.
Many of us will be tempted to stop using energy, especially when oil prices are still so low. This will only worsen our problem, which could result in a collapse of the financial system as well as our economy.
Demand will remain steady as the price of gasoline stays at a reasonable level. However, this will create a more dangerous situation if the prices rise to a point where it is difficult to find gas at a reasonable price. Many people will feel that they have to take the chance of paying the higher price, even if it is almost as high as the cost of the gasoline itself.
Unfortunately, oil risks are hard to predict. To ensure that we avoid a repeat of what happened in the past, we must learn from the mistakes of the past and anticipate the future instead of trying to predict the results of a decision we do not fully understand.
The best way to minimize the risks of oil risks is to prepare for them ahead of time. By reducing our dependency on foreign oil, we can begin to protect ourselves from a future crisis and we can be better prepared when it comes.
Our government can begin to explore the idea of increasing our country’s import dependence on foreign oil. This could include opening the U.S. market to energy independence.
By cutting down on our dependency on foreign oil, we can provide ourselves with an opportunity to begin to rebuild our American economy, and we can become stronger and more independent. We must become independent of foreign oil, but the sooner we do it, the better.