September 6, 2007

OPEC high oil prices policy

If a cartel like OPEC can demand higher prices for oil, why wouldn’t they? Oil wealth is not going to last forever and all oil major oil exporters are on a massive investment spree. From massive infrastruture projects in their own countries to buying large stakes in large global companies, they are sinking billions of dollars. High oil prices are absolutely necessary for them to continue build this investment portfolio for the future. Call it their own 401 K plan, sponsored by oil wealth which is their present employer or income provider. OPEC has also realized that all the analyst talk of high oil prices pulling down global growth has not really materialized. Now, they seem to be reasonably confident that $70 oil will not affect global growth and long term energy demand.

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