Oil Shock And Awe. Excuse Me While I Take A Nap.

OPEC's president is telling the world to prepare for a massive production cut in oil at their next meeting. And, for this I should .......... what? Be worried? OPEC is notorious for member states cheating on production quotas. Self-interests are greater drivers than any particular prognosticating. I wouldn't be surprised to see member states go all out to pump as much oil as humanly possible as this cycle hits their economies. In fact, I wouldn't be surprised to eventually see an all out bust in oil prices. Member states have spent like drunken sailors this cycle and they need cash to deal with the outcomes. Some of the OPEC states rank as having the highest debt loads on earth.

Here's something to think about. OPEC is a cartel that is completely toothless. How can I say that? What power did they have to stop oil from sliding to $10 a barrel in 1998? And, they continually claimed, and rightly so, that they had nothing to do with oil going to $147 this cycle. Similarly, Wall Street is also a cartel. They have monopoly access to capital from the Federal Reserve. Now tell me again, how was Wall Street able to translate that power into pricing that benefited themselves? They weren't. In fact, Wall Street has literally collapsed.

The moral of the story? Both cartels are along for the ride. Neither have the type of power or control associated with their bureaucracies. But, it makes for good photo ops when the OPEC ministers all meet for tea and crumpets.