Economics portfolio- price controls

Authors Avatar

Oct. 24, 2008

The Organization of Petroleum Exporting Countries cut oil production targets for the first time in almost two years as the group battles to slow a collapse in prices.OPEC decided to lower supply by 1.5 million barrels a day from November, oil ministers said today at the end of a meeting at the group’s Vienna’s headquarters. The reduction will be from the existing quota for 11 members of 28.8 million barrels a day.

"Demand is significantly less than what is being supplied, that is the reason the cut was taken," Saudi Arabian Oil Minister said after the meeting. Crude oil has tumbled 56 percent from a July 11 record of $147.27 a barrel as the financial market crisis spreads, job cuts increase and fuel consumption slows.

"The high oil prices from the past years contributed to the slowdown in demand and the subsequent downturn in the economy," White House spokesman Tony Fratto said in a statement, which also criticized OPEC’s policy of restricting supply. The International Energy Agency said that demand among industrialized nations will fall 2.2 percent this year.

Join now!

To understand what’s going on, we need to understand some key concepts.


Market equilibrium refers to a condition where a market price is established through competition such that the amount of goods or services sought by buyers is equal to the amount of goods or services produced by sellers. In absence of external influences, equilibrium will not change


1: If there is a shift in the demand curve towards the right, there is an increase in price per unit quantity

2: If there is a shift in the supply curve towards the ...

This is a preview of the whole essay