<p>I have been wondering. With OPEC driving down the price of oil in order to stifle the growth of the American oil industry, what can we do about it?</p>

<p>More specifically, why don't these oil producers simply store the oil that is produced for more than the current per barrel selling rate and then sell the stored oil later when the price inevitably rises once more?</p>

<p>I understand that many companies have to keep pumping the oil to retain land rights. But I don't see why we can't get around that by pumping it and then storing it somewhere. Preferably on land and in facilities that are already owned. Then when the price goes into the profitable zone you reduce the volume you are pumping out of the ground and replace the output with the stored oil.</p>

<p>Also, I read that Saudi Arabia is cutting oil production. But that OPEC has taken actions to drive down the cost of oil. Yet I would think that overwhelming the market with supply would be how they drive down prices. So I am confused as to how the production cutting is working.</p>

<p>Any thoughts or information?</p>

CC BY-SA 3.0
2014-12-16T08:57:03.783Z
`storing it somewhere` That is the catch. Building storage takes time and is costly. And storage space is limited, considering nobody expected the boom in fracking. Where did you read this `read that Saudi Arabia is cutting oil production` ? I read they aren't cutting down their production.
DumbCoder
CC BY-SA 3.0
2014-12-16T09:00:16.967Z
`OPEC driving the prices of oil down`, that cannot be farther from the truth. The rise in US production is and OPEC is helping by not cutting their production levels.
DumbCoder
CC BY-SA 3.0
2014-12-16T12:08:55.927Z
Who is this "we" in "what can we do about it?" . And what are you asking - are you interested in the microeconomics of contango, the macroeconomic implications of oil price, the impact of the OPEC cartel on the production function, or the relationship between financial markets and the oil industry?
410 gone
CC BY-SA 3.0
2014-12-16T15:24:39.673Z
@EnergyNumbers I am interested in the economic influence of the OPEC cartel and the United States ability to break free from their control. Specifically how we can control our own energy destiny and prevent OPEC from dictating how much we pay for energy. Thus my pointed questions are related to the steps we can take as a nation and the steps individual companies can take to weather the storm from the changes we are currently seeing.
Patrick
CC BY-SA 3.0
2014-12-16T15:28:27.477Z
@EnergyNumbers As such I am also interested in the economics of oil and to a lesser extent other energy sources. As an aside I am also curious as to why we allow speculation and artificial inflation to control the cost of our energy. I realize that we wish to have lots of freedom and leeway. However the cost of pulling the oil out of the ground is somewhat fixed. Why is it that we don't sell it like any other retail product? Is it simply because we pull it out of the ground instead of manufacture it?
Patrick
CC BY-SA 3.0
2014-12-16T15:44:05.843Z
That's very very broad - way too broad to handle in the handful of paragraphs that forms a good answer here. Lots of books get written on the subject. At the moment, the question reads like an open invitation to discussion of the oil markets, which isn't a good fit for the site. Can you narrow it down just to one specific angle - from your interest in storage, I guess contango could be the focus: it has received rather a lot of media attention very recently
410 gone
CC BY-SA 3.0
2014-12-16T19:04:37.803Z
OK, I will think it through more and edit the question.
Patrick
CC BY-SA 3.0
2014-12-16T20:05:59.203Z
Hi there. Welcome to Econ.SE. As a mod, I just wanted to let you know that I put this question on hold as too broad. That's not to criticize the thrust of the question, and I'd really like to reopen it if you can narrow it down to an objectively answerable question.
Jason Nichols
<macroeconomics><markets><international-trade><financial-markets><production-function>
With OPEC driving the prices of oil down, can American producers simply store oil produced at higher cost to sell later?
Patrick
# With OPEC driving the prices of oil down, can American producers simply store oil produced at higher cost to sell later?

(Asked by: username_0 on 2014-12-15)

I have been wondering. With OPEC driving down the price of oil in order to stifle the growth of the American oil industry, what can we do about it?

More specifically, why don't these oil producers simply store the oil that is produced for more than the current per barrel selling rate and then sell the stored oil later when the price inevitably rises once more?

I understand that many companies have to keep pumping the oil to retain land rights. But I don't see why we can't get around that by pumping it and then storing it somewhere. Preferably on land and in facilities that are already owned. Then when the price goes into the profitable zone you reduce the volume you are pumping out of the ground and replace the output with the stored oil.

Also, I read that Saudi Arabia is cutting oil production. But that OPEC has taken actions to drive down the cost of oil. Yet I would think that overwhelming the market with supply would be how they drive down prices. So I am confused as to how the production cutting is working.

Any thoughts or information?

**Tags:** macroeconomics, markets, international-trade, financial-markets, production-function

> **Comments:**
> **username_1**: `storing it somewhere` That is the catch. Building storage takes time and is costly. And storage space is limited, considering nobody expected the boom in fracking. Where did you read this `read that Saudi Arabia is cutting oil production` ? I read they aren't cutting down their production.  
> **username_1**: `OPEC driving the prices of oil down`, that cannot be farther from the truth. The rise in US production is and OPEC is helping by not cutting their production levels.  
> **username_2**: Who is this "we" in "what can we do about it?" . And what are you asking - are you interested in the microeconomics of contango, the macroeconomic implications of oil price, the impact of the OPEC cartel on the production function, or the relationship between financial markets and the oil industry?  
> **username_0**: @EnergyNumbers I am interested in the economic influence of the OPEC cartel and the United States ability to break free from their control. Specifically how we can control our own energy destiny and prevent OPEC from dictating how much we pay for energy. Thus my pointed questions are related to the steps we can take as a nation and the steps individual companies can take to weather the storm from the changes we are currently seeing.  
> **username_0**: @EnergyNumbers As such I am also interested in the economics of oil and to a lesser extent other energy sources. As an aside I am also curious as to why we allow speculation and artificial inflation to control the cost of our energy. I realize that we wish to have lots of freedom and leeway. However the cost of pulling the oil out of the ground is somewhat fixed. Why is it that we don't sell it like any other retail product? Is it simply because we pull it out of the ground instead of manufacture it?  
> **username_2**: That's very very broad - way too broad to handle in the handful of paragraphs that forms a good answer here. Lots of books get written on the subject. At the moment, the question reads like an open invitation to discussion of the oil markets, which isn't a good fit for the site. Can you narrow it down just to one specific angle - from your interest in storage, I guess contango could be the focus: it has received rather a lot of media attention very recently  
> **username_0**: OK, I will think it through more and edit the question.  
> **username_3**: Hi there. Welcome to Econ.SE. As a mod, I just wanted to let you know that I put this question on hold as too broad. That's not to criticize the thrust of the question, and I'd really like to reopen it if you can narrow it down to an objectively answerable question.  

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