OPEC Secretary General Rilwanu Lukman states that OPEC does not eel as though crude oil at thirty dollars a barrel is causing problems in the international economy. At first, OPEC stated that it would only want to see oil sold at twenty-eight dollars a barrel, but now their position has changed. This change came despite many warnings from analysts around the world. These analysts felt that such high prices for oil could be dangerous to the economy in the future. (See analysis below)

The article also brings up the idea that prices will fall as the annual season drop-off in

In truth, right now, oil prices are inelastic. This is what leads OPEC Secretary General Rilwanu Lukman to state that thirty-dollar oil is not creating a hardship. The demand curve here is almost vertical reiterating the fact that demand remains constant in an inelastic situation. When the demand curve is vertical, the quantity demanded at Q1 compared to the quantity demanded at Q2 is minimal in relation between the price change in P1 and P2 (see attached graph). This is the fact that allows OPEC to raise prices as much as they please without worry of demand falling.

As you can see from the above analysis, supply, demand, and their effect on price play a major role in the oil market. The overall main point is that oil prices are inelastic but the will not stay this way. In the future these high prices will actually cause demand to decrease thusly lowering these prices, making the world a better place for all of us who drive automobiles.

I mentioned about that in springtime the demand for oil would fall. This is an example of the fact that a decrease in demand will also decrease prices. Analy

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