OPEC Can Increase Prices; Can't Decrease Prices -- New Paradigm Shift

This is really, really interesting.

It echoes exactly what was said on this post some time ago.

OPEC can no longer do much to lower oil prices; about all it can do is increase prices.

OPEC can decrease production which, all things being equal, will push oil prices upward.

On the other hand, it appears OPEC has lost significant ability to push prices downward by increasing production

For one, very few OPEC members have the capacity to increase production at the flip of a switch -- and the most important of them, Saudi Arabia, has already done so, analysts said.

OPEC says it holds around 6 million barrels a day of spare capacity, “which could quickly be made available to the market,” the organization said in a document recently posted on its website.

Several analysts, and even the U.S. Department of Energy, however, dispute that number.

The DOE’s Energy Information Administration Tuesday estimated OPEC spare capacity will fall to 4.1 million barrels a day this year from 4.4 million barrels in 2010, followed by a further decline to 3.1 million barrels a day in 2012.

Analysts at Goldman Sachs said OPEC spare capacity is likely to have dropped below 2 million barrels a day given the developments in Libya, even accounting for Saudi Arabia’s recent boost in production. 

For those who thought this would be over in a week, the Libyan thing is now in its third week, and the Libyan leader has not yet been thrown under the bus. Figuratively or literally.