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Last year OPEC finally capitulated, acknowledging it had made a mistake when it increased oil production in 2014. In order to bring prices back up and stabilize the price of oil, it announced it would reduce production levels by 1.8 million barrels per day. With American and Canadian oil production increases, lowering OPEC production isn’t necessarily going to bring oil prices to higher levels, but it is a start. Higher, stabilized prices, however, are extremely important to OPEC nations, since a number of them are almost totally dependent upon oil sales to fund their governments and provide services to their citizens.

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In an article in Barrons earlier this year, Shuli Ren quotes Bernstein Research by saying that Saudi Arabia needs to average $75 a barrel in 2017 to run its government and provide cradle-to-grave services for its people. The average price of crude so far in 2017, though, is about $52 a barrel, or $23 a barrel short of what Al Saud needs. The longer the price stays below the target, the more governments have to cut services, reduce their reserves, or take out loans.

If the OPEC nations panic and start pumping more oil, then greater will be the downward pressure on the price of crude. This in turn will cause difficulty for many nations trying to avoid the equivalent of bankruptcy. Countries that fail to provide for the needs of their people because of lower crude prices will see significant unrest by their citizens, which will cause greater pressure on those governments to stay in power.

Those OPEC nations that for so many years have lived in decadence and engorged themselves on oil profits have no idea on how to live on less. America is about to show the world how to live with lower oil prices.

Dan Perkins is an author, radio and TV talk show host, current events commentator, and philanthropist. More information about him, his writings, and other works are on his website: danperkins.guru. Mr. Perkins can be heard on AM.FM24/7.com on Tuesday Mornings at 10 AM Eastern and Thursday Evening at 10 PM, on Recalculating for Small Businesses.[lz_pagination]