What Do OPEC and Hanukkah Have in Common?

The Jewish festival of Hanukkah, meant to commemorate a long-ago miracle, begins tonight at sundown. What is the miracle being celebrated?

Not, as you might think, the Maccabees’ very unlikely military victories against the mighty Syrian-Greek army. While that used to be the miracle that Hanukkah was built around, many years ago and for a relatively short time, it was ultimately replaced by a different miracle: that when the Maccabees recaptured their temple and found only one day’s worth of pure olive oil, the oil miraculously burned for eight days. In other words, the Maccabees miraculously overcame a potentially devastating oil shortage.

And so it seems worth noting that today, on the eve of Hanukkah, comes the announcement that OPEC has decided to cut oil production by 500,000 barrels a day as of February 1. This will create our very own oil shortage — admittedly a very minor one, whose intent is to regulate its price. And when it happens, it will probably take a miracle to prevent Americans from flipping out over the cost of gas.


mhertz

that's what he said: "...it will probably take a miracle to prevent Americans from flipping out over the cost of gas." -- i.e. over an increase in the cost of gas.

nonzenze

IIRC, the cost of a gallon of gasoline is in the vicinity of $10. You should be happy that now the price will better reflect the cost.

The miracle has been the large discrepancy between the price and cost for so long!

a singapore economist

Steve,

Price of oil will increase in order to prevent any shortage. This is pretty basic stuff.

kentavos

Behold, a miracle.

http://www.teslamotors.com/index.php?js_enabled=1

GamblingEconomist

The similarity is that the OPEC shortage will be alleviated by the same way the kosher oil shortage was alleviated -- Cheaters. A member country will cheat on its quota and slip some extra oil supply into the system to make some extra money just like somebody must of slipped some non-kosher oil into the menorah.

IBLG

Not sure about the "non kosher oil" comment from GablingEconomist, but the cheating concept/comment is correct. The price will rise because the traders will use the OPEC announcement to bid up the price, but the actual barrels per day pumped will stay the same because it's an opportunity to make extra money and if they didn't anonther non opec country would fill the gap and make the money..

kassinka

That's it. The government needs to subsidize segway sales, and, I mean, now!

NeverLimp

There is no oil shortgage, not even a very minor one. It's well documented that OPEC cheats and produces more than the quotas because the economic incentive is just too strong, especially at these bubbly prices. Non-OPEC production is extremely robust right now as well.

eCUnomics

beautiful, we all understand the game theory's prisoner dilemna, but a Nash equilibrium will still have an absurdly high oil price
so no "GamblingEconomist" cheating won't be the answer, nor will bashing the Jewish religion... and subsidizing oil will only continue to make the American consumer demand curve more inelastic.
In response, we should find a motivating alternative- so we the american people don't cheat outselves and continue to empty our pockets into the middle east. Subsidizing public transportation, alternative fossil fuels, and hybrid cars is my answer

chrisbryan

All the better for Alberta's economy if the oil prices rise,so I hope noone in OPEC cheats. And the idiotic behaviour of poeple boycotting African diamonds because of some Dicaprio movie will also help our northern diamond industry. I guess one person's loss is anothers gain, although Africa's primary resource industry has gotten shafted enough from low price and income demand elasticities for most of their primary goods. So I hope the oil prices rise some more because it makes it even more economically viable for oil extraction in the Fort Mcmurry oil sands, allthough public transit in my hometown really sucks...blood suburbia!

blink

Surely the current market price accurately reflects expectations about future production. If OPEC's planned cutback in oil production will increase the price of gasoline in the future, the price should rise NOW. If it does not (or has not), it must be the case that market believes either that OPEC will not keep their resolve or that other suppliers will pick up the slack.

scottmweaver

Stephen,

I'm the owner of BlogFlare.com, a service I created last week to both rank and promote the best blogs on the internet. I was wondering if you'd be interested in helping to beta test this new service. Please let me know!

By the way, love the book; I bought a copy.

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Scott

Andi

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quietlike

Call me naive, but I always thought that OPEC was pretty good about regulating memeber production. Also, there is a bit of a lag between the drop in production and the increase in price at the pump.
One interesting possibility in regards to the future of oil is what will happen when an increasingly weak U.S. dollar, combined with increased non-U.S. consumption causes oil to be traded in another currency.
Suddenly, Americans will actually realize that their currency's devaluation due to rampant national debt actually means something.

prftex

Merely SAYING they are cutting production often has the desired effect of driving up the price, which is, after all, the point. We have futures to thank for that, which will have the effect of artifically inflating prices from now until the last drop is pulled from the ground as it is highly unlikely that anyone will speculate that demand will decrease and supply will increase between now and the horizon. If on the other hand someone finally pulls off hydrogen in a replicable way, you could see oil plummet, which would have the odd effect of pushing back against the feasibility of widespread alternative use- but even that would only be temporary. In short, there has been and always will be OPEC cheating- the point is to drive up the price, and that will have largely have already been acheived in the declaration of a cut!

jkatz

I'm not entirely sure what you mean when you say that "the miracle that Hanukkah was built around" has changed. Are you speaking in terms of popular perception? In fact, the core miracle of Hanukkah *is* (and was) the military victory; the miracle of the oil is viewed more as a secondary event which, in effect, "certified" the military victory as being divinely ordained. I am not aware of any scholarly opinion to the contrary.

mike529

jkatz- I have seen the Talmud on the subject and it says clearly that the core miracle of Chanukah was the Menorah burning for 8 days. In fact the rededication of the Temple was the key victory in the real war, that of the Macabees against the Hellenists.

singh

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Leon Freilich

ECO-LIGHTS

While some're dreaming of a white Christmas,
I'm dreaming of a fete that's green;
It honors fuel efficiency
For every working machine.

My holiday recalls the time
A supply of oil for one day
Kept brightly burning constantly
For fully an eight-day stay.

Now that's efficiency in spades
And worthy of rah-rah!
So in the spirit of green-is-good,
I'm observing Hanukkah.