What is the relevance of the price bands if the price of oil is already way over it?
Price bands are only a mechanism used to guage output demands/supplies, the relative price determination of oil (based on myriad factors), and to set a base-line range of prices that are politically and economically acceptable to nations/economies which are net consumers of oil products.
From the range of this band, economists are better able to plan economic estimates and development schemes.
Having a defined range of oil prices helps stablize the markets that are so often incredibly irrational because of fears and speculation.
In the age of diminishing supplies of this finite commodity, price bands are a way for oil producing nations to state that they are not working at cross purposes with powerful economic and military powers.
The definition of price bands is a way for nations like Venezuela to assure imperialistic powers that they are willing to cooperate--not bring the already powerful nations to their knees with escalating prices that could substantially harm the relative distribution of power as it exists globally.
Stability among the capital markets will give Venezuela wiggle-room to develop the Bolivarian project without the real threat of imperialistic attack in the near future.
At least this is my read on the issue. I am by no means an 'authority' on this issue.
Jim has it right. The biggest thing it means is that if the price were to go below $40 then OPEC would take action (production cuts) to try to increase it.
Commenting by HaloScan
