whottt
09-18-2005, 02:49 AM
http://www.chron.com/cs/CDA/ssistory.mpl/editorial/outlook/3358391
OPEC is our enemy, and all Americans must join the fight
By RAYMOND J. LEARSY
JUST imagine, for a moment, the firestorm of indignation that would erupt if someone discovered that the world's major grain exporters (the United States and Canada, for instance) were conspiring to triple or quadruple the price of such basic foodstuffs as soybeans, wheat and corn — and then using the vast profits derived from this conspiracy to fund a worldwide network of schools, missionaries and fifth columns, all designed to undermine the beliefs and stability of the Muslim world and, where necessary, to spill blood.
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This is fantasy, perhaps, but the flip side of this scenario is all too real. The conspiracy lurks in our midst and literally has the world over a barrel. It is, of course, OPEC.
OPEC, an assortment of 11 nations including Saudi Arabia, Kuwait, Nigeria, Libya, Iran and Venezuela, controls some 40 percent of the world's oil production. These countries have struggled valiantly to persuade us they are doing all they can to meet the world's growing oil needs. And much of the world believes them.
The problem with this is no one outside OPEC knows for sure how much cartel members can produce and the actual size of their reserves. They won't tell us.
"Western nations are not dealing with oil producers as partners. Why should they have the advantage of knowing details of oil producers' reserves? Data on reserves is information, and information is power," Ishan Bu-Hulaiga, an economist and adviser to the Saudi government, was quick to declare after G-8 nations met in February and called for greater transparency among oil producers.
There are, however, some facts that we do know:
• In 1970, OPEC reserves were estimated at 412 billion barrels. In the 33 years that followed, OPEC produced 307 billion barrels and, at the end of that period, reserves had grown to 819 billion barrels. It seems that the more oil pumped, the more reserves.
• The Saudis have identified 80 important reservoirs of oil but are tapping less than 15 of those basins.
• With production at about 30 million barrels per day, OPEC claims to be at the limit of its capacity. But production reached 31 million barrels per day in 1979. Apparently we are supposed to believe that in more than 25 years, it added no additional capacity. If true, we can only conclude that it was intentional, in order to foster the illusion of shortage and strained capacity.
By colluding to restrict production and manipulate price, OPEC blatantly violates the spirit of free trade as well World Trade Organization rules. And it is enormously successful. At $65 per barrel, we are being hoodwinked into paying the equivalent of $25 for an ice cream cone.
It costs the major Middle East producers less than $1.50 to pump one barrel of oil. At $65 per barrel, if the same economic relationships applied, Detroit would be selling the Ford Taurus at $300,000 or more. We would not stand for a $25 ice cream cone or a $300,000 Taurus. And we should not stand for oil at $65 a barrel.
To those who argue that oil is still cheap compared to inflation-adjusted prices in 1981, I would counsel running to the nearest jewelry store and buying every gold bracelet, necklace and tie pin. In 1981, gold was selling for about $800 an ounce and, adjusted for inflation, it should be selling for $1,700 an ounce today. Given today's price of $450 per ounce, it's clearly a bargain that can't be passed up.
But it's not only our economic future that is in jeopardy. Our national security is also at grave risk.
Prominent members of OPEC openly work to undermine democratic ideals in the United States and other Western countries. Billions of dollars flow from Saudi Arabia and Kuwait to finance schools, mosques and charitable organizations around the world that actively promote the virulently anti-Western Wahhabi strain of Islam.
Ironies abound — not least that we supply the money at the gas pump that buys the textbooks and prayer books aimed at burying us.
It's imperative that we become more self-reliant for our energy needs. We must control demand as OPEC controls supply. This could be achieved in many ways.
One is to establish a gas distribution voucher program based on a national quarterly target of gas consumption per consumer comparable to the Bush administration's Clear Skies Program that allows less-polluting power companies to sell emission credits to heavier polluters.
This would let heavier gasoline users buy the rights to what less-thirsty consumers don't use. It would put a cap on consumption, but it would not be regressive. (An across-the-board gasoline tax, by contrast, would punish the poor and those who live in areas with fewer mass transit options.) It would give all Americans a chance to join in a fight against OPEC, and it would allow them to share the sacrifices being made by soldiers fighting for democracy in Iraq.
There are other options. The Senate, for instance, voted this summer to give authority to the Federal Trade Commission and the Department of Justice to pursue legal action against the OPEC cartel on antitrust grounds. The bill died in negotiations with the House, but this idea should be revisited.
In the short term, a portion of the U.S. strategic petroleum reserve (now nearly 700 million barrels) should be used to dampen the runaway price of crude oil — which, at current levels, presents an imminent danger to our economy. A release of just 50 million barrels, though marginal in terms of quantity, would send the signal that the government will be vigilant in maintaining fair prices for such a basic raw material. (President Bush agreed to release a portion of the strategic reserve after the devastation of Hurricane Katrina, but he did not go far enough.)
Then there is the nuclear option. France produces 80 percent of its electrical energy from nuclear power plants and China plans to quintuple its nuclear energy production over the next 15 years (calling for some 40 new nuclear plants). We have not built a nuclear power plant since the 1970s. What is it that the French and Chinese know that we do not?
It's time for us to act so that we can escape our shameful dependence on OPEC oil and break OPEC's extraordinary grip on the world's economy. We must dampen consumption as OPEC constricts production and become truly serious about alternative sources of energy.
We can no longer permit the unfettered consumption of oil. Our national honor and security depend on it.
OPEC is our enemy, and all Americans must join the fight
By RAYMOND J. LEARSY
JUST imagine, for a moment, the firestorm of indignation that would erupt if someone discovered that the world's major grain exporters (the United States and Canada, for instance) were conspiring to triple or quadruple the price of such basic foodstuffs as soybeans, wheat and corn — and then using the vast profits derived from this conspiracy to fund a worldwide network of schools, missionaries and fifth columns, all designed to undermine the beliefs and stability of the Muslim world and, where necessary, to spill blood.
ADVERTISEMENT
This is fantasy, perhaps, but the flip side of this scenario is all too real. The conspiracy lurks in our midst and literally has the world over a barrel. It is, of course, OPEC.
OPEC, an assortment of 11 nations including Saudi Arabia, Kuwait, Nigeria, Libya, Iran and Venezuela, controls some 40 percent of the world's oil production. These countries have struggled valiantly to persuade us they are doing all they can to meet the world's growing oil needs. And much of the world believes them.
The problem with this is no one outside OPEC knows for sure how much cartel members can produce and the actual size of their reserves. They won't tell us.
"Western nations are not dealing with oil producers as partners. Why should they have the advantage of knowing details of oil producers' reserves? Data on reserves is information, and information is power," Ishan Bu-Hulaiga, an economist and adviser to the Saudi government, was quick to declare after G-8 nations met in February and called for greater transparency among oil producers.
There are, however, some facts that we do know:
• In 1970, OPEC reserves were estimated at 412 billion barrels. In the 33 years that followed, OPEC produced 307 billion barrels and, at the end of that period, reserves had grown to 819 billion barrels. It seems that the more oil pumped, the more reserves.
• The Saudis have identified 80 important reservoirs of oil but are tapping less than 15 of those basins.
• With production at about 30 million barrels per day, OPEC claims to be at the limit of its capacity. But production reached 31 million barrels per day in 1979. Apparently we are supposed to believe that in more than 25 years, it added no additional capacity. If true, we can only conclude that it was intentional, in order to foster the illusion of shortage and strained capacity.
By colluding to restrict production and manipulate price, OPEC blatantly violates the spirit of free trade as well World Trade Organization rules. And it is enormously successful. At $65 per barrel, we are being hoodwinked into paying the equivalent of $25 for an ice cream cone.
It costs the major Middle East producers less than $1.50 to pump one barrel of oil. At $65 per barrel, if the same economic relationships applied, Detroit would be selling the Ford Taurus at $300,000 or more. We would not stand for a $25 ice cream cone or a $300,000 Taurus. And we should not stand for oil at $65 a barrel.
To those who argue that oil is still cheap compared to inflation-adjusted prices in 1981, I would counsel running to the nearest jewelry store and buying every gold bracelet, necklace and tie pin. In 1981, gold was selling for about $800 an ounce and, adjusted for inflation, it should be selling for $1,700 an ounce today. Given today's price of $450 per ounce, it's clearly a bargain that can't be passed up.
But it's not only our economic future that is in jeopardy. Our national security is also at grave risk.
Prominent members of OPEC openly work to undermine democratic ideals in the United States and other Western countries. Billions of dollars flow from Saudi Arabia and Kuwait to finance schools, mosques and charitable organizations around the world that actively promote the virulently anti-Western Wahhabi strain of Islam.
Ironies abound — not least that we supply the money at the gas pump that buys the textbooks and prayer books aimed at burying us.
It's imperative that we become more self-reliant for our energy needs. We must control demand as OPEC controls supply. This could be achieved in many ways.
One is to establish a gas distribution voucher program based on a national quarterly target of gas consumption per consumer comparable to the Bush administration's Clear Skies Program that allows less-polluting power companies to sell emission credits to heavier polluters.
This would let heavier gasoline users buy the rights to what less-thirsty consumers don't use. It would put a cap on consumption, but it would not be regressive. (An across-the-board gasoline tax, by contrast, would punish the poor and those who live in areas with fewer mass transit options.) It would give all Americans a chance to join in a fight against OPEC, and it would allow them to share the sacrifices being made by soldiers fighting for democracy in Iraq.
There are other options. The Senate, for instance, voted this summer to give authority to the Federal Trade Commission and the Department of Justice to pursue legal action against the OPEC cartel on antitrust grounds. The bill died in negotiations with the House, but this idea should be revisited.
In the short term, a portion of the U.S. strategic petroleum reserve (now nearly 700 million barrels) should be used to dampen the runaway price of crude oil — which, at current levels, presents an imminent danger to our economy. A release of just 50 million barrels, though marginal in terms of quantity, would send the signal that the government will be vigilant in maintaining fair prices for such a basic raw material. (President Bush agreed to release a portion of the strategic reserve after the devastation of Hurricane Katrina, but he did not go far enough.)
Then there is the nuclear option. France produces 80 percent of its electrical energy from nuclear power plants and China plans to quintuple its nuclear energy production over the next 15 years (calling for some 40 new nuclear plants). We have not built a nuclear power plant since the 1970s. What is it that the French and Chinese know that we do not?
It's time for us to act so that we can escape our shameful dependence on OPEC oil and break OPEC's extraordinary grip on the world's economy. We must dampen consumption as OPEC constricts production and become truly serious about alternative sources of energy.
We can no longer permit the unfettered consumption of oil. Our national honor and security depend on it.