OPEC is our enemy, and all Americans must join the fight

[whottt]

http://www.chron.com/cs/CDA/ssistory...utlook/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 an rust 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 quan y, 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.

[whottt]

It's a pretty good article...but..

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?

That they don't have the worlds largest coal reserves and second largest natural gas reserves, for housing energy, like America does? We cannot replace our Oil consumption with Nuclear Energy because our Oil Consumption is almost entirely in the automotive and transportation sector...

America is however the worlds second largest producer of bio-fuels and windpower, and we rank pretty highly in Solar Power...the only alternatives we truly suck at are hydro power and hydrogen power...now we just need to bust this hydrogen source open...it's not going to happen until we start trying to do it, if it's good enough to fly the shuttle it's good enough to run a car...no time like the present. IF this country devoted it's technological brain towards developing alternative energy the future would arrive sooner rather than later. My next car will be a hybrid.

[Drachen]

THANK YOU! I enjoyed the article, but I totally agree on your take on it whott

[whottt]

Thank you Drachen...I know I can count on your support for Rudoph Guilianni in the 2008 Elections...he's already proven he can do what they say can't be done...and he's also shown absolutely no fear about telling the Saudis where they can stick their money.

[Nbadan]

You two need to get a room.

• 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.

This can't be because OPEC membership grew or because satellite imagery made reserves easier to find and estimate, right? Nahh, let's go with the Tin-foil hat theory that our core magically created more reserves. A gift from God.

[whottt]

Well we've increased the depths to which we can drill as well...

I don't know what your point is Dan...

Are you against getting off Oil and supporting corrupt regimes like the Saudis? Or just determined to be a cynic?

[Nbadan]

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.

Yikes, this author obviously knows nothing about natural market forces - namely supply and demand. You see, it's not in the Saudi or any other OPEC's members best interest to sell oil at $65 per barrel. At that rate, the sale of Toyota Prius and other hybids goes up, people drive less, cities use more coal and natural gas (which is also high because of Hurricane Katrina, but that's another thread) and more nuclear power.

So in the long-run, OPEC sells less oil, and make less money because people ultimately use less oil, at least, that's how it's supposed to work. That changed recently, the Saudi's are pumping as fast as they can as are other members of OPEC, but the capacity loses of the North Shore and other production areas around the world have been difficult to overcome by a oil-thirty world which hasn't added any new major reserve discoveries going on two years.

Clearly, given the world we live in, there may be some speculative factor going on in the price of oil, fear of terrorism, and war with Iran among them, but if countries weren't demanding oil at the market price it is selling, the price would immediately fall.

[whottt]

Yeah if the policy continues longterm it decreases demand for Oil...but on a shortterm basis those guys are banking...make no mistake about it.


I like the High Oil Prices....because they will get us off of Oil more than anything will.

[Nbadan]

Well we've increased the depths to which we can drill as well...

, the addition of massive new reserves in Russia and even one in tiny little Cuba haven't made a dent on replenishing the world supply we are tapping out. What's also happening is that countries like Russia and Venezuela are nationalizing their countries reserves, which if your looking from a production point-of-view isn't what's best for anybody because they set their own prices and that throws the whole supply-and-demand mechanism for a spin, as well as their own production. It's socialized oil.

And to make things worse, to punish the Bush Administration for it's policies, there have been rumors of some collusion going on between Venezuela, Iran, Russia and China to sell as much oil as possible to China and India to drive their rapidly growing economies. China can afford higher oil prices because they own the American housing boom still driving the Bush economy.

This is one reason, albeit a large one, why I believe a war with Iran is quickly growing imminent.

[whottt]

India and China combined don't even use 25% of the Oil we use...let them try it. It'll kill the price of Oil and when we cut them off they will feel it a lot more than we will.

Furthermore...we don't that much Oil from OPEC countries...we get a buttload from Saudi and Venzuela which make up about 25% of our Oil Imports...or about the same as we get from Mexico and Canada...two non Opec countries...We don't get that much Oil from Kuwait...we import more Oil from the UK than we do from Kuwait. And we don't get that much oil from Russia either.

I've also read that Candada may end up being the country with the most reserves(as opposed to #2 right now)...I've also read that some people believe Australia might end up having the 3rd or 4th most reserves.

The bottom line though is Oil.

[Nbadan]

The bottom line is this is a world market, and when rumors swirl about important players possibly colluding to intentionally drive the world price of oil up, that makes everyone else nervous. Conspiracy theory? I gotta say that if it is it's working like a charm because America and Americans are largely charging their part of the rise in oil prices contributing to our future indebtedness. Reagan was wrong, eventually debt catches up with you.

[Vashner]

Yea.. let's see..
1. Neolibs want to attack opec.. .even though it's pressure from China, India, UK, Europe and the U.S. to send more oil... (it's OUR FAULT not theres)..

2. THEN the neolibs will blame gasoline prices (btw Neolibs gasoline is refined it's not just crude oil).. on GW Bush.

The major investment houses on Wall Street (BUSH DID IT!!) have been calling for 100 dollar crude for years. That's what they think it's worth...

[boutons]

Our enemy is ourselves, for not aggressively promoting conservation (other than by "personal virtue", according to condescending head, an oil man, of course) of energy in general and oil in particular, as successfuly did in the 70s and early 80s.

So USA has remained in a geo-political quaqmire of critical dependence on foreign oil from unstable, antagonistic sources in the Middle east, and, recently anti-American VZ.

dubya's $Bs in subsidies for energy "research" in the recent mammouth pork bill went to the energy companies who are currently, and for the forseeable future, drowning in windfall profits from high energy prices (a key Repug objective of the elective Iraq war was to drive up oil prices). The subsidies are another gift of federal tax $$ from the Repugs to their paymasters, and we will never see any ing benefit from the research subsidies.

One of the reasons "the world doesn't like USA" is that the USA is the biggest consumer of oil per capita, while not taxing its consumption the way more disciplined, responsible countries do in, say, Western Europe. To discourage transport consumption (the biggest consumer in USA), the Europeans have put punishing national taxes on gasoline and diesel, such that gasoline is $5 to $7/gal. This sqeezes out most non-essential/entertainment driving, and causes most cars to be 4-cyl and high mileage, pushes a lot of people in urban areas onto public transport (urban parking is extremely expensive in Europe). But the Europeans see the cheap, untaxed prices and high consumption of gas by large, heavy inefficient cars in USA, and know the USA is letting its drivers have free ride, and not pulling its considerable weight in reducing oil consumption, while the Europeans pay the price.

And of course the other side of high engergy consumption is pollution, esp carbon dioxide from carbon fuels. So this gives the foreigners another reason to dislike the USA, who won't tax pollution, won't admit global warming, or admit man's contribution to global warming, therefore won't co-operate in reducing USA pollution, while playing the blatant delay game of "more study".

Essentially, the US corps are setting national energy and pollution policy (remember head's secret "executive privilege" energy policy planning meetings with his cronies/paymasters in the energy industry?) for the primary benefit of the US corps, aided and abetted by their purchased, whoring puppets in the Repug party.

One of the key roles of the federal government is to protect citizens from rapacious, destructive, immoral, dehumanizing business, to be a countervailing power. Obviously, the corp-controlled Repubs are working with business against citizens.

[scott]

I don't think people without a grasp of high school economics should be allowed to write articles about oil. Just an opinion.

[ChumpDumper]

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.

So the commodities trader wants to create yet another market -- wouldn't this just cause even higher prices?