TodayOPEC does U.S. favor, indirectly
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Article RatingAs the price for a barrel of oil soars to new records, OPEC sure doesn’t seem like our friend.
But that raises the question of what friends are for. Sometimes friends tell us things we don’t want to hear — and OPEC sure gave the U.S. an earful last week.
At its semi-annual meeting in Vienna, the Organization of Petroleum Exporting Countries responded with a flat “no” to U.S. hopes it would increase production and thus ease the pain of rising fuel costs. The prospect of $4-a-gallon gasoline in just a few weeks’ time is so real that energy analysts sound almost bored when they mention it.
Instead, OPEC says current world supplies not only are adequate but that it expects a drop in demand in the near future. And the 13-member blamed U.S. economic policies for oil prices being out of step with actual current demand.
“Crude oil prices are being strongly influenced by the weakness in the U.S. dollar, rising inflation and significant flow of funds into the commodities market,” OPEC said in a statement. It blamed what it termed “mismanagement” of the U.S. economy as a factor in its decision to continue on its current course.
Of course, that argument is a two-way street. Alarm over what is happening in the credit and mortgage industries is driving oil speculators’ frenzy, but concerns over fuel costs are also feeding into the gloom over whether the U.S. is headed into a recession, if it isn’t there already. It’s a dog chasing its tail.
That’s not what we’re thinking about when we say OPEC is our friend, however. Everybody already knows there’s little love lost between President Bush and the leaders of the OPEC nations, particularly Venezuela and Iran. Relations with the Arab states have been strained in recent years as well. Where U.S. political pressure once may have influenced OPEC decisions, those days are gone.
Moreover, many OPEC leaders are also deeply aware of how their prosperity is tied to American interests, hence their worried resentment about how a downturn here could impact their prosperity. Oil revenue is all that props up many a regime otherwise unloved by its people.
No, we’re thinking more about how being denied extra oil when we demand it can prepare us for an energy-independent future. It hurts now, as we wonder how our household budgets can be stretched to pay for fuel and food and other goods that now cost more because of the higher cost to deliver them.
But OPEC’s firm stance is yet another push in the right direction for us. Our leaders have been talking about the need to develop clean renewable energy sources for more than 30 years, but the incentive to change has been sadly lacking.
Petroleum isn’t going to last forever, and the sooner we prepare for the day the last drop falls from the pipeline, the better. In fact, we should guarantee our children and grandchildren that the last drop is consumed somewhere other than in the United States because we have learned to curb energy use while simultaneously substituting alternative energy sources.
In denying us more oil, OPEC is doing us a favor. We may not thank it today, but if we respond appropriately, we will come out ahead in the long run.
