There was a time when we thought that the main oil-producing countries were our friends and would keep prices relatively low and stable so that we could grow our economy. That time is over.
Here in Davos, the head of OPEC made it clear what OPEC's intentions are. Abdalla Salem El Badri, the Secretary-General of OPEC, said:
We are not happy with $40 a barrel or even $50. This is not enough to permit our member countries to invest and if they don't invest now, there will not be enough capacity to meet the increased demand when the economy recovers.Somehow OPEC was investing when oil was $20 a barrel but now needs $80 a barrel to meet that bar. OPEC will use any excuse it desires to continue its cartel and control prices.
How long will America sustain the delusion that a few hybrids and a small dash of ethanol is going to make any difference in this disproportionate dependency? The US has more than 250 million cars on the road -- 30% of all cars in the world. Putting out even a few hundred thousand hybrids barely moves the meter.
The Economist makes the point this week that America's massive trade deficit is partly to blame for the current global crisis. Half of the trade deficit is payment for imported oil.
When will the US wake up to the stark reality that OPEC will squeeze every last dollar from every barrel?
Obama has promised to cut in half the amount of oil that is imported. Where is that plan?