THE BLOG

As It Meets, Time to Make OPEC Understand Access To Our Market Can No Longer Be Taken For Granted

07/27/2010 11:43 am ET | Updated May 25, 2011

It is beyond time that all imports of crude oil and major downstream products (i.e., gasoline) coming into the American market should require an import license designating a specific country of origin. For why, and what it means, please read on.

OPEC meets this week to set production quotas. Venezuela and Iran are pressing for production cuts to assure prices do not slip below $100/barrel. Saudi Arabia, forever playing its usual double game, is making mollifying noises, having King Abdullah quoted by their ever pliant mouthpiece, the New York Times, that according to the King, "$100 was too high." This while sending a real-time message to their fellow OPEC cartel coven by sharply marking up prices for October shipments of heavy crude to Asian refiners (Gulf Times, September 7).

So here we sit, waiting for the nabobs to tell us what they will produce and what they will graciously allow us to consume. And why not? It is a poker game they have been playing with us for eight years now, and our hand has been held by the three oil industry "Stooges" -- Bush, Cheney, and Bodman, happily letting us be fleeced while their oil industry cronies cluck contentedly over their backs. Times are good for the OPEC boys. Pass them another cigar.

Well, times they are a changing. Economic conditions and consumption restraint are beginning to take hold. The public has become keenly aware of the risks inherent in the unbridled consumption of fossil fuels, clearly aware of its dangers economically, environmentally and in terms of our national security. Further, they have come to understand the voracious and shameless opportunism of the oil producers to gouge the price of oil ever higher for as long as they can and for as much as they can. In doing so the oil patch has left an indelible conviction of mistrust, being patently unreliable as providers of a significant but diminishingly important resource. And for these reasons alternative energy programs are being set in stone and are not about to be displaced, as has been the case in the past, by the sudden erosion of crude oil prices

In four months time the "Three Stooges" will have been retired and a new relationship will be emerging between oil producer and oil consumer and then it will be the time to play our ace in the hole. Rarely talked about nor alluded to in the past eight years is the fact that in being the world's most important consumer of fossil fuels our market is as important to oil producers as they have been suppliers to our needs. And as such, even as our consumption diminishes, as it will in the years ahead, it will still provide oil producers with their most important market for years to come.

That market should no longer be taken for granted by oil suppliers nor be available to all comers irrespective of their adversarial policies and their pricing strategies. That henceforward all imports of foreign crude oil into the United States should require an import license designating a specific country of origin. Ideally it would be a system put into place, with import licenses freely available without ever a need to impose restrictions. However given, as example, Venezuela's hawkish stance to push prices ever higher, combined with its confrontational and malign policies such as inviting Russia to joint naval exercises and extending invitations to the Russians to establish military bases on Venezuelan soil and permitting Hezbollah to set up a base of operations in the Americas creating terrorist cells looking to kidnap businessmen throughout Latin America with the intention of taking them back to Lebanon, with the further prospect of Hezbollah using Venezuela as a base to "insert terrorists into the United States."

Given their intentions and their dangerously contentious policies, would it not make sense, especially as our needs diminish, and as other supplies become available (such as alternative fuels, natural gas, offshore, North Slope, shale, ethanol from Brazil and on), that our government have in place a program that could stop or limit imports of oil from national origins that have policies that are inimical to our national interests by simply limiting or refusing issuance of oil import licenses. Perhaps our ability to act accordingly would dissuade Venezuela and others to reexamine their hostile policies. Of course one could argue that oil is a fungible commodity whereby substitution or exchanges with other national producers could in some measure neutralize the objectives of such a program. Yet if there is a serious willingness to implement a viable licensing regime, this too can be dealt with effectively.

In the meanwhile you can rest assured whatever decision is trotted out by OPEC this week it will be dressed up as an exercise in OPEC's beneficence and in "caring" response to the needs of the world's consumers and that our sincere appreciation should be forthcoming.