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Raymond J. Learsy

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OPEC Meets This Week, Holding World Hostage to Its Budget "Needs"

Posted: 06/11/2012 7:16 am

Ah, the Arab Spring! How convenient for it to alight just when oil prices were once again going through the roof. Saudi Arabia and its OPEC brethren are trying so hard to make us understand that their need for higher oil prices is now more essential than ever before. They cite the sharp increase in budgetary spending required in response to the "Arab Spring" to keep their restive populations in check.

In other words, folks, you like the "Arab Spring?" Well then, pay for it through higher oil prices. This is akin to France proclaiming, 'We need you to make up for our budget shortfall so we will significantly increase the price of Camembert 'fromage' exports.' Yes, yes, I realize our passion for Camembert doesn't compare to our need for crude oil and petroleum products, but you get the idea, the concept is about the same.

The irony is that we (the U.S. and oil consumers throughout the world) are being asked to bail out the budgets of OPEC nations, especially the booming Gulf Arab States (Saudi Arabia, Kuwait, U.A.E. et al.) while we and much of the rest of the world are sinking into recession, if not depression. Saudi Arabia seems poised to rein in production to protect a price of $100/bbl for Brent crude. To support its objectives, earlier this month it raised the price of its main crude grade, Arab Light, to Asian customers, according to the Centre of Global Energy Studies in London. Wittingly or unwittingly, this is making Iranian oil that much more attractive to these very same buyers -- and, of course, in case you missed the point, it's a clear signal from the Saudis that the price for Brent crude better not sink below $100/bbl.

Given the prosperity of the Gulf States piggybacking on extortionist oil prices while the world's economies are reeling, it is well past time for those in charge of our government, especially now, given our growing domestic production of oil and gas bringing us to the cusp being free of all dependence on Persian Gulf and Eastern Hemisphere oil supplies, and natural gas supplies altogether, take the initiative to whisper sweet 'somethings' into their assembled ears before the OPEC meeting, somewhat along the following lines:

"Gentlemen, your oil cartel game in restraint of free trade in oil markets has gone on for too long. It's time you bellied up to the bar and paid your fair share to rectify one the greatest economic distortions, shell games and hijackings in human experience. If you continue to obstruct a free market in oil pricing, we the United States will in short order withdraw our Naval Task Force plying the Persian Gulf at a cost to America's citizens of hundreds of millions a day, and leave you and your coastline undefended by us. We would, of course, wish you well in dealing on your own with your neighbor Iran and its murderously bellicose ambitions.

And good luck!"

 

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