Monday, March 28, 2005

Keeping US hooked on oil

It's become common wisdom (and therefore suspect in my book, but go with me on this) that until Democrats can somehow earn some kind of national security street cred we'll never win a national election. Happily the brain-trust at BushCorp™ is giving the Dems a terrific opportunity through its corrupt and disingenuous approach to US energy consumption. Or perhaps they're just fools.

The oil-pushing potentates at OPEC are certainly no fools, however, as they demonstrate by acting this week to increase oil production:
Oil analyst Victor Shum at Purvin & Gertz in Singapore said he expects prices to ease further due to the seasonal drop in demand in the second quarter.

"In the short-term, the crude oil market looks to be well-supplied," he said. "There will be some downward correction."

However, other analysts caution that strong demand from China and other growing economies would probably keep prices high over the medium term.

The Organization of Petroleum Exporting Countries said Sunday that the group will take its time in increasing output quotas by an additional 500,000 barrels per day due to global petroleum market fluctuations.

"Oil prices have witnessed fluctuations on world markets in the past two days, which prompted the organization to take its time in implementing the second increase," Abdel-Rahman al-Khreiji told Kuwait's state news agency, KUNA, in Vienna.

OPEC agreed earlier this month to raise production quotas by 500,000 barrels per day and said it would consult on whether to increase them by a further 500,000 if prices continued to rise.

Khreiji said OPEC will monitor petroleum prices in the coming few days.

"If it finds that there is a need to interfere, the cartel president will consult with the remaining ministers to specify a date for implementing the new increase," he said.
The trick for OPEC is to keep edging prices up while at the same time not raising them so high that consumers (especially in the US) might adjust their usage. The worst thing that could happen as far as OPEC is concerned is a sharp spike in prices (say to Arab oil embargo levels) that might create enough political will for us do actually do something to kick the fossil fuel habit
In fact OPEC owes its very existence to US efforts in the late 50s to limit our reliance on mid-eastern oil:

In 1959 the U.S. government established a Mandatory Oil Import Quota Program (MOIP) restricting the amount of crude oil (and refined products) that could be imported into the United States. The MOIP gave preferential treatment to oil imports from Mexico and Canada. This partial exclusion of the U.S. market to Persian Gulf producers depressed prices for their oil…

In September 1960 four Persian Gulf nations (Iran, Iraq, Kuwait, and Saudi Arabia) and Venezuela formed OPEC, the purpose of which was to obtain higher prices for crude oil. By 1973 eight other nations (Qatar, Indonesia, Libya, the United Arab Emirates, Algeria, Nigeria, Ecuador, and Gabon) had joined OPEC. Ecuador withdrew on the last day of 1992.
By failing to adequately encourage both conservation efforts and alternative fuel and energy use technologies, the US government continues to leave the American public at the mercy of these petroleum pushers. And as with our loan-sharks in totalitarian China, as oil junkies, the US is in no position to offend its oil suppliers. How comfortable are you with Chinese and Saudi Arabia holding de facto veto power over US policy?

BushCorp™ will, of course never betray the members of its special friends and family plan (otherwise known as big oil), by taking steps to decrease US oil dependence (and of course reduce the donor class' profits). Since the simplest way to achieve conservation and finance new technology is through a substantial gas-tax (Tom Friedman recommends a tax to keep gas at $4/gallon) the Republicans, who won't even support a tax increase to support a war effort, will never summon the will to do what needs be done. This leaves the "energy as national security" issue wide open to Democrats.

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