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Cartel That Couldn't Suddenly Can — Thanks To U.S. Shortsightedness
IBD ^ | March10, 2008 | Robert Samuelson

Posted on 03/10/2008 6:08:51 PM PDT by Kaslin

For much of its 47-year existence, the Organization of the Petroleum Exporting Countries has been a cartel in name only. It could not control oil prices because many of its members regularly breached the production quotas that were intended to regulate the market.

So OPEC followed oil prices up and down, as supply and demand shifted. But now OPEC may be the real deal: a cartel that works. If so, that's bad news for the rest of the world.

Look no further than last week's OPEC meeting in Vienna. Oil ministers declined to increase production despite a strong case for doing so. Not only were oil prices fluttering above $100 a barrel, but the U.S. is either in or near a recession and much of the rest of the world faces an economic slowdown.

What's wrong is that a fall of oil prices is one of the mechanisms by which a recession or economic slowdown corrects itself. Lower prices for gasoline, home heating oil and diesel fuel improve consumer purchasing power. They muffle inflation and increase confidence. In this sense, they're an important "automatic stabilizer" for a faltering economy.

Oil producers don't much care. High prices have been good to them. Since 1999, annual oil revenues for OPEC countries have more than quadrupled, to an estimated $670 billion in 2007, says energy economist Philip Verleger Jr.

(Excerpt) Read more at ...

TOPICS: Business/Economy; Editorial
KEYWORDS: cartel; exxon; opec; sevensisters

1 posted on 03/10/2008 6:08:52 PM PDT by Kaslin
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To: Kaslin
Hey, what's not to like??

2 posted on 03/10/2008 6:17:24 PM PDT by Notary Sojac ("John Mc Cain here. I'm not a conservative, but I play one on TV...")
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To: Kaslin
I think it's time for the OPIC cartel. Organization of Petroleum Importing Countries.
3 posted on 03/10/2008 6:17:58 PM PDT by RoadKingSE (How do you know that the light at the end of the tunnel isn't a muzzle flash?)
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To: Notary Sojac

I suggest you crawl back under the rock you slid out from

4 posted on 03/10/2008 6:22:30 PM PDT by Kaslin (Peace is the aftermath of victory)
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To: RoadKingSE

We should start by pouring weapons into Israel for an attention getter.

5 posted on 03/10/2008 6:22:30 PM PDT by blueheron2 (Half a loaf is better than none.)
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To: Kaslin

The next clown who says oil is traded on the free market needs some serious therapy. OPEC is, has, and will always shaft us for all they can get. The idiot liberals/treehuggers who refuse to let us drill in ANWAR, off the coasts of California and Florida, and anywhere else we damn well please are just as guilty. I’m still not convinced EXXON Mobile, Chevron, or the other oil companies give a rats a$$ either. I know that President Bush is pretty apathetic on this issue by his lack of action.
There goes my pay raise in April, it will be lining the pockets of tinpot camel jockey dictators.

6 posted on 03/10/2008 6:24:36 PM PDT by sean327 (God created all men equal, then some become Marines!)
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To: Kaslin

I think that’s a little strong.

7 posted on 03/10/2008 6:32:38 PM PDT by Eric in the Ozarks (ENERGY CRISIS made in Washington D. C.)
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To: Kaslin

These guys of course don’t really understand what determines price. We could have cheap oil prices again either by increasing supply or decreasing demand.

The supply issue is pretty obvious:

1. The US could allow drilling in certain off limit areas.

2. The US could allow oil drilling companies special tax deductions on drilling expenses. [We once did, but I am not sure if the Dims have killed those or not.]

3. The US could subsidize or allow special tax breaks for the construction of plants to produce oil from shale oil.

4. Start a new war between Irag and Iran so they have an incentive to produce beyond their OPEC quota to buy weapons.

People seem to be missing the demand issues:

A. We could help bring back international communism. A little Maoism revival in China and oil prices would drop like a rock. A little socialism in India would help too.

B. Americans could conserve too as the Dims want.

To me the demand options are not so good nor is supply option 4. So I favor the first three of the supply options to the extent they are realistic.

That is I don’t know how much subsidy it would take for a shale oil plant. I do not favor subsidizing the production, just building the plant if that is the stumbling block to producing oil from shale oil. More production in other areas is fine with me too.

8 posted on 03/10/2008 6:33:41 PM PDT by JLS
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To: Kaslin; Notary Sojac; Eric in the Ozarks

You think that pic is revolting, you should see the one with Bush *kissing* those murderous, 6th century subhumans.

THAT’S revolting, stomach-churning and vomitorious.

9 posted on 03/10/2008 6:40:22 PM PDT by do not press 2 for spanish
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To: sean327

Oil is traded on a market although there are various side agreements. Oil is certainly not produced in a competitive market. Combining the production cartel with our own environmental cartel is economic stangulation in action.

Bush tried for most of his presidency to increase oil production. He could not get any cooperation from the rats and rinos. He now seems to have given up. He never even mentions domestic production. He sings the praises of biofuels and hydrogen.

In defense of the rats, they now admit that they cannot bring down the price of fuel for at least 5 years. SHE has stated that oil will fall after HER election. It seems that the oil markets have already reacted to rat control. If it appeared that conservatives were taking control and opening domestic production, the price would collapse.

10 posted on 03/10/2008 8:05:19 PM PDT by businessprofessor
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To: businessprofessor

Oil is certainly not produced in a competitive market


Dittoes for the rest of your post. You should start a thread with your brilliant essay.

Add to this that Bush has begged the Saudis aka OPEC to increase oil productions and they refused. So we see a transfer of wealth that the world has never seen before to the nations of the Gulf.

Seen what is happening in Dubai lately?

11 posted on 03/10/2008 8:10:46 PM PDT by eleni121 (Solzhenitsyn on the bombing of Serbia: "no difference whatsoever between NATO and the Nazis")
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To: Kaslin
Well, when I see the President of my country making goo-goo eyes at that terrorist-enabling, Jew-killing, camel-buggering sack of crap in a turban, I wish I could crawl under a rock.

Unfortunately I don't have that choice, I have to live in the world that they are making for me and my family.

12 posted on 03/11/2008 6:06:36 AM PDT by Notary Sojac ("John Mc Cain here. I'm not a conservative, but I play one on TV...")
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Each of your proposals has merit. Unfortunately, the tree-huggers would stop any new drilling or construction in favor of strangling the economy.
13 posted on 03/11/2008 6:13:41 AM PDT by Pistolshot (Remember, no matter how bad your life is, someone is watching and enjoying your suffering.)
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