What is in this article?:
- OPEC unravels as 'rogue' nations exert muscle
- Pain at the pump
- America has a new political problem - the Organization of Petroleum Exporting Countries, or OPEC.
America has a new political problem - the Organization of Petroleum Exporting Countries, or OPEC. According to a new article from the Financial Times, internal political struggles are redefining how the cartel sets policy. As FT Commodities Editor Javier Blas notes, it is the rogue nations such as Iran and Venezuela that are seeking to keep oil prices above $100 per barrel to help balance domestic balance sheets after years of "rampant military spending" and other domestic investments.
The fact that nations with expressed disdain and desire to harm Americans and our allies are driving OPEC policy and holding the world oil market hostage should be a compelling reason to stop dragging our feet on investments in domestic renewable alternatives. The following is a recent post on the RFA blog, The E-xchange:
Just when America had all it could handle with the intense political struggle on Capitol Hill and around the country, a new column by Financial Times Commodities Editor Javier Blas tells us that the internal politics of the Organization of Petroleum Exporting Countries, or OPEC, may be far more troublesome.
Blas reports that after nearly a decade of relative cooperation among the member countries, the coalition is beginning to unravel. Blas warns that the more moderate voices in the cartel (yes, amongst this group Saudi Arabia is the moderate voice) are losing their influence.
Instead, rogue nations like Iran and Venezuela are exerting more influence in a drive to keep global oil prices above $100 per barrel. Previously, this level was thought to be too high and would result in demand destruction that the cartel sought to avoid. But no more. As Blas writes, “The hawkish camp needs much higher prices than it did over the last decade to survive economically. Venezuela, Iran and their allies need oil prices above $100 to balance their budgets after years of expansionary policies, generous subsidies and rampant military spending.”
That last rationale for higher oil prices should give everyone pause. Nations with expressed ill-will and desire to see America fall are seeking to bolster their efforts by increasing the rate of wealth transfer from America to oil-rich regimes. Americans are already sending nearly $1 billion a day overseas to pay for our oil addiction.
All of this comes against a backdrop of American political angst and misleading efforts to derail America’s pursuit of renewable alternatives to oil. Many lawmakers, including those claiming to be tough on countries hostile to the U.S., are seeking to undermine the growth and evolution of American ethanol and biofuel production and cement oil’s position as the default American fuel. They are seeking to prevent the installation of blender pumps that offer consumers a choice when refueling. They are seeking to pull the rug out from under and industry that is still maturing and threatening to derail the progress of new ethanol technologies like cellulosic ethanol production. The only outcome of such policies is higher gas prices and an increase in oil imports – the exact outcome for which Hugo Chavez and Mahmoud Ahmadinejad are cheering.