Only a week ago, George Bush was on hand and knee begging the King of Saudi Arabia to send the US more oil. The gesture may get him some lucrative speaking engagements in the region once he has retired, but that will be the extent of it.
Word from some OPEC ministers is that they may actually tighten oil supplies. The reasoning is that most winter stocks of crude needed for the winter in the Northern Hemisphere have already shipped and a slowing economy should bring demand back to earth. According to The Wall Street Journal "some players within OPEC are talking now about the potential need to cut production, if not at this gathering, then perhaps at the club’s regular session in March."
The news reinforces the fact that OPEC is about money and not about supplying oil per se. High oil prices may be high partially because of speculation and the value of the dollar. But, they are more about the insatiable demand for crude in the US and developing world, especially China. They are also about the amount of oil now kept by oil producing countries to fuel their own cars and help them build new infrastructure.
Cutting the oil supply will almost certainly raise prices for OPEC members. That will bring them more money into their financial systems, more money to invest in US companies and real estate, It is also a stab at the heart of the global economy.
Douglas A. McIntyre
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