REVIEW
OPEC's public rationales and the logic they employ make little or no sense when one studies their words, as you wonder who taught them the market concepts of supply and demand and as we think about which American Presidential candidate will have the guts to develop a serious alternative energy plan for America's future.
Strategy One
In the basic supply-demand concept, companies naturally and understandably want the ideal, which is to have demand for their product be much greater than the supply they produce. That allows the company to maintain a higher price for that product, sometimes referred to as a premium, and in the world of capitalism, consumers pay "what the market will bear."
Strategy Two
Additionally, some companies make the effort to control the absorption rate with which their products enter the marketplace, which simply means that they want to control - and maintain, through how much they produce - their preferred prices for their products as often as they're able.
Now, the first strategy is standard fare. No big whoop.
But the second strategy is where we've had problems with OPEC and America's oil companies. We've heard almost minute-by-minute contradictions over the years as to why the price of a barrel of oil suddenly spikes up . . . a fire at a particular facility or pipeline, some civil unrest in a major oil-producing country, etc., etc.
But now, because the equities markets (stocks) worldwide are doing so poorly and because the U.S. dollar is so painfully low against the Euro, the Yen and numerous other world currencies, despite the lowest interest rates from The Federal Reserve and World Bank, we're now hearing an ever-growing chorus of contradictions - and internal division - coming from OPEC as to why we're fast approaching $150 a barrel oil.
For example, does OPEC like the $4 plus per gallon in the U.S.? Some oil ministers say no, because it hurts demand. True enough.
Yet today we have King Abdullah of Saudi Arabia, the world's number one oil exporter, blaming speculators while also calling on consuming countries to get used to high prices.
Also today, we have Chakib Khelil, the president of OPEC, say that they have concerns that future demand for oil may be in jeopardy because of the now increased chances we'll find some alternative fuels.
Hey, you can't, on the one hand, expect us to believe you're unhappy with the current price per barrel because it so negatively impacts demand, then tell us to get used to paying $4 per gallon or more at the pumps while at the same time express concern about a loss in future demand and still expect us to believe that the blame for current prices fits squarely on commodity speculators!
And if you're so concerned with future demand on the wane, wouldn't you want to do whatever it took to discourage or prevent your customers from pursuing fuel alternatives, either by making price adjustments down or at least increasing production so that natural economic supply and demand forces create a more stable and reliable environment for everyone?
Oh, then of course, there's the P.R. part of this picture.
With the manipulations and threats OPEC has made for the past 35 years - along with the inexplicable record profits American oil companies have enjoyed - we may all be just about ready to start kicking each of them to the curb, little by little.
We can start by putting Turbine Wind Farms (with solar panels) atop every acre of landfill, connected nationwide to a grid that stores and distributes enough energy to power their respective communities - and still be able to share the surplus elsewhere.
Hey, it works in Hull, MA.
It can work for us all with the power of a new President behind us.