Edmund Storms wrote:
Well Steven, if you had the oil, would you agree to take less money for your dwindling resource just because Bush asked?
No, but throughout its history, OPEC has been careful to keep the price reasonably low, for two reasons:
1. To keep from hurting the U.S. economy, because the U.S. is their biggest customer. (And nowadays because they get paid in dollars, but that was never an issue in the past.)
2. To discourage the development of alternative energy source. See the book "The Prize" for details.
After all, this would mean you would also get less selling to China . . .
They get the same price no matter who they sell to. Oil is completely fungible. They don't care who buys the stuff. By the same token they want to avoid a U.S. recession no matter who else is buying, because a U.S. recession will lower worldwide demand and reduce the price of oil worldwide. For that matter, they want to avoid a Chinese recession. They would be concerned about the U.S. economy even if the U.S. were still self-sufficient and exporting oil, as it did until the 1970s. It could easily become self-sufficient again, by mandating the use of plug-in hybrid cars. The U.S. could be a member of OPEC by 2015. In that scenario, the Saudis would still prefer to see a strong U.S. economy. Except they would hate to see GM sell millions of hybrid cars a year. (Not a problem so far. Ten years after the Prius was introduced and after Toyota has sold more than a million of them, GM has not sold a single hybrid automobile. What a disgrace!)
If the U.S. stopped using oil completely, from all sources, then OPEC would no longer care about our economy. Of course, if we had the technology to do that, so would everyone else in the developed world, and OPEC would be in a desperate situation.
Besides the price will naturally drop soon as the American economy slides into depression. Why take a hit sooner than is necessary?
A U.S. depression is what they are trying to avoid. That's why they would be wise to do what Bush suggests. They should also pump the stuff and sell it as quickly as they can, before someone invents a cheaper alternative. Sooner or later, it will be worth nothing.
- Jed
