Iran, OPEC's second-largest producer, argues it's too early to raise production, especially in the second quarter when demand for oil normally falls as the Northern Hemisphere winter subsides. The legacy of $10 oil seen in December 1998 pervades OPEC's debates.
``All these guys know prices are too high,' said Bill
O'Grady, director of fundamental futures research at A.G. Edwards & Sons in St. Louis. ``It's just that they are still spooked by $10 oil and they don't want those days to return.'
That's the most important point in that article you presented to me. They know the price is too high but they are afraid of crashing the oil market with unrestrained cut-rate pricing policies. So the result is that they take the other extreme, underproduction.
So to take the pressure off of them, we should release a million barrels a day to ease the US requirement for importing foreign oil until the spot price moderates, or later this fall. That would constitute roughly 25% of our SPR and send a strong signal that the US will not be held hostage to economic extortion.
But then again, I guess this could prove to be a prime opportunity for the Federal govt to reduce its exise tax on gas and diesel, which as I last recall makes up something like 35% of the actual cost per gallon. We are running a surplus... right?? <VBG>
Btw, gas is $1.54/gal on average for regular, here in the DC area.
Regards,
Ron |
