PetroDispatch, March 3: Oil Soars As Lawmakers Demand OPEC Action. But they refuse to help increase U.S. production. U.S. oil prices skyrocketed to a fresh nine-year high as members of Congress demanded the Clinton administration cut off U.S. assistance and arms sales to OPEC members to prod the cartel into rolling back production cutbacks and pump more oil.
But at the same time the lawmakers and candidates failed to release restricted areas to offshore drilling.
(Candidates on Offshore Drilling: dailynews.yahoo.com )
What's really going on? I don't believe the government leaders are interested in solving the problem; they are only interested in being elected. Therefore, they see no conflict in talking out of both sides of their mouths. And to make matters even worse, the public believes them.
If there were a true interest in reducing the power of OPEC, the ban on drilling offshore California and Florida would have been lifted long ago. We also should have been concerned when OPEC suffered from low crude prices. Part of today's high price is a result of yesterday's low price, which destroyed the domestic O&G production industry and handed power over to OPEC.
Washington seems only able to generate hot air instead of solutions. Energy Secretary Bill Richardson, newly returned from a week-long energy diplomacy trip, said he was confident OPEC would soon agree to a ``substantial' increase in oil production when the group meets on March 27. But the oil market ignored him as U.S. crude oil futures shot up by a breathtaking $1.34 to close at $31.77 a barrel.
The price increase was fueled mostly by new U.S. government data showing another tumble in inventories, and traders' skepticism that OPEC is willing to increase production enough to make a difference. Also there is growing concern that Venezuelan oil workers will strike on Friday.
Richardson faced intense criticism from U.S. lawmakers, who want the administration to punish OPEC and other major oil exporting nations by halting U.S. assistance and arms sales. Again, real smart; another U.S. exporting industry might get hurt in Washington's quest to provide hot air for the voting public. OPEC will just buy from Europe and Russia.
Another option is for the United States and other consuming nations to file an international antitrust lawsuit against OPEC for its price-fixing activities, said Rep. Jim Leach, an Iowa Republican who sits on the panel and is chairman of the influential House Banking Committee. Again, more hot air. Considering the overwhelming percentage of lawyers, it is surprising no one points out that U.S. antitrust laws don't apply to foreign governments.
And finally for the dumbest idea, both Republican and Democratic members of the panel also urged the administration to use some of the 570 million barrels of crude oil stashed in the Strategic Petroleum Reserve (SPR) to ease prices. The original purpose of the reserve was to protect the U.S. from supply embargo, not high prices. Of course, I don't think it will work if in the future we are really faced with the problem; it is more pabulum for the masses that wastes your taxes today.
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