Prepare for higher gas prices=OPEC cuts production 4%

[cycloneye]

This decision means that the prices at the pump will go higher than they are now so by summer prepare for record high prices. :

http://money.cnn.com/2004/03/31/news/in ... tm?cnn=yes

[stormraiser]

Open ANWR NOW!!!!

[yoda]

Open ANWR NOW!!!!

That would be a bad choice right now...

[TexasStooge]

I still smell a rat whenever I see gas prices constantly increasing.

[Josephine96]

Yesterday I actually saw 1 gas stations prices raise 3 cents in a couple hours..

They were 1.76-1.86-1.96 when I went by about 10am

By 1:30pm they were 1.79-1.89-1.99

Lots of price raisin'

[rainstorm]

OPEC Is No Friend of Ours
by Jerry Taylor

Jerry Taylor is director of natural resource studies at the Cato Institute.

Is the OPEC cartel a good thing for consumers? Its raison d'etre, after all, is to radically restrain production in order to jack up oil prices. Given the political and economic angst sparked by the recent spike in gasoline prices, you'd think that the answer would be rather obvious. You would, however, be wrong. Rather than come up with a plan to bust up the cartel, most Washington politicos and policy mavens are content to leave the cartel alone and, in fact, defend OPEC against those who want to tear it down.

OPEC apologists contend that the cartel assists in stabilizing oil prices. The record, however, suggests otherwise.

In the period between World War II and the formation of OPEC, the inflation-adjusted price of oil fluctuated little. Oil prices indeed jumped during the Middle East crises of 1956 and 1967, but they fell back quickly. In fact, the inflation-adjusted price of oil -- indexed by GDP -- fell by about two-thirds from 1945 to 1970.

From 1970-1980, however, the real price of oil rose by about 1,300 percent. Between 1980 and 1986, it dropped by about two-thirds. It was fairly steady between 1986-1997, fell farther in 1997-1998, and then nearly quadrupled after February 1999. This is stability?

Cartel prices fluctuate more because they are less certain than normal market prices, inviting speculation. In short, market agents are forced not only to consider global supply and demand but also to factor in OPEC's behavior and its members' fidelity to their promises. Hence, the market is less predictable and prices are accordingly more volatile.

The price spike in late 1973 is instructive. There were only trivial changes in world oil supply yet prices rocketed, a phenomenon that can only be explained by buyers' panic.

Others believe that OPEC is doing us a favor by producing oil in dribs and drabs because underproduction now postpones the end of the oil age. The widely advertised, long predicted end of the oil age, however, is like the horizon -- forever receding as we move closer to it.

How would we know if oil was indeed becoming scarcer? The only certain metric would be finding costs. If oil stocks were indeed dwindling, it would be more expensive to find and develop each additional barrel of oil. Up until about 15 years ago, however, finding and developing costs were trending downwards, not upwards.

Since then, most of the data on the matter have simply disappeared. As an alternative, economists Morry Adelman and Campbell Watkins tabulated the sales value of proved reserves in the United States, information that serves as a window on the value of oil reserves anywhere in which oil finders can go freely and invest. From 1982-2002, however, the price of existing reserves did not increase, demonstrating that the market does not believe oil in the ground is an appreciating asset.

Someday, of course, oil stocks will indeed begin to dwindle. When that might be, however, is unknowable because new technologies continue to emerge that make finding and producing oil cheaper than ever before. Regardless, we don't need OPEC to manage the future. When depletion becomes a real problem, oil prices will rise of their own accord and economies will adjust because prices today reflect expectations about prices tomorrow.

OPEC's defenders also contend that high oil prices bring political stability to the Middle East and that low oil prices bring political instability. Perhaps. But why is a stable Saudi, Iranian, or Libyan regime in our interest? While we could perhaps imagine worse regimes, we could certainly imagine better. But more to the point, the argument that these undemocratic, oppressive, ideologically bizarre, and terrorist-friendly regimes are propped-up by high oil prices is scarcely a strong argument for applauding the cartel's machinations. In fact, President Bush's program to encourage human rights, democracy, and peace in the Middle East will not succeed as long as these regimes remain in power in their current incarnations.

Let's be clear about what's at stake. If OPEC disappeared tomorrow, oil prices would drop to somewhere around $8 a barrel and gasoline prices would almost certainly be south of $1 a gallon. A price collapse of that magnitude would do more for consumer welfare and the overall health of the American economy than almost anything that's been put on the table by President Bush or his Democratic Party rivals. Accordingly, the OPEC cartel should be resisted, not embraced, and policy should aim at undermining it, not propping it up.

[rainstorm]

this is what bush should do. he should tell saudi arabia he is withdrawing his support from them publicly. he will allow them to be butchered by islamic extremists. i think they will change their tune fast.

[cycloneye]

I favor that Bush orders the opening of the petroleum reserve that the US has to then aliviate americans from more higher pump prices and then the US can forget OPEC.

[Stephanie]

Aren't we kind of at their mercy though? Don't we get the majority of our oil from them? Plus, another source of our oil, Venezuela, has been in political upheaval for the last few years, also causing our prices to be higher.

[rainstorm]

I favor that Bush orders the opening of the petroleum reserve that the US has to then aliviate americans from more higher pump prices and then the US can forget OPEC.

that wont work cyc. clinton ordered 30 million barrels released and it lowered prices 1 cent. the real solution is simple. we need to withdraw from the un and organize a cartel of our own and eliminate trade with the oil producers till they lower prices.

[stormchazer]

We also pay an average of 65 cents a gallon in Federal and State taxes.

[GalvestonDuck]

[Stephanie]

It may come down to that Duck!

[blizzard]

Althopugh I agree that these prices are extreme, look at what we pay vs. what the rest of the free world is paying for gasoline.

And I also agree that we have to open up our reserves and start more drilling here in the US. THere is oil here, it is just being preserved for future drills. IMO

[Bunch]

Thanks, Blizzard. I'm glad that somebody besides me realizes we still pay less for gas in this country than most of the rest of the world.

Take a look at what other countries pay, folks, and maybe you'll stop whining about a measly 2.00 per gallon.

[chadtm80]

about a measly 2.00 per gallon.

2.00 per gallon is not measly to me in no way shape or form Bunch

[blizzard]

Thanks, Blizzard. I'm glad that somebody besides me realizes we still pay less for gas in this country than most of the rest of the world.

Take a look at what other countries pay, folks, and maybe you'll stop whining about a measly 2.00 per gallon.

Don't get me wrong. $2.00 per gallon is outrageous in my mind. One of the reasons other countries prices are higher, is that they use alot less. They have mass transportation methods that we will never have. So we naturally have many more vehicles on the road. Therefor using much more petroleum. I think that when we start seeing $1.79 as a bargain, something is wrong.

[rainstorm]

but a gallon of water costs more than a gallon of gas. and look at all the expense of making a gallon of gasoline. its a real bargain

[blizzard]

but a gallon of water costs more than a gallon of gas. and look at all the expense of making a gallon of gasoline. its a real bargain

My water costs me about 3 cents per gallon. Sure, I could buy it for more, but I can't make my own gasoline.

You're argument is faulted in that respect, just my opinion though.

[rainstorm]

a gallon of water at the store costs much more than a gallon of gas.