We must reduce dependancy on foreign oil.

As oil prices fall, OPEC faces production dilemma
By Jad Mouawad
Published: September 4, 2008 - International Herald Tribune


"The focus of the debate among OPEC ministers gathering in Vienna next week will not be whether there is a need to cut crude oil production, but rather when," PFC Energy, a consulting firm, wrote in a note Wednesday. "The question facing OPEC ministers is the optics of how to engineer this reduction."

Some analysts suspect that OPEC is already trying to prevent prices from dropping below $100 a barrel by discreetly paring production.

Saudi Arabia, for example, has reduced its output in the past month by 50,000 barrels to 100,000 barrels a day, according to various estimates. Saudi Arabia, like most OPEC producers, does not provide timely production figures.

Many questions remain unanswered: What is the minimum price that OPEC is willing to defend? Can the cartel prove more effective than it has in the past at imposing discipline among its members? How low does Saudi Arabia want to see prices fall?

OPEC accounts for about 40 percent of the world's oil production. It does not set prices directly. Instead, its members manage global supplies through production quotas that are periodically assigned to all member countries except for Iraq.

Its 13 members are, ranked by July production level, Saudi Arabia, Iran, the United Arab Emirates, Kuwait, Iraq, Venezuela, Nigeria, Angola, Libya, Algeria, Qatar, Indonesia and Ecuador. Indonesia, which has become a net importer of oil, will leave the cartel at the end of the year.

"There is a clear divergence within OPEC between countries that want to keep oil prices high, such as Iran and Venezuela, and those that want to lower prices to a level where they do not hurt global demand, such as Saudi Arabia," Brad Bourland, chief economist at Jadwa Investments, said this week.

The Planter comments: America is reducing foreign oil consumption by one million barrels a day. OPEC is becoming concerned with our falling consumption and determination to become less dependent on their oil. As Americans we must demand that oil get back to at least half of what they desire for each barrel. There's plenty of oil, but they want to gouge us. Let's keep driving less and put more money in our pockets and less in our gas tanks. OPEC may have already sealed there long term fate. Americans will not tolerate much more of this. Our momma's didn't raise a bunch of dummies.