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Jawbone OPEC?

MB has often written about the recent rise in oil prices. Oil is currently trading at $35.80 per barrel for US light crude. Gas prices are also hitting record highs:

Gas prices crept to another record high Tuesday, a day before OPEC meets to discuss its planned oil production cuts in April.

The AAA's survey of gas prices hit a new record of $1.753 a gallon on Tuesday, up 3/10th of a cent from Monday's average. It marks the sixth straight record for the survey, which is updated every weekday.

John Kerry thinks that the administration should be doing something to reduce gas prices:

Massachusetts Senator John Kerry, the Democratic candidate for U.S president, plans to call on President George W. Bush to pressure oil-producing nations to pump more petroleum …

Is jawboning OPEC to increase production a useful suggestion?

Even before the recent spike in oil prices, one presidential candidate thought jawboning OPEC was the right idea:

“What I think the president ought to do,'' he said while campaigning in New Hampshire where heating oil prices were soaring, “is he ought to get on the phone with the OPEC cartel and say, `We expect you to open your spigots!'''

Just because we expect OPEC to open the spigots, it seems unlikely that they will do so unless they perceive it to be in their interest. Is it in their interest? One presidential candidate, at a New Hampshire debate, thought so:

Q: What pressures should be brought on OPEC nations to lift oil production?

A: It’s important for the president to explain in clear terms what high energy prices will not only do to our economy, but what high energy prices will do to the world economy. It is in the Saudis’ best interests for the price of oil to mellow out. It’s not only in our country’s best interest; It needs to be explained to them it’s in their best interests. And I will do so.

Do we have any special leverage over the Middle East oil producing countries to induce them to increase production, thereby reducing prices? One presidential candidate thinks so. He suggested that as president:

He would use his “political capital'' with Mideast producers. “These are countries where it wasn't all that long ago that a President Bush helped Kuwait,'' he reminded voters, alluding to … the Gulf War.

”I think Americans ought to be asking where's all the capital we earned overseas after defending some of our OPEC nation friends?''

In each of those cases, the presidential candidate was, of course, George W. Bush.

The OPEC oil ministers are to begin meeting in Vienna on Wednesday where they are expected to discuss a cut as opposed to an increase in production. Perhaps President George W. Bush should listen to advice from candidate George W. Bush.

Posted by Dwight Meredith at March 30, 2004 01:51 PM | TrackBack