Feeling OPEC’s Pain

The following is an excellent excerpt from the book “THE GREAT UNRAVELING: Losing Our Way In The New Century” by Paul Krugman from Part Four “When Markets Go Bad” from Chapter 13 “Smog and Mirrors” on page 333 and I quote: “Feeling OPEC’s PainAugust 5, 2001 – George W. Bush said something interesting about economics the other day. No, Really. It wasn’t his usual line about how tax cuts are the answer to whatever ails you; he said something unscripted, something that reflected what he really thinks and feels. You might say that his remarks gave us a sense of his soul. And it turns out that his soul–or maybe it’s just his heart–belongs to people, of whatever nationality, who sell oil.
Recently Mr. Bush was asked about the decision of the Organization of Petroleum Exporting Countries to reduce output by a million barrels a day. That’s about as much as the Department of Energy’s estimate of peak daily production if we drill in the Alaskan tundra–a peak that won’t come until the middle of the next decade. And OPEC cut production in order to keep oil prices high despite slumping world demand, which would seem to be against U.S. interests.
Yet Mr. Bush was remarkably sympathetic to OPEC’s cause; it seems that he feels the oil exporters’ pain. “It’s very important for there to be stability in a marketplace. I’ve read some comments from the OPEC ministers who said this was just a matter to make sure the market remains stable and predictable,” he declared. Just in case you wonder whether this was really an endorsement of price-fixing, or whether Mr. Bush was just being polite, his spokesman, Ari Fleischer, left no doubt: “The president thinks it’s important to have stability, and stability can come in the form of low prices, stability can come in the form of moderate prices.”
This is the same man who boasted during last year’s campaign that he would force OPEC to “open the spigot.” Did OPEC take Mr. Bush’s remarks as a green light for further cuts?
According to one oil analyst interviewed by Reuters, Mr. Bush’s apparent expression of support for their efforts to keep prices high “excited a lot of OPEC ministers.”
Funny, isn’t it? When California complains about high electricity prices, it get s lecture about how you can’t defy the laws of supply and demand. But when foreign producers collude to prevent prices from falling in the face of an oil glut, the administration not only signals its approval but endorses the old, discredited theory that cartels are in consumers’ interest.
This was not the only case in which the administration dropped its principles when the subject turned to oil. The energy bill the house passed last week was notable for its indifference to environmental consequences and its lack of serious conservation measures–increased fuel-efficiency standards could easily save far more oil than we’ll ever get by punching holes in the tundra.
But the most amazing thing is that the bill contains more than $50 billion in subsidies and special tax breaks for energy producers. That’s even more amazing given that money is looking very tight: Republicans are nervously awaiting new budget projections, which everyone in Washington expects will show that the tax cut has wiped out the non-trust-fund budget surplus for the foreseeable future.
So it seems that many of the administration’s principles contain a special clause, making an exception when it comes to oil. The administration tells people that they should place their trust in the free market, and accept the fact that prices will move up and down with changes in supply and demand–unless those people happen to be selling oil. And the administration tells countries that they must expect the U.S. to stand up for its own interests, and that our government doesn’t worry about offending their delicate sensibilities–unless those countries happen to be selling oil.
Mr. Bush was, needless to say, naive in ascribing any altruistic motives to the OPEC ministers. They don’t want stability, they want money–your money. And their action didn’t do the world economy a favor–on the contrary falling oil prices were one of the things that economists had hoped might reduce the risk of a global recession. So OPEC’s decision to cut output, which Mr. Bush seems to condone, was bad for the world, and bad for the people of the U.S.–except, of course, for those people who happen to be selling oil.”
(THIS IS SOMETHING THAT THE BUSH-CHENEY ADMINISTRATION, EVEN THOUGH THEY DECLARED WAR ON IRAQ, THINKING THEY WERE GOING TO CAPITALIZE ON OIL PROFITS, REALLY BACKFIRED. THEY STIRRED UP THE ARAB EMPIRE SO BAD THAT THEY ACTUALLY UNITED MANY OF THE ARAB GROUPS THAT WOULD HAVE WORKED WITH THE UNITED STATES AND THE EUROPEAN UNION. THINGS HAVE GOTTEN BETTER SINCE PRESIDENT OBAMA BECAME PRESIDENT. THE OIL SITUATION HAS SETTLED DOWN AND BIN LADEN HAD BEEN KILLED. SOMETHING THAT PRES GEORGE W BUSH NEVER COULD MANAGE. IN FACT, AFTER 9/11 HAPPENED, HE GROUNDED ALL THE AIRCRAFT IN THE UNITED STATES WITH THE EXCEPTION OF THE AIRCRAFT FLYING OUT MEMBERS OF THE BIN LADEN FAMILY WITHOUT EVEN QUESTIONING THEM, WHICH SOUNDS ALMOST UNBELIEVABLE, AFTER THE HORRIFYING PICTURES YOU SAW WHEN THE TWIN TOWERS WENT DOWN.
LaVern Isely, Progressive, Overtaxed, Independent Middle Class Taxpayer and Public Citizen Member and USAF Veteran

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About tim074

I'm a retired dairy farmer that was a member of the National Farmer's Organization (NFO). Before going farming, I spent 4 years in the United States Air Force where I saved up enough money to get my down payment to go farming. I also enjoy writing and reading biographies and I write about myself as well as articles and excerpts I find interesting. I'm specifically interested in finances, particularly in the banking industry because if it wasn't for help from my local Community Bank, I never could have started farming which I was successful at. So, I'm real interested in the Small Business Administration and I know they are the ones creating jobs. I have been a member of Common Cause and am now a member of Public Citizen as well as AARP. I have, in the past, written over 150 articles on the Obama Blog (my.barackobama.com) and I'd like to tie these two sites together. I'm also on Twitter, MySpace and Facebook and find these outlets terrifically interesting particularly what many of these people did concerning the uprising in the Arab world. I believe this is a smaller world than we think it is and my goal is to try to bring people together to live in peace because management needs labor like labor needs management. Up to now, that hasn't been so easy to find.
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