Crude Comments

Oil prices continue to tumble. The dictators at OPEC are really starting to worry now, and are struggling to find answers. Is anybody feeling sorry for them? If so, it’s the world’s smallest violin I hear playing!

Most editorials say that things are beyond OPEC’s control because of the now, world-wide recession, in which, presumably, most people are reducing their gasoline use because their personal economies are in trouble. I think this is all reverse thinking.

I will maintain that it was the oil price increases that we’ve seen for over a year now that are the root cause for most of the economic slide. Yes, the mortgage crisis is huge and was bound to boil over regardless of oil. But the mortgage mess hit us at our weakest moment. A round-house right which hit us squarely when we were already reeling with unprecedented high energy costs. Had we been in the midst of cheap energy and low inflation, I think we’d been much better off to deal with the rest. Our “immune system” would have offered a far stronger fight!

We still have to realize that everything begins with energy. Plentiful and reasonably priced energy. And at this point, energy means oil. Not windmills or solar panels. Many people, mostly dems, still don’t get it. At least, they don’t seem to be doing what it takes to help fix it.

Likewise, OPEC doesn’t get it. They are now feeling the effects of their own action. It’s what tends to happen when you abuse your number one customer, in this case, the United States. We are still the economy that runs the world. And all it takes is for us to decide that we want to cut consumption by just a few percentage points and it can ruin the market for OPEC.

The reason I say that OPEC hasn’t learned, is that they are still considering production cuts in order to try and drive the price back up! They don’t see that a threshold has been established. It’s somewhere around that $100-per-barrel price, and if they insist on trying to price the product at that level or higher, then the market will begin to correct itself all over again.

Again, the dems and all other anti-oil folks could look at this and see what an increase in our own domestic oil production could do to pricing from the middle-East. Drill just a little more and allow us to reduce what we purchase from OPEC, and you cut their legs out from under them. All we need is just a few percent increase to make a difference.

In the meantime, we’ll continue to struggle with whatever OPEC decides to bestow upon us. But should we choose to elect the right party next week, we can begin to assert some real pressure through our own increase in domestic exploration and drilling. And if OPEC thinks that they still need $100+ pricing, then they will just be hastening the drive to alternative sources also. Sounds like a Catch-22 to me, and it couldn’t happen to a nicer bunch.