OPEC Keeps Production Down
Although OPEC member states have about 75% of the world’s oil reserves, OPEC controls about 35% of oil production worldwide. Their production quotas create an artificial scarcity by holding back supply. The Saudis in particular hold a tight grip on the production lever, keeping the flow slow and profits high. They pushed OPEC to reduce production in 1998, and it has never been restored to those levels.
Meanwhile, the Bush family has long standing private and governmental ties with the Saudi Royal family. For years, the U.S. Navy and Marine Corps have been the protector of last resort in the Middle East. U.S. taxpayers pay $136 million a day to protect Saudi oil wells while the Saudis treat us like they own us. Oil was below $12 per barrel in June 1998 and was still as low as $20 per barrel in December 2001 (after 9/11). While the price of oil has increased over 500% since the Iraq war began, the production cost to the Saudis has remained about the same - about $2 per barrel.
The Bush government has done absolutely nothing to reduce our consumption or help us make substantial changes towards alternative fuel sources.
The Strategic Petroleum Reserve
Meanwhile, Bush/Cheney policy is to replenish the Strategic Petroleum Reserve no matter what the price of oil is. When the price of oil was skyrocketing, Bush used his 2007 State of the Union address to propose that we expand the capacity of the Strategic Petroleum Reserve to twice its current level… creating an open invitation for OPEC to keep prices high as we continue to buy whatever they put on the market.
Why does the Strategic Petroleum Reserve matter so much? It currently holds about 700 million barrels of oil (worth over $70 billion at current value). This takes a huge amount of oil off the market, and if you ever took Economics 101 you know that reduced supply results in higher prices. But the psychological message it sends to OPEC is just as important. When we don’t use the SPR as our supply and demand leverage, it allows OPEC to control production and prices however they would like.
Bleeding us Dry
The oil industry and their lobby are enormously powerful players in the Bush/Cheney era. While the administration has had to tap into taxpayers pockets for recent Wall Street bailouts, they have allowed the oil industry to suck its money straight out of our back pockets.
The United States needs an oil policy that leverages the power of our demand on the world market. We can decrease the amount we’re paying for oil while simultaneously decreasing our military spending in the Middle East. It’s time that we stop sending a financial pipeline to the Middle East. It’s bleeding common people dry, fattening the Bush/Cheney oil elites, and destabilizing the entire region.
What I’ll Do in Office
Take action NOW. People can’t afford to drive to work with gas prices at $4/gallon. They need help today, which is why I support opening the Strategic Petroleum Reserve. Feed the market and drive retail prices down. And, it sends the right message to OPEC nations: business as usual is over. The US should begin tightening the screws with our purchasing power-and what better time than now to remind them of the $136 million daily subsidy we are providing to serve as their de-facto Department of Defense.
President Clinton tapped the Strategic Petroleum Reserve in 2000. It’s time to take the same bold action-NOW.
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