OPEC...are you serious?

OPEC is a shameful organization and we (oil consuming nations) need to do more to aggressively cut ourselves from them.

In July of this year the world was shocked when oil climbed to a record high of $147.27 and during this climb consuming nations asked OPEC to increase production to ease the pain. The International Energy Agency (IEA) even asked OPEC to increase production in 2007 and 2008 to combat the rising price of oil. Saudi Arabia agreed to increase production in May 2008 by 300,000 barrels a day. The rest of OPEC merely dismissed the concerns saying there was nothing that they could do to bring oil prices down.

OPEC was upset with Saudi's decision with OPEC oil ministers decrying the increase at every opportunity. Shokri Ghanem, chairman of Libya's National Oil Cor. was quoted as saying: "I don't know on what ground they took this decision...I think it came in response to the many requests of the United States...if they think it will help the market, I don't think so because the market is already very well supplied.'' OPEC was happy with prices over $140.00 a barrel and they were raking in the cash. A barrel of oil had risen from $70.00 (in May 2007) to over $140.00 a barrel in approximately a year and with that the coffers of OPEC members were exploding. OPEC budgets were swelling and the governments were spending the money left and right. All of this while oil consuming nations were edging into recession due to gas prices that were literally beating people down financially.

Then the current global economic recession took hold and in less than half a year oil has fallen to under $50.00 a barrel and with it the excess riches of OPEC have decreased. The price of oil has literally fallen over $100.00 a barrel and OPEC is not happy. Budget deficits are creeping into the picture and the wealth is being trimmed down as prices continue to fall. Saudi Arabia recently announced that they felt $75.00 a barrel was a "fair" price for oil. I find it fascinating that when the world was hurting OPEC wouldn't cut oil prices...but, now that they are hurting they are going to slash production by 2,000,000 barrels a day starting in January 2009. At the peak price of $147.27 that 2,000,000 barrels would have represented daily revenue of $294,540,000.00. That's right almost two-hundred and ninety-five million dollars...and that 2,000,000 only represents a 3% decrease in production. That same 2,000,000 barrels now only represents $90,000,000.00 at a price of $45.00 a barrel. That is a huge swing of $200,000,000.00. OPEC has to be the most selfish money addicted group of countries in the world and it is time that we give them a taste of their own medicine.

2,000,000 barrels a day...can you believe that. When the world was hurting only Saudi Arabia would boost production and then only by 300,000 barrels a day. Now, that they are on the opposite end of the price they are going to cut oil production by the largest amount ever and in doing so hope to boost oil prices to a "fair" price.

Seriously, screw OPEC. I think most of the world would say that a "fair" price is $25.00 a barrel. So, this is my suggestion:

That 2,000,000 barrels represents (among other things) approximately 39,000,000 gallons of gas (approximately 19.5 gallons of gas can be produced from one 42 gallon barrel of oil). Based on rough figures from the Department of Transportation there are approximately 140,000,000 registered cars on the road in the United States. Let's assume that 50% of these are regularly driven...that means there are 70,000,000 cars on the road being regularly driven. So, if we take the 39,000,000 gallons of gas (the approximate gallons of gas that the 2,000,000 barrel a day production cut represents) and divide that by the 70,000,000 cars that are being driven daily on a regular basis and you come up with .55 gallons per car. That means if every one of those drivers cuts their daily gas intake by approximately a half a gallon per day (or 3.8 gallons a week) the United States alone would negate the production cut by OPEC. This is absolutely doable...I have no doubt that I can cut my personal gas usage by 3.8 gallons a week, heck just driving a little slower and being a bit gentler on the throttle would save that amount. It basically represents 19% of a full tank of gas (based on a 20 gallon gas tank). Just imagine the results of everyone cutting their gas usage by that amount. If you think gas prices are low now...just think of the results this could produce.

I think the world should be furious...and we should as a loud voice give the old "one finger salute" to OPEC. If there ever was a time to become energy independent...now is the time. Let OPEC suffer for once...they were happy when the world was suffering from high gas prices. I didn't hear many voices in OPEC saying a "fair" price was $75.00 a barrel when the price was over $140.00 a barrel.

So, I pledge to you that my family will reduce our gas consumption by at least 3.8 gallons a week for our two cars (daily drivers) when we return to the United States. We will combine errands, plan the most efficient route and generally drive a little slower. I ask every American that is sick of OPEC to do the same. If only 10% of the folks out there do it we would still use approximately 3,850,000 less gallons of gas a day or 197,435 barrels of oil. Just imagine if everyone was committed. Folks, there is a lot of talk out there these days of energy independence and doing the right thing...but, until we (the average American) take things into our own hands we won't get the results we need.

So, pledge to America's future and economic prosperity and cut your fuel usage by just 3.8 gallons a week...that is a small price to pay to give OPEC a clear signal that we will no longer be subject to their greed. If I get enough interest I will create a website where folks can sign up for the 3.8 gallon a week pledge. Forward the link to this blog entry to your friends and spread the word.