OPEC Threatens To Reduce Investment In Oil Field Development If Customers Become More Efficient


"The president of OPEC said Wednesday that repeated calls by industrialized countries to reduce dependence on oil could lead to a reduction in supplies from the cartel. ‘‘Today’s policy announcements could translate into scarcity of supplies in the future,’’ Mohamed Al Hamli, president of the Organization of Petroleum Exporting Countries, said at an energy conference. He noted that OPEC is made up of developing nations with limited resources, and it would be a ‘‘waste of badly needed funds’’ to invest heavily in oil production if demand is unclear." What a clever man. He's figured out the general idea behind OPEC customers seeking more efficient vehicles and increased reliance on renewable power. Must be why they made him OPEC President. Trying to get a feel for things are supposed to go, after this announcement, from the OPEC viewpoint. Let's try to imagine what the official world future would be if OPEC had their way in other words.

Short Term
OPEC threatens to slow investment in oil field development, which infers reduced long-term oil production in the face of increased world demand: i.e. a threat of continuous price increases.

Oil traders, fearing reduced margins on long term positions, have a new incentive to lobby against government programs for stringent CAFE standards, public transportation improvements, and the like.

Government officials, fearing voter restlessness over gas prices and cutbacks in GDP due to increased operating costs for energy intensive industrial sectors, get cold feet over energy efficiency programs.

US fails to deliver on drastic oil conservation measures, keeping demand high.

China, seeing a lack of leadership by the G5 nations on a new, post-Kyoto climate treaty, stays with the Iron Age strategy of resource inefficient, energy intensive development.

Via:: The Pueblo Chieftain, Business Edition. Image credit:: OPEC Website