Remember the resentment the media showed toward oil companies when they announced record profits?
When gas prices were hitting their highs back in 2007, there were reports of a death threat to an oil company executive, media personalities voicing suspicions of price gouging and pleas to just “cut back” on profits so people wouldn’t have to spend their grandchildren’s college money on gas.
But, after oil exceeded the $100 a barrel mark on February 19, industry analyst this time blamed OPEC’s reluctance to increase output as one of the key factors.
“Today you had three events,” CNBC’s Maria Bartiromo explained on the February 19 “NBC Nightly News.” “Number one – you mentioned OPEC, the news that they may put less oil on the market. Number two – there was an explosion at a refinery in
The impacts of two of those events aren’t really clear. Fears of a disruption of Nigerian oil go back as far as the 1990s. One expert told ABC “World News” on February 18 the oil refinery fire is more psychological than substantive. However, little criticism has been doled out on OPEC in the wake of these high prices in the media.
OPEC has thirteen member states, including
According to a January 30 Financial Times column by Ed Morse, chief energy economist at Lehman Brothers, as long OPEC maintains their current policies, oil prices will continue to show these highly-volatile price swings.
“Three factors reinforce OPEC’s role in price volatility,” Morse wrote. “The first stems from OPEC’s increased internal factionalism and the politics of consensual decision-making. The second reflects OPEC’s greater prominence in incremental global oil supply. The third is OPEC’s own demand growth where summer consumption undermines oil production schedules, tightening markets just as demand seasonally peaks elsewhere.”
OPEC’s has long been a thorn in the global economy’s side with its anti-market practices, including the cause of the 1973 oil crisis – a time in the United States when price controls were placed on domestically-produced oil, causing gas lines and rationing. With OPEC’s track record, it’s curious why it gets little fanfare in the media.
