The Organization of Petroleum Exporting Countries decided to cut 1 million barrels of oil a day in production starting April 1. This powerful organization should not be allowed to control the price of fuel consumed worldwide. By significantly decreasing its output, gas prices will yet again rise to $2 per gallon for us here in Salt Lake City. This price, for some, brings back memories of the oil crisis of the early 1970s in the United States.
OPEC was formed in 1960 by Iran, Iraq, Kuwait and Saudi Arabia. The cartel was founded to balance the influence of Western oil companies.
Unfortunately, this cartel became much more powerful than it should have ever been allowed. In the early 1970s, OPEC used its controlling interest to nearly double the price of oil worldwide. Using the cover of an embargo, OPEC put the United States into crisis mode.
There was nothing that anyone could do, except take the brunt and pay more for fuel. Soon thereafter, the United States created the Strategic Petroleum Reserve to insure the country from ever being pushed around by these terrorists again.
In the early 1990s, OPEC attempted to create another crisis, but luckily the crisis was avoided by using barrels of the SPR.
Currently, OPEC consists of 11 oil-producing and exporting countries throughout the world and currently supplies about 40 percent of the oil output of the world. It holds more than three fourths of the world’s crude oil reserves. This puts OPEC in a place of substantial power, allowing it to “adjust” oil prices to its whim.
Although it does not control the output from the other countries that contribute to the world’s crude-oil supplies-such as Mexico, Canada, Russia and China-OPEC tracks the oil production of these other nations, then adjusts its own production to maintain its desired barrel price.
With gas hovering around $2 per gallon, it may seem logical to consider tapping into SPR to temporarily lower the price. However, the reserve currently stores about 570 million barrels of crude oil, enough oil to provide for the United States for only 60 days.
The price is not yet high enough to mandate a pull from SPR.
The United States and other members of the United Nations need to combat OPEC on many fronts.
First, instead of increasing the amount of oil stored in SPR, the United States should invest heavily in research of hydrogen and other alternative fuel sources.
Not only will this begin to take away the control of cartels like OPEC, it will help better the environment by removing the smog generated from petroleum burning vehicles.
Second, the United Nations should take immediate action against OPEC in the form of regulatory prohibitions. The United Nations is much larger and more powerful than OPEC and should use that to its advantage to regulate the world’s petroleum supply.
Third, the United States should allow the tapping of the 1002 Area, part of the Arctic National Wildlife Refuge. In a 1998 analysis conducted by the U.S. Geological Survey, it was estimated that there are about 7 billion barrels of profitable oil in the 1002 Area alone.
This area should be tapped to decrease OPEC’s grip on the market until we can move the country to alternative fuel sources.
Finally, the United States should decrease taxes on gasoline. Of the cost for one gallon of regular gasoline, 31 cents go toward taxes. These taxes should be reduced to allow consumers to get where they need to go at affordable prices.
Oil is not only used to fuel vehicles. Heating homes and businesses, it plays a gigantic role in our economy.
It is time for the world community to stop allowing these 11 countries to milk the rest of the world for all we are worth.
It is no secret that the bloodline of the world is petroleum, whether for better or for worse, and as such, it should not be controlled by those whose interests are only in their own personal gain.