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OPEC faces blame over price drops

AS  oil prices roller-coastered from record highs near $150 per barrel a year ago down to $35, many pointed fingers at traditional scapegoats OPEC and oil sheiks synonymous with the group.


The reasoning was that the 12-member bloc — the source of more than 30 percent of the world’s oil — was to blame for the spike, then doubly culpable as it struggled to engineer a rebound as prices fell during the start of the worst global recession in decades.

For the Organization of the Petroleum Exporting Countries, and its key Mideast members, however, it was a question of economic survival.
The price drop stunted sharp growth in Arab sheikdoms such as the United Arab Emirates, rattled deeply entrenched political systems in places like Kuwait and Iran, and endangered security and reconstruction efforts in war-ravaged Iraq. Across the region, the subsidy programs that serve as placebos for often disgruntled people in the politically volatile region were in jeopardy.

But even as oil prices staged a modest rebound — the fruit of OPEC’s rare moment of unity and quota compliance — it is unclear whether the producer group has come away from the year’s turbulence any the wiser. That uncertainty carries sweeping implications for both the region and the world.
“OPEC never learns from the past,” Fadhil Chalabi, an economist at the London-based Centre for Global Energy Studies, said in comments echoed by numerous other experts.
“They just don’t look to the future.”

OPEC’s total revenue from petroleum exports climbed to slightly over $1 trillion in 2008, more than five times their 2002 levels, according to the group’s latest Annual Statistical Bulletin.
The price collapse in the second half of 2008 — which wiped out some four years of gains in just five months — “was a sobering thing for OPEC,” said Fadel Gheit, chief economist at Oppenheimer & Co. “These guys were spending money like it grew on trees.”

OPEC initiated a rapid-fire series of reductions aimed at cutting production by 4.2 million barrels from September levels.
The cuts brought prices closer to the $70 to $75 level OPEC kingpin Saudi Arabia and other members say is needed for new exploration and production.

oil prices roller-coastered from record highs near $150 per barrel a year ago down to $35, many pointed fingers at traditional scapegoats OPEC and oil sheiks synonymous with the group.
The reasoning was that the 12-member bloc — the source of more than 30 percent of the world’s oil — was to blame for the spike, then doubly culpable as it struggled to engineer a rebound as prices fell during the start of the worst global recession in decades.

For the Organization of the Petroleum Exporting Countries, and its key Mideast members, however, it was a question of economic survival.
The price drop stunted sharp growth in Arab sheikdoms such as the United Arab Emirates, rattled deeply entrenched political systems in places like Kuwait and Iran, and endangered security and reconstruction efforts in war-ravaged Iraq. Across the region, the subsidy programs that serve as placebos for often disgruntled people in the politically volatile region were in jeopardy.

But even as oil prices staged a modest rebound — the fruit of OPEC’s rare moment of unity and quota compliance — it is unclear whether the producer group has come away from the year’s turbulence any the wiser. That uncertainty carries sweeping implications for both the region and the world.
“OPEC never learns from the past,” Fadhil Chalabi, an economist at the London-based Centre for Global Energy Studies, said in comments echoed by numerous other experts.

“They just don’t look to the future.”

OPEC’s total revenue from petroleum exports climbed to slightly over $1 trillion in 2008, more than five times their 2002 levels, according to the group’s latest Annual Statistical Bulletin.
The price collapse in the second half of 2008 — which wiped out some four years of gains in just five months — “was a sobering thing for OPEC,” said Fadel Gheit, chief economist at Oppenheimer & Co. “These guys were spending money like it grew on trees.”

OPEC initiated a rapid-fire series of reductions aimed at cutting production by 4.2 million barrels from September levels.
The cuts brought prices closer to the $70 to $75 level OPEC kingpin Saudi Arabia and other members say is needed for new exploration and production.


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