1-23-08 by dugan
Despite the fondness of American conservatives for France’s "cowboy president" Nicolas Sarkozy, his proposal to bargain with OPEC for fixed and stable oil prices was all but ignored in the U.S. news media. It must have seemed too wacky to consider. But it’s not any crazier than what’s happening right now with oil prices. Oil supplies are overflowing, the world economy is still sinking and oil prices spiked by 11% in three otherwise dismal days for the economy. The AP headline says it all: "Oil prices baffle traders."
Actually, prices ar no more baffling now than they were in July at $145 a barrel, when analysts who could see perfectly well that global demand was falling and supplies were ample kept saying there was a "supply and demand" reason for the insane trading on energy markets. Yet even OPEC leaders, who were profiting mightily from the bubble, were saying it had nothing to do with supply and demand. So why not do it differently?
As reported in a brief wire story:
"It is in everyone’s interest to regulate the prices of raw materials, not just oil, not just gas, but all raw materials," said Sarokozy in a speech to foreign diplomats stationed in France.
"Let us seize this moment to extend a hand to oil-producing nations … to tell them, ‘We developed nations are ready to examine with producing countries how to guarantee them a median acceptable level for the price of oil.’"
When oil was priced at $150 a barrel, producers "would have looked at us and said, ‘It didn’t bother you that for years you exploited our oil at pauper’s rates,’" Sarkozy said. "Now that prices are low let us profit from that to take an initiative."
The idea sank like a rock. Yet Sarkozy was dead-on in saying that it’s the pricing roller-coaster created by speculative markets that damages economies. There are worse things than bargaining with OPEC, and we’ve been suffering the gamut of them for months. And if oil prices can spike upward in today’s economy, think what will happen when the economy begins to recover.