The Little Old Cartel That You Love to Hate
Is OPEC threatening the global economic recovery? Is the cartel sucking the blood out of the economic recovery like the pariahs that they are? The pressure continues to build on the merry band of conspirators as UK Prime Minister David Cameron is showing his frustration with the UK pay, soaring heating bills and the coldest UK December on record! This is probably not a great time for the Prime Minister to give a speech talking about the dangers of global warming.
Instead, according to Reuter's News, British Prime Minister David Cameron urged OPEC to boost production of crude because the increase in oil prices, combined with petrol duty and sales tax increases, have pushed petrol prices in Britain to record highs and brought complaints from consumer groups. Those taxes of course are in place partly to "save the planet".
Cameron said Britain could use its status as an oil producer that is not part of OPEC to try to persuade it to step up output at a time of high prices. "We are an oil producer ... we need a regime that encourages firms to continue to extract oil from the North Sea," Cameron said in a question and answer session with Britons at a manufacturing plant in central England. "Actually in a small way, by not being members of OPEC, we are outside that cartel, so we can push our own production levels and we should be arguing for opening up OPEC and opening up oil production in the world."
Reuter's reported that Cameron said he was talking to the treasury about ways of adjusting the fuel tax so that it would go down when prices rise and increase when they fall back. Reuters has long maintained that Western governments should reduce taxes on oil products.
Now as much as I hate to admit it Cameron has a point. The Cartel has done everything it can do to hamper the economic recovery. While the rest of the world made major sacrifices to help bring the global economy back from the brink, OPEC has done absolutely nothing. If the economy does go into a double dip, OPEC obviously will have to shoulder much of the blame.
In the meantime, despite the rebound in oil prices, technically the market still looks like it has run out of steam. We could see some wild swings as oil tries to balance improving demand scenarios along with a stronger dollar.
Phil Flynn is senior energy analyst for PFGBest Research and a Fox Business Network contributor. He can be reached at (800) 935-6487 or at firstname.lastname@example.org.