Background:
The U.S. economy appears to be on the brink of recovery. However, the high price of oil will place undue stress on the fragile recovery. At a time when gas process are around $4.00 per gallon; we find ourselves at the mercy of a cartel; the Organization of the Petroleum Exporting Countries (OPEC). In the U.S., an organization that controls supply and demand and thereby determines the price of oil would be illegal. Yet we are at the mercy of OPEC. For example, with Oil near a 30-month high; Saudi Arabia is cutting back on production [1]. This could push us back into a recession. In contrast, the last time we had a balanced budget, President Clinton’s term, energy prices were low. This suggests the price of energy drives or curtails the U.S. industrial base and thereby the taxes received. If the law of supply and demand was allowed to run its course, oil would be lower. Moreover, President Obama has acknowledged we will be dependent on oil imports for some time.
Suggestion:
We must use all legal resources to undermine the OPEC cartel.
References:
1. Jolly, David, New York Times, Saudis Adjust Oil Production as Demand Fluctuates, April 12, 2011.
