Energy Bedfellows

Countering OPEC Through China-U.S. Cooperation

President Bush has denounced our addiction to oil. His foreign policy has been guided by advisers — Dick Cheney, Donald Rumsfeld, Paul Wolfowitz — whose worldviews were formed during the 1970s, when the OPEC oil cartel emerged as a threat to U.S. interests. But OPEC now appears more menacing than it has in a long time. For an administration that made energy security a priority right from its first months, this is a humiliation.
At its meeting a year ago, OPEC resolved to restrain output and force higher prices on consumers. That muscle-flexing worked: It reinforced the market dynamics that have brought prices to $80 a barrel. Then last week, after much American pleading, OPEC magnanimously promised to boost output by a token amount. “Our message to consumers is that we care,” OPEC’s leader told the media. The unspoken subtext was, “You are at our mercy.”

OPEC apologists say we shouldn’t fret. Oil producers and oil consumers are interdependent, the argument goes: They need our markets just as we need their energy. Unfortunately, this line is less convincing than it used to be.

Thanks to the high prices of recent years, oil exporters are sitting atop mountains of money. The United Arab Emirates, for example, has a government trust fund worth perhaps $1 trillion; with each passing month, the piggy bank grows bigger. Most OPEC members are in a better position to sustain a loss of access to our markets than they used to be, whereas our ability to survive an interruption in supply has not grown commensurately. In his State of the Union address in January, President Bush proposed doubling the size of the Strategic Petroleum Reserve. Then he forgot about it.

The Washington Post