UnderAgeThinker

This is an issue I’ve put quite a bit of thought into and the more I think about it, the more I think it is a good idea.  Oil exporting countries have formed a cartel that can set the price of oil with essentially no opposition, it only makes sense to form a cartel of oil importing countries that would be powerful enough to negotiate with OPEC and lower the price of oil.  It seems like a no-brainer.  There is so much to this that I should be writing a book instead of a blog post but this will have to do for now. 

If the major oil importers bound themselves together and were willing the bare the initial and inevitable embargo from OPEC, the rewards that they would reap would be enormous.  Today oil is at nearly $100 a barrel, in 1999 it was around $10 a barrel.  Don’t believe me?  Just imagine what it would do for our economy if oil suddenly dropped to, say $20 a barrel.  That is not an unreasonable figure provided someone like OPIC was negotiating the price for us. 

Here is one example of how something like OPIC could work.  Representatives from the U.S., China, Canada, the E.U., Japan, Australia, and other Oil importing countries meet in Geneva and decide that they will pay $40 a barrel for oil.  The various countries refuse to buy any oil for any more than that.  At this point OPEC is almost certain to react by refusing to sell any oil at all.  Then the game of chicken begins.  It would all depend on who blinks first.  If OPIC could stomach gasoline rations and high prices long enough then OPEC would give in.  If OPEC would not agree to OPIC’s price then at least they might open up to negotiations on the price.  Another possibility is that the OPEC cartel would break.  Saudi Arabia, replete with cash, might be willing to hold out longer than some of the other OPEC members but, as soon as one OPEC country broke and started to sell two things would happen, the price of oil would start to drop thereby giving relief to the OPIC countries and the other OPEC members would begin to follow suit.  The former OPEC countries would have to compete to sell oil on the open market.  OPIC might even be able to shutter the windows.  One thing that makes me think a strategy like this could work is that OPEC does not control all the world’s oil.  This means that during the stand off the OPIC nations would not run completely out of oil. 

One objection that might arise to the idea of OPIC is that it isn’t very capitalistic.  This however, is not the case.  What is more capitalistic than leveraging all the power you have to negotiate a better price for a product?  OPIC would be a great expression of capitalism.  Labor unions and monopolies are both capitalistic in the same way.  The problem with them both is that they could potentially hurt the economy as a whole.  However OPIC would be working to help the economy. 

It is at least food for thought.  We can’t go on like this, especially with so much of the Islamic terrorism being funded by petro-dollars.  If the price of oil does in the next 9 years what it did in the previous 9 years then in 2017 we will be paying close to $1,000 a barrel.  That would be $30 or $40 a gallon at the pump!  Organisation of Petroleum Importing Countries, it has a nice ring to it doesn’t it?