The Middle East oil countries have done very well during the past thirty or so years. The have combined to form the Organization of the Petroleum Exporting Countries (OPEC) and have raised the price of oil from somewhere near $5 a barrel to over $100 a barrel (although the cost of oil is currently dropping).
The article reports:
But even modest cooperation between many members has broken down, and Saudi Arabia, in particular, has moved to act on its own. While it cut output earlier this summer, other members didn’t go along. Since then, it has dropped its prices.
Each member has a different tolerance for lower prices. Kuwait, the United Arab Emirates and Saudi Arabia generally don’t need prices quite as high as Iran and Venezuela to keep their budgets in the black.
Late Friday, Venezuelan Foreign Minister Rafael Ramirez, who represents Caracas in the group, called for an urgent meeting to tackle falling prices. The group’s next regular meeting is set for late next month.
But on Sunday, Ali al-Omair, Kuwait’s oil minister, said there had been no invitation for such a meeting, suggesting the group would need to stomach lower prices. He said there was a natural floor to how low prices could fallat about $76 to $77 per barrel—near what he said was the average production costs per barrel in Russia and the U.S.
The history of oil prices has often been that when the Middle East begins to drop their prices, Americans stop looking for cheaper oil in their own country. Considering the current instability in the Middle East in the OPEC nations, that would be a big mistake.
America needs to be energy independent for both economic and security reasons. It is time to develop our own resources.