OPEC today announced that member states will cut production by 1.5 million barrels a day starting in November in order to shore up the price per barrel which has dropped 56% from its high in July. This is obviously bad news for oil producing countries, so they are trying to manipulate the oil market to drive up the price of oil.
We depend on their oil, and they depend on our dollars. Unfortunately, the massive transfer of wealth that results from our oil addiction is not always used in benevolent ways. Instead, we are indirectly funding the ambitions of our enemies. Iran funds Hezbollah with petrodollars and rewards families of so-called martyrs who kill innocent Israeli men, women and children. Saudi oil wealth finds its way into militant Islamist coffers to fund the insurgency in Iraq resulting in the death of our service men and women. In our own hemisphere, Hugo Chavez likes to rail against the US, while simultaneously raking in US currency. Our hunger for oil delivers more than 10% of Venezuela’s GDP.
Iran, Venezuela and other OPEC members have suggested that for them, selling oil under $80 was a loss-maker, and Iraq on Thursday said it would have to rethink next year’s national budget if prices remain under that level. (NPR)
Knowing that a decline in oil revenue directly affects our opponents’ ability to harm us should convince us all to reduce our oil consumption with utmost urgency. We should not be tempted to increase our usage of oil just because the price has dropped, but continue to conserve this resource, and invest the savings in alternative energy sources.
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