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I was just emailing my previous post to Sen. Frank Lautenberg, and I spotted a link on his home page to this very interesting report. It turns out 6 countries that are members of OPEC (Kuwait, Venezuela, Qatar, Indonesia, UAE and Nigeria) are also members of the World Trade Orgranization—and the WTO forbids export quotas, such as those used by OPEC to control prices.
EXECUTIVE SUMMARY
The Organization of Petroleum Exporting Countries (OPEC) consists of 11 of the world’s largest oil producing nations, 1 producing slightly more than 1/3 of the world’s oil, with 75% of the known reserves. By negotiating among themselves, OPEC sets export quotas for each of its member nations, and is able to exercise a great deal of control over the international price of oil.
Six of these countries, 2 representing half of OPEC’s production, are members of the WTO, and two more 3 are seeking admission. Under the Uruguay Round Agreements, countries are not permitted to impose export quotas.
OPEC’s price manipulation has been a major factor in the recent run-up in gas prices, which have now averaged around $2 per gallon for the last two months.
[.....]
Conclusion
OPEC’s practices are in violation of WTO rules prohibiting quantitative restrictions on exports. Although there are exceptions that OPEC could attempt to cite, the applicability of these exceptions is tenuous. A WTO case against the six WTO members of OPEC could have immediate, large and lasting benefits to the US consumer and economy by driving down oil and gas prices.
I like it that Lautenberg is looking for ways to put pressure on OPEC. But I question whether countries can be forced to pump the oil out of the ground as fast as the world demands it—which would be infinitely fast. It may even be in the interests of conserving oil supplies to have some controls on the speed at which it is consumed.
