For those of you who've never heard of him, Claude Mandil is the head of the International Energy Agency, a Paris-based organization that is supposed to represent the interests of major oil consumers and importers like the United States, Europe and Japan. Yet today, Mandil praised the other side -- yes, that would be our friends in OPEC -- for having "done their best, done what we expected from them." Ahhhhh....I see. Like, for instance, failing to build adequate oil production capacity the past few years and then enjoying the benefits of $50-$60 per barrel oil? But wait, there's more praise for OPEC from Monsieur Mandil: "I prefer to look at what OPEC does rather than what it says, and it has very well supplied the market." In other words, according to the person who's supposed to be the chief advocate for oil importing nations like the United States, the world is awash with oil despite oil prices in the stratosphere.
Perhaps this is part of a trend. In mid-May, US Energy Secretary Sam Bodman called the Saudis a "moderating force" in world oil markets. To see how "moderating" this force has been, look at the graph below and note how flat oil prices were, around $10-$20 per barrel, before the Saudis took over the market in 1973. Then, compare those years to how rocky prices have been since. If this is "moderation," I'd hate to see extremism!
By the way, the fact is that the Saudis have not built their oil production capacity at all for many years now, despite having huge reserves. Apparently, they've decided that they have us "over a barrel," so to speak. And they happen to be right. This is in large part due to the failure of powerful friends of big oil, with or without the last name "Bush," to do something about cutting U.S. oil consumption.
Of course, leading Republican politicians certainly wouldn't want to do anything to hurt the big oil companies, which give them so much money ($20 million in 2004). Companies like ExxonMobil, for instance, with its $82 billion in revenues, and $7.9 billion in net income, during the first quarter of 2005 alone. So why don't we hear any talk about a windfall profits tax on these companies while our country is at war? Gee, I wonder. Meanwhile, our soldiers fight -- and die -- in part to defend the flow of oil from the very region of the world where most of the world's proven crude oil reserves happen to be located. Hmmm....