Thursday, August 04, 2005

Is there a Plan C? 

It is no secret that the U.S. has wanted OPEC dead for some time. They had hoped that Venezuela would help kill it off by maximizing production, busting quotas, and bringing down oil prices. That actually worked for a while as successive Venezuelan governments were willing maximize production and did indeed pursue and anti-OPEC agenda. Unfortunately for them, these policies (along with other things like mis-management and corruption) wrecked the Venezuelan economy and helped bring the very pro-OPEC Chavez to power. With Chavez in power Venezuela could no longer be counted on to undermine OPEC and in fact it became one of OPEC proponents.

So what to do? Well, there was one country in the Middle East that was sitting and some of the world’s largest oil reserves but wasn’t producing very much due to the United States not liking its government and imposing sanctions. If the U.S. could overthrow that government and get control of all that oil then maybe they would have an effective Plan B for cutting OPEC down to size. Now of course, the U.S. government publically denies that getting access to oil had anything to do with it invading Iraq and it certainly doesn’t want to admit the war isn’t going well. But unfortunately for them one of their think tank gurus let the cat out of the bag:

"One of the assumptions, and they were obviously wrong, was that a liberated or democratic Iraq ... could break the back of OPEC," and supply additional oil on world markets, says Frank Verrastro, who specializes in energy at the Center for Strategic and International Studies in Washington.

I think we can rest assured that bit of candor wasn’t appreciated in the West Wing of the White House. Some of these think tank analysts had better be more careful in what they say or they may find themselves looking for real jobs soon.

In any event Plan A of having Venezuela solve their OPEC problem seems to be going down the drain as Chavez’s poll numbers go higher and higher. And Plan B in Iraq seems to not be doing much better. I wonder what their plan C is? I assume they do have a Plan C. After all, the natives might not be willing put up with gas at $2.50 forever.


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