Well, it appears the fuse to the time bomb that is OPEC oil is about to be set. After months of hand wringing over demand destruction ostensibly having a great deal of concern to prevent it they appear about ready to actually USE oil as a weapon in much the same way as they did during the 1970's oil embargo. This from that Newsweek link:
Saudi Arabia is the key player at OPEC meetings. It has the most latitude to increase, or cut, production. It raised output in recent months, pumping an extra half million barrels a day or so. Many Saudi policy makers have long fretted that high prices could force consuming countries to find alternatives ranging from biofuels to electric cars. In OPEC meetings, this is called "demand destruction."
Next Saturday, OPEC appears to be preparing to damn the torpedoes and take down the worlds economy in a bid to keep the price of oil high by decreasing output. I hope you all have your solar panels and windmills ready to roll....
Article continues:
Or as one-time Saudi oil minister Zaki Yamani famously said, the stone age didn't end because the world ran out of stones, a reference to the possibility that people might stop using oil even if oil were still around. More recently, the Saudi King Abdullah said he would like to see prices come down under $100 a barrel. They aren't far off now, closing Friday at $106, down almost 30 percent from the $147 high in early July.
Apparently OPEC doesn't like deflation caused by market pressures and will soon be experiencing deflation due to decreased demand. There answer, lower production and squeeze the very economies further which will cause a downward spiral of demand. I guess the petrodollar has come back to bite us in the ass, economic planning by the like of the Chavez, Iran, and the Saudi's (it's pretty bad when the Saudi's are the level heads).
I guess that killing of one of the "Big 3" auto manufacturers doesn't count as demand destruction in their book. WHEN GM goes down that will be about 266,000 families that won't be buying as much OPEC oil for quite awhile. This is also going to further squeeze the farmers and increase the price of food production and shipping.
You may be saying "Good, oil sucks anyway!", but consider the negative effect of this move on the economies of the world as they attempt to switch to alternative energy. I think that is EXACTLY what OPEC and the oil industry is considering, rather then letting us "escape" into alternative energies, they'd rather keep us barefoot and pregnant while inefficiently burning their products. They are not our friends (not even Bush and his Hallibuddy). This is why they are preparing to beat us down with their only weapon, OIL.
We are heading for the second great depression and OPEC is our chauffeur. Afghanistan and Iraq where the opening rounds of WW III this crisis is going to suck us into a full scale battle for the worlds resources (think Japan in the South Pacific and Germany in the Caucuses). The corner of "the economy" and "national defense". This may play out very strangely inside of the next few weeks.
Obama needs to get in front of this before the waves of nationalism start sweeping the country, he has to deepen his dialogue concerning alternative energy and use it as leverage against Big Oil. It's brinksmanship and he has to start playing the game soon (good luck eating sand OPEC).