On the golf course several consecutive weekends, energy consumers have asked, “What’s it going to take to bring these oil prices down?” Other consumers (not industry members) answer that OPEC can’t rein in prices. In fact, the most obvious problem with oil prices is the weak U.S. dollar. Frankly, OPEC’s hands are tied: Its target price remains $70/barrel—what used to be worth US$70. That’s the equivalent of about US$100 today. There’s nothing wrong with the OPEC target. What Americans continue to fail to understand or appreciate is that the U.S. continues to determine world oil prices, as it represents 25% of world oil demand. One in seven barrels of oil produced each day is consumed on U.S. highways alone. Americans are in the driver’s seat, if you will, and risk losing this pricing power if continuing to merely complain about gasoline prices, and not telling Congress to help the U.S. oil industry better assure domestic supply in the future. The French, for example, have little power over oil prices, as a cutback in their consumption has a relatively small impact on total world demand. The French are price-takers. Americans are price-makers. A continued unappreciation of this power puts all of the U.S. at risk—by losing sight of its own energy-pricing dominance. Four important ingredients of a strong economy is cheap energy, cheap water, cheap labor and well-protected property rights. Losing any one of these could turn the tide in the American success story. –Nissa Darbonne, Executive Editor, Oil and Gas Investor, A&D Watch, Oil and Gas Investor This Week, www.OilandGasInvestor.com; ndarbonne@hartenergy.com
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