Monday, March 24, 2003

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RESPONDING TO CALPUNDIT: Kevin Drum requests that someone to the right of him respond to John S. Herrington's LA Times op-ed on substituting Iraq's reserves for our own Strategic Petroleum Reserve as a way of destroying OPEC's monopoly power over oil.

OK, I'll provide the realpolitik response to Herington's rambling and incoherent op-ed:

First, even Herrington should have acknowledged that OPEC has largely been a bust as a monopoly cartel. Their oil embargoes of the 70's contributed to the development of the North Sea oil fields. The collapse of the Soviet Union has introduced new exporters -- Russia, Kazakhstan, and Azerbaijan -- that are outside OPEC's domain. OPEC production quotas are honored only in the breach. In Controlling for inflation, the price of oil is far lower now than it was during the seventies. There's simply no bogeyman to destroy here.

Second, why on earth would a smart realist ditch the material resources located in one's own country in favor of relying on a source that's 6,000 miles away? That's a logistical nightmare.

Third, the political externalities created by such a drastic drop in the price of oil would be tremendous. It would certainly lead to instability among Iraq's neighbors, which would likely complicate efforts to rebuild Iraq, at the very least. Do we really need addition aggravation on that score?

posted by Dan on 03.24.03 at 10:00 AM