All About Oil
Wednesday 14 November was the quarterly meeting of the Organization of Petroleum Exporting Countries (OPEC). It was the meeting where OPEC announced it would reduce output to boost oil prices. It was supposed to be a declaration that lower demand would result in lower supply. But the meeting proved to be none of these.
When efforts to cajole non-OPEC members to reduce production failed, OPEC ministers reversed their strategy; they now seem to prefer a price war. Oil companies in Russia, Norway, and Mexico are angered by the prospect of lower output. Low oil prices are causing serious economic damage in Nigeria, Venezuela, and Saudi Arabia. The Kuwaiti OPEC minister now claims that if the current trend of non-OPEC member oil production continues, oil may soon be USD10 a barrel.
In this situation why did OPEC decide to maintain output at current levels until non-OPEC members reduce production by the 500,000 barrels a day OPEC requests? An oil price war would do much more harm than good to most oil-producing states whether or not they are OPEC members.
This question has three answers: One is that OPEC desperately wants to reassert itself as an important participant in the international oil trade. Another answer is that this is OPEC's last gasp at significance, and it wants the cartel to lose its influence after what its members may regard as a valiant attempt to restore price equilibrium. Then of course there is the answer that some curious back room bargains were agreed at the OPEC conference which will not be known to the public for quite a good while.
Turbulence Bring Down Plane over New York?
As if New York City has not endured enough misfortune recently, on Monday 12 November an American Airlines (AA) A-300 jet crashed in a residential section of Queens. AA Flight 587 (en route from New York to Santo Domingo, Dominican Republic) struggled to gain altitude for two minutes after it took off from New York's JFK airport. Slightly more than two minutes into the flight, the tail section broke cleanly from the plane. Then the engines fell off. One engine landed only six feet from a fuel pump at a Texaco gas station. The wreckage of the aircraft hit twelve homes, destroyed four homes completely, caused massive fires, and littered debris all along Jamaica Bay. Flight 587 (a flight so popular that three years ago it inspired a merengue hit song) had 260 people aboard: 165 passengers had Latin American names and traveled on US passports; 69 passengers had Latin American names and traveled on Dominican passports; eight passengers and the nine crew members had non-Latin American names and traveled on US passports; two passengers traveled on Taiwan passports; one passenger traveled on a British passport; one passenger traveled on a French passport; the five infants on board had no passports, so their nationalities cannot be determined.
