Middle-east Arab News Opinion | Asharq Al-awsat

The OPEC Summit and Oil | ASHARQ AL-AWSAT English Archive 2005 -2017
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The summit of the Organization of Petroleum Exporting Countries’ [OPEC] is being held in the Saudi capital, Riyadh. There are paramount details that cannot be overlooked as this summit is held in Saudi Arabia, the world’s largest oil producer and top exporter. There is a civil war and real division going on in the country of one of OPEC’s most important and prominent members, namely, Iraq. There is also an explicit and serious military threat against Iran, which is an influential member of the organization; in addition, we must not overlook the changes in the situations of some OPEC members such as Indonesia, which imports almost as much oil today as it exports. Naturally, all this comes amid a record rise in the prices of crude oil that is close to $100 per barrel.

Despite that the member states are happy with these new remarkable incomes, there is a required caution that should come with this happiness. The great industrial states are no longer affected in the same way as they once were in the past for two fundamental reasons: the first is that there is a radical change in the structuring of the economies in these countries, which have moved away from heavy manufacturing towards an industry of services and economic know-how that do not depend on oil as a main source of energy. Therefore, the large growth in consumption results from the nascent states such as China, India and others. The second reason, just as important as the first, is that these countries have resorted to solid rational policies to decrease oil consumption and to gradually find new methods as an alternative to oil, (nuclear energy in France constitutes 53% of its total consumption of power, while the use of wind energy in the Netherlands constitutes 20% and is remarkably on the rise).

In addition, there is an immense challenge facing OPEC and oil in general. By virtue of the increasing price of this commodity from the commercial perspective, the costs of production and the use of other energy alternatives (the expense of which is the main obstacle to their acceptance and widespread use as a real and practical alternative and consequently oil prices continue to rise as well as the scarcity of newly discovered oil wells and sites) would make this situation a certain and established reality and would make oil deplete economically before its natural depletion (coal for example, which is still being produced but has no economic value). Furthermore, environmental pressure from countries and international organizations cannot be overlooked as they strongly continue to pressure the oil producing countries through tightened legislations and policies to protect the environment; the costs for which will be immense on these countries. However, there is a clear inclination that some of the OPEC members prefer the natural gas line and the obvious future gamble over it at the expense of oil based on the consideration that gas is a cleaner commodity and is devoid of the environmental problems that come with oil.

It is clear from all that is stated above that OPEC is proceeding to an unprecedented stage of its history, or the history of oil itself, between the exultation experienced by its members for the immense level of incomes and the oil countdown as a commodity as a result of the depletion of wells and the reduction of alternative energies where oil is running on its last legs. Therefore, the question remains: how do we prolong this period with the best results both practically and effectively so that nobody has to deal with the shock of having the rug pulled from under their feet?