When Oil Hits 200
Source: Alalam.ir, IRAN DAILY, 17-06-2008
The oil market seems to be in a state of frenzy. This is how most experts describe the international crude market these days. Currently, the black gold is selling for close to $140, and in the near future the world is expected to learn to live with prices ranging from $150 to $200 a barrel.
Windfalls made by the member states of the Organization of Petroleum Exporting Countries signal changing times and need for new thinking. It is obvious that without new instruments in the volatile oil market OPEC states will suffer big losses.
If the issue of converting petrodollars into other hard currencies was only seen as one of many ideas in the past, now wisdom demands it be viewed as an undisputed exigency. Over the past few years OPEC members have collectively made hundreds of billions dollars in extra revenues.
However, the constant decline in the greenback against other major currencies has indeed undermined the purchasing power of oil exporters.
In other words, countries should pay more to import their needs, and this implies that a country like the United States is gaining without any effort simply because crude is traded in the American currency.
Furthermore, overdependence of the OPEC members on the dollar is having a negative effect on their national security. In the past half century, western powers through political and economic machinations have exercised control over the growing revenues of oil producers and at times also deprived them of holding bank accounts.
If the past is anything to go by, it is time that OPEC governments rethink their policies of putting their assets in western countries and come up with a roadmap to help ensure the interests of their present and future generations.
For starters, OPEC members could create a basket of currencies and effectively check their disturbing reliance on the dollar, which has lost almost half its value in the past two decades.
The need for a new approach becomes all the more necessary as a margin of safety for their nations' ambitious development programs if crises emerge and crude prices take a beating.
Establishing a special oil bourse, founding an OPEC bank, cooperation in regulating the market, placing checks and balances on the army of greedy brokers and middlemen, augmenting political and security stability in the oil-rich regions are among the other responsibilities of energy producers and exporters.
Neglect has been an ally of energy exporters for a long time. Time and consequences demand we better put a permanent end to negligence because it is a luxury we simply cannot afford.
The oil market seems to be in a state of frenzy. This is how most experts describe the international crude market these days. Currently, the black gold is selling for close to $140, and in the near future the world is expected to learn to live with prices ranging from $150 to $200 a barrel.
Windfalls made by the member states of the Organization of Petroleum Exporting Countries signal changing times and need for new thinking. It is obvious that without new instruments in the volatile oil market OPEC states will suffer big losses.
If the issue of converting petrodollars into other hard currencies was only seen as one of many ideas in the past, now wisdom demands it be viewed as an undisputed exigency. Over the past few years OPEC members have collectively made hundreds of billions dollars in extra revenues.
However, the constant decline in the greenback against other major currencies has indeed undermined the purchasing power of oil exporters.
In other words, countries should pay more to import their needs, and this implies that a country like the United States is gaining without any effort simply because crude is traded in the American currency.
Furthermore, overdependence of the OPEC members on the dollar is having a negative effect on their national security. In the past half century, western powers through political and economic machinations have exercised control over the growing revenues of oil producers and at times also deprived them of holding bank accounts.
If the past is anything to go by, it is time that OPEC governments rethink their policies of putting their assets in western countries and come up with a roadmap to help ensure the interests of their present and future generations.
For starters, OPEC members could create a basket of currencies and effectively check their disturbing reliance on the dollar, which has lost almost half its value in the past two decades.
The need for a new approach becomes all the more necessary as a margin of safety for their nations' ambitious development programs if crises emerge and crude prices take a beating.
Establishing a special oil bourse, founding an OPEC bank, cooperation in regulating the market, placing checks and balances on the army of greedy brokers and middlemen, augmenting political and security stability in the oil-rich regions are among the other responsibilities of energy producers and exporters.
Neglect has been an ally of energy exporters for a long time. Time and consequences demand we better put a permanent end to negligence because it is a luxury we simply cannot afford.
Comments
- Related News
