As reported by the Financial Times, finance ministers and central bank governors of The Group of Seven leading economies met in Washington this weekend, and along with currencies they focused on the need to raise oil production as prices hitnew highs of $75 a barrel.
They called on producers to increase transparency of their reserves and raise investment in exploration and refining capacity. Most significantly Gordon Brown, the U.K. finance Minister was quoted "When OPEC meets on June 1 it must look at its production quotas and it must look at both how we can secure increases in output and increases in refining" . He continued later saying it was "absolutely essential" for the G7 to push for transparency in oil markets because market participants neither know the level of reserves nor likely future supply and demand for oil. Other officials stressed that only incremental progress was all that could be expected from the meeting.
Transparency is key to a realistic assessment of the oil market( i.e.what are Saudi Arabia's true reserves, -only fifteen of over eighty oil reservoirs have been tapped, Kuwait's, Iraq-only ten percent of Iraq's land mass has been prospected, Russia- where oil reserves are a state secret, Iran, UAE, and so on) . It is the lack of transparency that has permitted the oil patch and OPEC in particular to bamboozle the world into turning "shortages and peak oil" into accepted Gospel. In my book, "Over a Barrel: Breaking The Middle East Oil Cartel" I go into great detail dispelling this myth. (and coincidentally, with President Bush's call today to stop deliveries of oil to The Strategic Petroleum Reserve given current today's stratospheric price levels, the book called for a similar step at over $35/bbl many months ago)
What is shocking however, now at these newly high prices so little attention is paid by the New York Times (see "Tom Freidman Spells Out OPEC" 2/09/06) and the Wall Street Journal on the manipulation of the oil market and the key role that the lack of transparency plays in the orchestration of prices.
Gordon Brown's ringing plea and reasons for greater transparency was not carried by either newspaper. Nor for that matter was Gordon Brown's condemnation of OPEC in September of last year laying blame squarely at the feet of OPEC for the doubling of prices over the prior two years.
Why the hesitancy in dealing with this core fact impacting the pricing of oil markets and in turn gasoline. One begins to believe that the oil patch's influence extends further than first imagined.
And always remember, the gouging doesn't start at the pump, it starts at the well!