When President Bush pointed out on his recent visit to Riyad, that high oil prices were hurting the US economy and that an OPEC production increase might help, Secretary-General Abdalla Salem al-Badri said the oil cartel "will not hesitate to increase production if the market justifies this increase."
You could take OPEC at it's word and believe that high prices are NOT linked to supply but speculation in which case increasing production would not help. Or you could assume that oil producing countries are so greedy that they willing to prop up $100 oil in order to reap the profits.
The former seems insincere in light of the fact that reports of US inventories have a daily impact on futures prices. Supply and demand lives.
The later might be true but OPEC was making lots of money at $60 vs the $20 of a few years ago. It seems pretty extreme to risk the ire of your customers and of wary congressmen by following a $500 or bust policy.
What if the Saudis won't produce more oil because they can't? Peak Oil theorists have been pointing out for years that the official figure for Saudi Oil Reserves never changes. Think about it. They pump oil out of the ground for years but no dent is made in reserves. No bump up in estimates occurs because new reserves are located. Nothing. The figure just keeps steady over 18 years. Just what is being concealed by this practice?
It appears that there is more than prudence or greed going on here. With India, China and the rest of the developing world demanding more and more oil alternative energy and greenhouse gas remediation steps may become an economic as well as an environmental imperative.