Breaking the Oil Cartel  

By Jamie Glazov | Tuesday, October 07, 2008

Frontpage Interview’s guest today is Gal Luft, one of America’s most influential energy independence advocates. He is executive director of the Institute for the Analysis of Global Security (IAGS) a Washington based energy policy think tank and co-founder of the Set America Free Coalition, an alliance of national security, environmental, labor and religious groups promoting ways to reduce America’s dependence on foreign oil. He specializes in strategy, geopolitics, terrorism, energy security and economic warfare.
FP: Gal Luft, welcome to Frontpage Interview.

Luft: Delighted to be here.

FP: Your thoughts on the oil cartel and what it is doing to the world?

Luft: The oil cartel is looting the world economy and is by far the main culprit behind the current oil crisis. This is a cartel that owns 78 percent of world oil reserves but produces only 33 percent of the world’s supply. Stunningly, OPEC’s pro duction is less than what it used to be 35 years ago, just before the Arab Oil Embargo. Then they produced 30 million barrels per day. Today their quota is just under 29 million barrels per day. So in 35 years the world economy essentially doubled, non-OPEC production nearly doubled, but the oil cartel, despite the fact that last year it brought in two new members, Angola and Ecuador, with combined daily production capacity equivalent to that of Norway, hasn’t ramped up production. In fact, only this month OPEC decided to reduce its production by more than half a million barrels per day.

The consequences of this daylight robbery are dire, particularly to the poor people of the world. Developing economies are hemorrhaping and this will increasingly become a destabilizing factor. Even more troubling is the fact that the two main engines of radical Islam-Saudi Arabia and Iran-as well as the top two obstructionists of U.S. foreign policy-Russia and Venezuela-are now on the receiving end of hundreds of billions of dollars in oil and gas revenues. As long as we continue to enrich those countries while depleting our own coffers we will not be able to prevail in the long war of the 21-Century.

How do we break the oil cartel?
Luft: We need to instil in OPEC the fear of Adam Smith and break them through good old competition. To do so we need to end oil’s monopoly in the transportation sector by making our cars platforms on which alternative liquid fuels and electricity (which is essentially no longer generated from oil in this country) can compete against gasoline. You see, today almost all of our cars, trucks, planes and ships can run on nothing but petroleum. This gives OPEC control over the global transportation system and by extension, over the world economy. And yet, we continue to foolishly put on the road 16 million new gasoline-only vehicles every year, each with an average street life of 16 years. We are in a deep hole and instead of climbing out we continue to dig. This has to stop.



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