Friday, March 26, 2004

Cato institute on oil

This is a couple of exerpts from the article

March 26, 2004

OPEC Is No Friend of Ours

by Jerry Taylor

Since then, most of the data on the matter have simply disappeared. As an alternative, economists Morry Adelman and Campbell Watkins tabulated the sales value of proved reserves in the United States, information that serves as a window on the value of oil reserves anywhere in which oil finders can go freely and invest. From 1982-2002, however, the price of existing reserves did not increase, demonstrating that the market does not believe oil in the ground is an appreciating asset

Let's be clear about what's at stake. If OPEC disappeared tomorrow, oil prices would drop to somewhere around $8 a barrel and gasoline prices would almost certainly be south of $1 a gallon. A price collapse of that magnitude would do more for consumer welfare and the overall health of the American economy than almost anything that's been put on the table by President Bush or his Democratic Party rivals. Accordingly, the OPEC cartel should be resisted, not embraced, and policy should aim at undermining it, not propping it up.

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