OPEC said today it is not sure it will cut oil production to keep prices from further sliding because of growing frustration over a lack of cooperation from its main non-OPEC rival, Russia. A senior OPEC official told Reuters that they will not make a cut unless Russia, the world’s second-biggest exporter, agrees to a proportional reduction.
"They have the biggest capability. They are the key to price stability," Saudi Arabia minister Ali al-Naimi Naimi said. Moscow's offer to remove 30,000 bpd was "disappointing," he said. OPEC has proposed a reduction of up to 1.5 million bpd.
Russia is being compared to other non-OPEC producers, such as Mexico and Norway, which have not responded to the call for a cut in production. That has prompted some OPEC delegates to warn that a price war could erupt among the world's oil exporters.
Oil prices have been down sharply since the September 11 terrorist attacks of New York and Washington. Crude oil for December delivery fell as much as $2.04, or 9.4%, to $19.63 a barrel today on the New York Mercantile Exchange. That price is down 43% from this time last year.
That is good news for fleet owners, however. The price at the pump for a gallon of diesel fuel fell to $1.269 yesterday, the lowest price since it hit $1.261 on Nov. 15, 1999, according to the Dept. of Energy.
Nationwide, the average price of self-service regular gasoline has dropped to $1.196, which is 35.9 cents less than this time last year, according to the American Automobile Assn.’s (AAA) November Fuel Gauge Report. The price is the lowest since August 1999.
"A slumping U.S. economy and the fallout from the September 11 attacks has reduced demand for oil," said AAA spokeswoman Bronwyn Hogan. "Not long ago, it seemed that oil would become alarmingly expensive. Now the question is how much cheaper will it get?"
President George W. Bush gave a modest boost to prices Tuesday when he ordered the U.S. government to put more oil into America's Strategic Petroleum Reserve (SPR) and for the first time fill the reserve to full capacity.
The SPR, which currently has 544 million barrels of oil, is to be filled "in a deliberate and cost-effective manner" up to its full capacity of 700 million barrels, Bush said in a statement. The first SPR deliveries are scheduled to begin in April.