For a significant shift in OPEC policies, watch out for June 2012.
No major change is expected when the Organization of Petroleum Exporting Countries meets next month. But mid next-year, the group may finally decide to upgrade its quotas system—the allocation that formally restricts production levels for all its members bar Iraq.
Back in 2008, the group decided to reduce its collective output ceiling by 4.2 million barrels a day as oil demand and prices collapsed amid an acute global recession.
Last week the Obama administration proposed a modest expansion of offshore oil drilling in the Arctic Ocean and the Gulf of Mexico in its first concessions on offshore production since last year’s Deepwater Horizon spill. The five-year plan would, however, keep Atlantic and Pacific sites off-limits in order to avoid a controversial decision before the 2012 election.
As we continue our endless debate on whether we should have more Outer Continental Shelf development and where, all our neighbors have chosen to proceed. Cuba, Mexico, the Bahamas, Canada and Russia are all moving ahead on offshore development adjacent to our borders.
It is a major issue for Western countries too, as a recent report by the CNA military advisory board illustrated recently. The report urges the US to cut oil use by 30 per cent over the next decade to reduce grave national security risks.
The report claims that Washington’s reliance on imported oil is a “weak point in national security,” considering that the closure of the Strait of Hormuz for 60 days, for example, would affect prices and jobs in the US.