Iraqi Oil Minister Shahristani said on Friday that “A reasonable price for oil is 80 dollars a barrel” and they would go along with OPEC to cut production to ensure oil was consumed instead of stored. Without large petroleum reserves in the US, this essentially guarantees OPEC will dictate the price of oil.
On one hand, I am quite annoyed with Iraq who have large cash reserves with their oil exports subsidized by American muscle. But on the other hand, I’m also worried with cheaper gas ($1.79/gallon in MD) we will fall back to our old ways of buying low efficient cars and perpetuate our dependence on foreign oil.
OPEC will walk a fine line of maximizing profits while not incentivizing automakers from aggressively pursuing alternative fuels. The worst thing we can do now is bailout the American auto-makers who are stuck in their current engineering designs and modus operandi. Freeing American ingenuity from the burden of bad business practices will allow us as a nation to kick our addiction.
So is $200/barrel “reasonable” or will we get our act together?