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Western Press Review: OPEC Move Seen As Helpful But Inadequate

  • Joel Blocker

Prague, 11 September 2000 (RFE/RL) -- Much West European press commentary is focusing on yesterday's decision by the Organization of Petroleum Exporting Countries, or OPEC, to increase oil production by 800,000 barrels a day. Analysts probe whether or not this will be sufficient in either the short or long term to reduce fuel and gasoline prices for consumers, including truck and tractor drivers who have taken to the streets in a few European Union nations to protest the rapid rise in costs.


Two Swiss newspapers see the OPEC decision somewhat differently. The German-language Neue Zuercher Zeitung says in its editorial that the organization "has bowed to political pressures from the United States and Europe not to let oil prices continue to rise." But, the paper adds, "because the capacity for transporting oil is now being fully utilized, it is doubtful to what degree oil prices will be held down." The paper goes on to say: "The oil producers are engaging in a tight rope balancing act: if the oil prices [fall to and] remain at [only] $30 per barrel for a few months, then the world economic boom may suffer. That could end dangerously in increased production capacity coupled with a decrease in demand -- an undesirable result for oil producers."


The French-language Tribune de Geneve is far more critical of OPEC. It writes in an editorial: "The oil-producing states -- indifferent to the West's political and social convulsions -- were rather meager in their decision to lift production by a mere 800,000 barrels per day." The paper calls this a "homeopathic dose of medicine, which at best will [only] serve to calm consumers without reducing their fever." It goes on to say: "If no other measures are taken by OPEC, importing countries will be forced to exhaust their reserves, today already at their lowest level in 10 years. Worse," it adds, "with winter coming on, energy usage grows, and the small amount of reserves will melt like snow in the sunshine and prices will then go up again."


Two Spanish dailies also comment on the OPEC action. El Pais is critical of the lack of effective action by the European Union, writing: "Neither the European Commission nor Ecofin [the EU's council of finance ministers, which met over the weekend] has proposed any ideas for Union-wide management of the crisis. The Commission's pressure on OPEC has proved to be a fiasco." It goes on to describe the French government's decision last week to meet protests by truckers with substantial aid as "a policy of financial concessions." In any case, the paper concludes, the EU "does not have a unified policy, it does not speak with one voice and there are no institutional resources to draw on in the short term in case they are needed."


El Mundo says the oil-producing nations are "avoiding their responsibility. They claim," the paper says in its editorial, "that oil-consuming nations should help out by lowering state taxes on fuel. That [line is] the same as that of truck drivers in France or farmers in Spain -- neither of whom are right." In the long term, the paper adds, industrial nations "should not misuse an expensive, non-renewable and polluting raw material. Western countries should reactivate their research efforts [to find alternate sources of energy]. This crisis is not temporary and demands a long-term response."


The French provincial daily Dernieres nouvelles d'Alsace says of its government's concessions to protesting truck and tractor drivers: "These complicated tax rebates will be paid for by French tax-payers." Its editorial holds out little hope for a quick solution to the overall problem: "The [increased production] announced by the oil-producing nations, led by Saudi Arabia," it says, "will not lead to a long-term solution. First of all, the cost of crude oil hardly touches on the problem of state taxes, judged to be abusive throughout Western Europe. Second, this concession by OPEC was obtained by the United States, [not] by Western Europe."

"The EU," the editorial goes on, "suffers from an undervalued euro, whose fall in relation to the dollar increased the cost of crude [in the EU]. That means expensive petroleum bought with a strong dollar but paid with a weak euro -- a cost surrealistically multiplied by state taxes. So it's up to the consumer to find the solution -- in his wallet."


Britain's Financial Times says "OPEC's help is not enough," although the paper sees both good and bad news in yesterday's decision. "The good news," its editorial says, "is that OPEC is really trying to avoid a damaging run-up in oil prices this winter. The speed with which oil ministers reached their decision, the apparent lack of dissent, the fact that the figure is the highest credible level of extra output that OPEC is capable of pumping -- all this emphasizes that the organization has no desire to push prices up to unsustainable levels."

Then there is the bad news: "Between them, OPEC and the oil companies have managed to create an unstable oil industry, in which slight misjudgments of the demand for output are capable of causing worrying bursts of price acceleration and outbursts of public anger. [What] OPEC will now produce -- given previous concealed over-production -- will do no more than dampen the hysteria. Modest action earlier in the year to increase the ceiling and to get spare capacity in Saudi Arabia ready for use would most likely have prevented it entirely."

"Meanwhile," the paper adds, "Western governments have failed to persuade the public of the environmental case for high levels of energy taxation. Probably such high-minded arguments would always cut little ice with the energy-dependent small business people -- farmers, [truck drivers], fishermen -- for whom rising oil prices are a desperate blow. But by making the case to a wider public, governments would be in a stronger position to override illegal blockades."


The Irish Times writes: "Only time will tell whether the increase in production agreed by OPEC will be enough to bring about a sustained fall in oil prices on world markets. The OPEC [target]," it says, "is to reduce the price of a barrel of crude oil to between $23 and $28 a barrel, from the 10-year high of $35 reached last week. The level of increase agreed by OPEC," the editorial goes on, "is a continuation of its traditional cautious approach, but does signal a genuine attempt to secure some decline in the price of crude oil."

The paper adds: "The view among market analysts [is] that crude prices will probably ease slowly from their highs of last week, but that a sustained fall towards the target level of around $25 a barrel may not happen until next year. Given the complex supply and demand position in the oil market," it says, "such forecasts can only be tentative. A key complicating factor is that supplies of refined product held in the main industrialized economies are at a low level. [This] means that the price to consumers of products such as petrol and home heating oil may remain high for some time, even if crude oil prices start to ease."

(This concludes today's press review in one take. RFE/RL's Dora Slaba and Aurore Gallego contributed to our report)