To judge by several of the presentations made at the recent Interna tional Oil Summit in Paris, the claim repeated at various government and industry gatherings over the last year that the world's oil producing and consuming countries were entering a new era of understanding-or even solidarity-risks looking increasingly shaky (See Editorial, p. 17).
The one point of agreement, naturally, shared by camps with competing views of how best to manage global supply and demand of oil, is price stability. Yet, from this common ground, the opinions of Saudi Arabia's Minister of Petroleum Ali al-Naimi and Interna tional Energy Agency Director Robert Priddle, broadly representing Middle Eastern and Western interests, rapidly diverged.
Al-Naimi accused industrialized nations of fueling a state of worldwide "petrophobia," despite oil-"the elixir of industrial civilization"-having served as a relatively low-cost energy source that has powered over a century of global economic growth.
In the name of energy supply security and environmental concern, moreover, said al-Naimi, Western governments had imposed "excessive" petroleum taxation regimes that thwarted their openly advocated credo of "openness and freer trade."
"These measures are pursued vigorously despite the decline in energy and oil intensities in [Western] countries in the past 3 decades and the relatively small share of energy in their GDP," al-Naimi stated. "Such discriminatory policies and measures undermine free trade and, consequently, world economic growth."
Al-Naimi's comments necessarily drew fire from the director of the IEA, which counts most of the world's industrialized nations among its 26 members.
Priddle acknowledged that producers and consumers alike "deplored price volatility," but emphasized that the structure of the price band adopted by the Organization of Petroleum Exporting Countries-always under sway of its most powerful member, Saudi Arabia-continues to exercise a far from calmative influence on crude markets.
"The nervous consumer is entitled to observe that many OPEC members advocate a price at the top of the [$22-28/bbl] price band," he stated, "and that the mechanism itself is biased against the lower range, with a shorter fuse for response when the price falls below the floor than when it rises above the ceiling."
Looking forward, Priddle sees cause for both apprehension and hope in the cooperative attempt to steady errant crude prices. "The fluctuations of the oil market over the past 3 years have caused economic damage and political crisis. The joint interest of consumers and producers in lower price volatility has encouraged dialogue and a quest for greater market transparency."
"Both are desirable and welcome. But we should not deceive ourselves into thinking that a convenient solution is at hand," he added.
Moreover, any solution, convenient or hard-won, to bring oil markets out of this period of record-setting fluctuation has to factor in the impact of production from Iraq, OPEC's 11th member and the "joker in the pack," in Priddle's phrase.
For after reporting the suspension of exports last November, Iraq's monthly output has varied-on a rising trend-from an average of 1.3 million b/d in December to 2.7 million b/d in March, another source of disquiet for consumers and producers. And doubtless an entry high on the rolling agenda for OPEC's ministerial meeting in Vienna next month.
