Richardson says OPEC should not cut output
US Energy Sec. Bill Richardson criticized the Organization of Petroleum Exporting Countries Wednesday for signaling that it was considering production cuts in order to prevent a oil price collapse in the spring.
LONDON�US Energy Sec. Bill Richardson criticized the Organization of Petroleum Exporting Countries Wednesday for signaling that it was considering production cuts in order to prevent a oil price collapse in the spring.
Richardson, speaking at the Oil & Money conference, said the 11 OPEC nations had acted responsibly to "address the imbalance and volatility in (crude oil) prices" this year through four production increases.
According to its figures, OPEC has added 3.7 million b/d to world crude markets this year.
"I feel that our quiet diplomacy has helped move (OPEC) in this direction," Richardson said. "The US believes that the world needs more oil, and we hope that when OPEC meets again in January they will see the need to increase production."
Richardson added, "$34/bbl for oil is too high�and this is hurting developing countries. What is needed is to let markets dictate prices."
"Two years ago, the price of a [barrel of] oil was $10, and that was too low; $34 is too high. There has to be a medium dictated by market prices," he said. "To become complacent and say it is going to be $30 and should be $30 I think is wrong."
He said the US wanted an oil price between $20-$25/bbl, a "price that is good for both producer and consumer." OPEC's price band presently is $22-$28/bbl.
Richardson questioned the thinking of OPEC ministers, including Saudi Arabia's Minister of Petroleum and Mineral Resources Ali Naimi, who want OPEC to consider output cuts next year.
"We believe that cuts to production would not be healthy for the international economy," he said. "Clearly production cuts would not be very wise." Reductions in OPEC output, Richardson added, would be a "manipulation" of the market.
Richardson stressed world production should be maintained in order to replenish depleted crude oil stocks.
He said US representatives would attend the International Energy Forum in Riyadh next week for the first time. He said that indicated US belief in the need for a "good, frank dialog between producer and consumer (nations)."
Richardson said, "We may not agree on the final outcome, but the common objective has to be how to reduce the excessive volatility of oil prices and how to bring oil prices down to sustainable levels."
He said OPEC's election of Ali Rodriguez Araque to the post of OPEC secretary-general was "a very good appointment" for the future stability of oil prices.
Richardson said another drawdown from the US Strategic Petroleum Reserve was still possible. He said the US is reviewing the impact of the first 30 million bbl release.
"It moderated prices a bit, it helped home heating oil supply, it sent a signal that the US has an energy policy based on market principles, and that the President will act to help consumers," he said. "It certainly galvanized a lot of international support for our position."