LONDON. Mar 2: The Organisation of Petroleuq) Exporting Countries is hlnltng tt fould levy higher prices to pre-empt new carboh taxes on oil by the West, reports Reuter.
Whether OPEC ever does retaliate like a true cartel would need a policy shift by King Fahd of Saudi Arabia.
Western industry executives believe tt conceivable but unlikely that the King would ever turn the lap down so hard on production as to deliver a new 1970*-sty Ie "oil shock".
But the King probably did express concern over US pro-Cels for an energy tax when
retary of State Warren Christopher met him in Riyadh on February 21.
OPEC's fear is that recession-hit governments In the European Community (EC) and Japan may follow the US lead and try to fill their empty coffers, too, with new taxes on fuel
These can be sold to wary electorates as a way to help rescue the earth from global warming by curbing the use of fossil fuel and reducing emissions of carbon dioxide (CO2).
OPEC's warning shot was fired In an unsigned editorial in the February OPEC bulletin published by Its Vienna secre tariat.
The OPEC editorial urged the 12 members lo be zealous in honouring new output quo tas. For if oil prices weakened "a carbon tax., will be easier for consumer governments to impose".
OPEC also envisioned higher US taxes eventually be ing levied than are now pro posed by the Clinton ad minis l ration.
Once the tax was "an accepted part of the landscape Ihc US can easily adjust It us ing the same convenient Siunds of cutting the budget
Belt." the OPEC editorial said.
"Emboldened by the Clinton move, the European Community will dust off tts plans again for tts own tax. Others may follow".
Producers scorn the "green" case for such taxes as a cloak for a straight grab for more economic rent on the barrel.
They said that 1.2 billion
Chinese arc sitting on 11 per cent of world proven reserves of coal, the fossil fuel most prolific al emitting carbon
A lew cent on gasoline price* in the West won l stop the Chinese from mining and burning the coal.
"What is needed Is a holistic approach to the whole Issue uf the environment." says Saudi Arabian Oil Minister Hisham Nazer
If the West wen rcuHy worried about CO2, Nqzer adds, Japan and Germany wouldn't
subsidise their coal at up to 100 dollar a tonne.
OPEC further complains that US coal would be taxed under the Clinton plans al only 25.7 cent per million British Thermal Units (BTU) versus 59.9 cent for oil.
Taxes that would hit petroleum demand are an especially bitter blow to Saudi Arabia, the world's biggest producer.
tver Since the mid-1970s it has Incurred the wrath of OPEC "hawks" led by Iran with a strategy of using its own produetton to keep a lid on oil prices. Others In the 1970s branded Nazer s predecessor, Sheikh Ahmed Zaki Yamanl. a western stooge.
In this decade too. the Saudis plan to spend some 45 billion dollar to get production capacity lo 10 million barrels ^^Thcy see that as their side of a bargain. They offer secure supply at stable prices. Jrr return, they want consumers lo promise them a market for their oil Into the 21st century.
An energy lax therefore seems like a slap In the face
and fl also exposes the Saudis to OPEC taunts of "I told you
But there is another dimension to the Saudi bargain with the West.
“Whc-e would the world be if my country hadn't produced an extra three million barrels a day after Iraq Invaded Kuwait?" Asked Yamanl in a recent In terview.
But others in OPEC ask where Saudi Arabia would be If America hadn't then waged war on Iraq and did not re main as the ultimate Guarantor of Gulf Arab security?
Officials tn more "hawkish" OPEC states therefore Ihfnk it may be nard lo get the Saudis to ratchet prices up In defiance of Washington. On the other hand, say some Arab analysts. social security in Saudi Arabia needs a thriving domestic economy.
Referring to Islamic unrest in another Arab OPEC slate, one non-Qulf source said, “the people of Algeria arc not uh dergoing some kind of mystic crisis. It Is Just that the money from the oil wells isn't flowing the way ft once did".